EUROPEAN COMMISSION

Brussels, 23.1.2019

SWD(2019) 5 final

COMMISSION STAFF WORKING DOCUMENT

Accompanying the document

Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions

Investor Citizenship and Residence Schemes in the European Union

{COM(2019) 12 final}

TABLE OF CONTENTS

I. INTRODUCTION    

II. INVESTOR CITIZENSHIP SCHEMES    

II.1 Introduction: what are Investor Citizenship Schemes?    

II.2 Legal Basis of the Schemes    

II.3 Institutional structure of the schemes    

II.4 Involvement of non-public bodies    

II.5 Investment required: type and amount    

II.6 Residence or other genuine link criteria    

II.7 Criminality and security checks    

II.8 Anti-money laundering measures vis-à-vis the investment    

II.9 Information about who obtains citizenship under these schemes    

III. Investor Residence Schemes    

III.1 Introduction: what are residence investor schemes?    

III.2 Institutional structure of the schemes    

III.3 Involvement of non-public bodies and intermediaries    

III.4 Investment required    

III.5 Residence    

III.6 Duration of stay and renewal of the permit    

III.7 Criminality and security checks    

III.8 Anti-money laundering    

III.9 Information about individuals obtaining residence under these schemes    

I. INTRODUCTION

This Commission Staff Working Document accompanies the Report on Investor Citizenship and Residence Schemes in the European Union. It gives an overview of current national law and practice in EU Member States concerning investor citizenship and investor residence schemes 1 .

Citizenship, the status of a person as a legal member of a sovereign state, can be acquired through different means. Traditionally, citizenship is obtained based on one’s descent or place of birth. States also grant citizenship to persons that fulfil certain requirements (naturalisation), such as extended residence, completion of language and citizenship tests and good conduct. A “genuine link” 2 between person and state is generally required.

Three Member States – Bulgaria, Cyprus and Malta – use citizenship to attract foreign investment in the form of so-called “investor citizenship schemes”. Under these schemes, certain ordinary naturalisation requirements are waived or softened provided the applicant invests a certain amount in the Member State concerned. Some other Member States grant discretionary naturalisation on grounds of special achievements in the national interest. Such special achievements are typically in the area of culture, sports or science, but can also cover economic achievements.

A person who becomes, through birth or naturalisation, a citizen of an EU Member State automatically acquires Union citizenship as well. Union citizens enjoy a number of rights based on this status, for example the right to move and reside freely within the territory of the Member States, the right to vote and stand as a candidate in European Parliament and local elections and specific market access rights.

Similarly, a number of Member States grant residence in exchange for investment. While the rights granted in this context are more limited than those granted through Union citizenship, they also impact other Member States. In particular, a valid residence permit issued by a Member State applying the Schengen acquis in full allows a third-country national to enter any other Schengen Member State 3 for a duration of up to 90 days in any 180-day period. It also allows access for short stays to Bulgaria, Croatia, Cyprus and Romania based on the unilateral recognition of residence permits by these Member States 4 .

Part II of this document sets out further detail of Member States’ investor citizenship schemes, as well as explaining the operation of discretionary schemes on grounds of national interest. Part III sets out further detail of Member States' investor residence schemes.

II. INVESTOR CITIZENSHIP SCHEMES

II.1 Introduction: what are Investor Citizenship Schemes?

Investor citizenship schemes can be defined as a Member State legislative, policy or administrative initiative aiming systematically to attract investment by allowing investors to acquire citizenship of the Member State concerned. Bulgaria, Cyprus and Malta introduced such investor citizenship schemes in 2005, 2007 and 2013 respectively.

A few other Member States have in their legislation the possibility to confer citizenship on an individual basis as a result of an investment made in the country via either discretionary naturalisation or discretionary facilitated naturalisation schemes 5 . Discretionary naturalisation on grounds of national interest is where the naturalising authority waives all or almost all naturalisation conditions. Discretionary facilitated naturalisation on grounds of national interest is where the naturalising authority waives some but not all naturalisation conditions. Such discretionary naturalisation procedures are highly individualised, are generally used on a limited basis and do not provide for the systematic award of citizenship based on an investment in the same way that the investor citizenship schemes of Bulgaria, Cyprus and Malta do.

II.2 Legal Basis of the Schemes

The Bulgarian Citizenship Act (BCA) 6 , together with the Foreign Nationals in the Republic of Bulgaria Act 7 , provides for two pathways through which foreign investors may obtain Bulgarian citizenship by waiving some of the ordinary naturalisation criteria 8 . The Investments Promotion Act 9  and the secondary legislation on its implementation, are also relevant as they govern the procedures for certification of various types of investments, among other matters.

Table 1 summarises the differences between these two schemes.

Table 1 Overview of Bulgaria’s investor citizenship programmes 10

In Cyprus, the Council of Ministers has the discretion to grant Cypriot citizenship to foreign investors for reasons of public interest (independently of their duration of stay), in exceptional circumstances where high level services were provided to Cyprus, under Article 111A of the Civil Registry Laws of 2002 to 2017 12 . Implementing this discretionary power, the Council of Ministers created the ‘scheme for naturalisation of investors by exception on the basis of subsection (2) of Section 111A of the Civil Registry Laws’ (scheme for naturalisation of investors by exception or naturalisation by exception) in its Decision 81.292 of 13 September 2016 13 . The scheme was renamed the ‘Cyprus Investment Programme’ 14 in the course of legislative amendments made in July 2018 15 .

Malta’s scheme – the Individual Investor Programme (IIP) – is regulated by secondary legislation issued under the Maltese Citizenship Act 16 , namely, the Individual Investor Programme of the Republic of Malta Regulations, Legal Notice 47 of 2014 (LN 47/2014) 17 . This allows for the granting of citizenship by a certificate of naturalisation to foreign individuals and their families who contribute to the economic development of Malta. The Citizenship Regulations 18 are also relevant to the regulation of the scheme.

II.3 Institutional structure of the schemes

In Bulgaria, the competent authority is the same as that for naturalisation procedures: the Ministry of Justice is responsible for making a proposal to the President of the Republic of Bulgaria to issue a decree on the acquisition of Bulgarian citizenship. Specialised services within the Ministry will examine the relevant files to be sent to the Minister to propose a draft final decision. The Minister of Economy also plays a role in certifying that an investment has been made 19 . Ultimately, the President issues the corresponding decree granting or refusing citizenship.

The decision-making authority in Cyprus is the Ministry of Interior, although the competent authority deciding to waive the naturalisation conditions is the Council of Ministers. Applications are processed by the Director of the Civil Registry and Migration Department and the Director General of the Ministry of Interior.

In Malta the Identity Malta Agency (Identity Malta) carries out functions and duties in relation to passports, identity documents, work and residence permits for expatriates and individual investment programmes 20 . On 29 March 2018, the Maltese government set up the Malta Individual Investor Programme Agency (MIIPA) to administer the IIP. 21 . Such work is carried out in cooperation with Identity Malta. The Minister responsible for identity management – currently the Parliamentary Secretary responsible for Reforms, Citizenship, and Simplification of Administrative Processes, within the Office of the Prime Minister – is responsible for Identity Malta and for the MIIPA.

Of particular interest for investor citizenship schemes are the specific monitoring mechanisms or reporting obligations. In Bulgaria there are none: citizenship is granted by Presidential Decree, but there is no subsequent monitoring, as Presidential Decrees enter into force at the moment of their issuance and are not subject to judicial review. In Cyprus, monitoring is possible, as the Council of Ministers must inform the House of Representatives before adopting a decision to grant citizenship 22 . However, there is no publicly available Parliamentary Report or question raised at the House of Representatives concerning the monitoring of the scheme 23 . In March 2018 a new Supervisory and Control Committee was appointed, made up of officials from the Ministry of Interior, Ministry of Finance and the Cyprus Investment Promotion Agency (CIPA) 24 . The Committee is responsible for registering agents (see section below on non-public bodies); it does not appear that it has any specific reporting obligations. However, legislative changes in June 2018 imposed a duty on the Cypriot Ministry of Finance to conduct studies, assessing the application of the Cyprus Investment Programme and its effects on the economy, and to provide information to the Council of Ministers. 25 It is too early to assess the impact of this new duty.

Malta’s IIP Regulator (ORiip) reviews all aspects of the IIP and reports on its functions to the Minister annually. These reports are public and subject to parliamentary scrutiny 26 . The Regulator must also investigate complaints about the IIP 27 , but a legal instrument prescribing the procedure for complaints has not yet been adopted. A Monitoring Committee 28 consisting of the Prime Minister, the Minister (responsible for identity management) and the leader of the opposition monitors the IIP. This Committee must meet at least once a year and can ask the Regulator to attend and report at its meetings. It does not however monitor individual applications and relies on the regulator to do this.

II.4 Involvement of non-public bodies

Non-public bodies play a role in the operation of investor citizenship schemes.

In Malta, the IIP applications must be submitted to the Malta Individual Investor Programme Agency (“the MIIPA”) either through Approved Agents or the concessionaire 29 . These non-public bodies have a significant role throughout the application process, acting on behalf of applicants and interacting directly with the competent authorities on their behalf. In addition, Maltese legislation provides for the design, promotion and operation of the IIP by the concessionaire 30 . This role has changed over time and the concessionaire is now primarily concerned with promoting the IIP, organising events in Malta and advising the MIIPA on legal or technical aspects as needed. The concessionaire also presents applications on behalf of clients, similar to any other agent 31 .

In Bulgaria and Cyprus applicants may choose to employ consultants or lawyers to advise on the preparation of the necessary documents; they are however not formally part of the procedure. Their role is limited to explaining the procedure, facilitating or acting as representatives. In July 2018 a specific Registry for investor citizenship scheme service providers (e.g. accountants, law firms, estate agents) was set up in Cyprus. Service providers must meet certain admission criteria (for example, submission of a clean criminal record) to be entered on the register and must comply with a Code of Conduct 32 . Service providers cannot submit applications for naturalisation unless registered. The Code of Conduct includes guidelines for the promotion of the Cypriot investor citizenship scheme, including a ban on advertising the scheme in public places.

II.5 Investment required: type and amount

All three Member States operating investor citizenship schemes require the applicant to make different types and minimum levels of investment. In Bulgaria, an overall investment of EUR 1 million is requested under its fast-track investor citizenship scheme. In Cyprus, a minimum investment of EUR 2 million is necessary, together with ownership of property in Cyprus. In Malta, a contribution of EUR 650,000 must be paid into a national investment fund, together with an investment of EUR 150,000 and a requirement to own or rent property in Malta. In Cyprus and Malta, additional investments for family members are required.

Various investment options can be observed among the three Member States operating investor citizenship schemes: capital investment 33 ; investment in immovable property 34 ; investment in government bonds 35 ; and one-off contributions to the State budget 36 .

Table 2 below provides an overview of the investment requirements in Bulgaria, Cyprus and Malta.

Table 2 Comparative overview of the types of investment in investor citizenship schemes 37  

In addition to the investment requirement, applicants must also pay non-refundable administrative fees as part of the application process. Cyprus and Malta have significantly higher fees than Bulgaria and foresee specific fees for applications from family members.

II.6 Residence or other genuine link criteria

In all three Member States, there is a formal requirement of prior residence in order for the foreign investor to qualify for the investor citizenship schemes, with the issuance of the corresponding residence permit. Merely holding a residence permit for the required timeframe is sufficient to qualify for the investor citizenship scheme. However, effective residence, meaning physical presence for a regular and extended period in the territory of the Member State concerned, is not required.

In Malta, the applicant must be physically present to provide biometric data for the e-Residence Card and to take the oath of allegiance) 43 . A personal interview with the applicant may also be required in Malta. In Bulgaria, the applicant's presence is required for the submission of the application for citizenship and in Cyprus for the collection of the residence permit.

In Malta, the e-Residence card must have been held for at least 12 months preceding the issuance of the certificate of naturalisation: the applicant is described as having “effective residence status” during this period. In Cyprus, the applicant must hold a residence permit for at least 6 months before the naturalisation certificate can be issued. In Bulgaria, the applicant must hold a permanent residence permit for five years (ordinary scheme) or one year (fast-track scheme) in order to be able to apply for Bulgarian citizenship. Foreign investors can apply directly for permanent residence (which grants an unlimited right of residence) under the investor residence scheme (see section III.5).

The study 44 looked for other factors, besides physical residence, which might be said to create a link between the applicant for citizenship and the country concerned. In Bulgaria the applicant must undergo an application interview, but is exempt from the conditions of being proficient in the Bulgarian language or from showing knowledge of public life in Bulgaria. The Cypriot authorities consider that the investment in Cyprus is itself a sufficient bond between the applicant and Cyprus: under the relevant Council of Ministers decision, the residence criterion required under its ordinary naturalisation procedure is replaced by an investment criterion. Applicants for Maltese citizenship in the final stage of the naturalisation process are asked about their links with Malta. Applicants are asked to have boarding passes showing travel to Malta, or if they have other evidence, for instance that they donated to charitable organisations, have membership of a local sports, cultural or social club or pay income tax to the Maltese Inland Revenue Department  45 . Applicants are also encouraged to set up a business in Malta.

II.7 Criminality and security checks

In all three Member States with investor citizenship schemes, checks are carried out to ensure that applicants and their dependants are not a potential threat to national security, public policy or public health. The way such checks are carried out is highly discretionary and guidelines, legislation or other information concerning the actual practices involved was scarce. The study could not therefore identify, for example, exactly how a person is identified as a threat to national security.

In Malta, the checks are made on the criminal background of the main applicants and their dependants over 12 years of age. The checks are carried out on the basis of police records from the Maltese police and/or from the competent authorities in the country of origin and in the country or countries of residence where the applicant has resided for more than six months during the last ten years. The requirement to prove a clean criminal record may be waived in exceptional circumstances, where the competent authority considers such a certificate impossible to obtain. For instance, if the competent authority in the country of origin would not issue certificates for short or intermittent stays. In those cases, a sworn affidavit from the applicant and any dependants, declaring a clean criminal record, will suffice.

The Maltese authorities consult INTERPOL and Europol databases as part of a four-tier due diligence process covering: 46 know-your-client due diligence checks by the agent and the MIIPA (see section on anti-money laundering checks below); clearance by the police authorities; a check for completeness and correctness of the application and verification of the documents submitted; and an outsourced due diligence check whereby the MIIPA commissions two reports from international companies on every IIP application 47 . The study was not able to obtain information about any use made by the Maltese authorities of EU databases, including the Schengen Information System (SIS). Individuals, who are nationals or residents of Afghanistan, Iran and the Democratic People’s Republic of Korea, or with significant ties to these countries, are excluded from the Maltese IIP. Also excluded are citizens from countries which are subject to a U.S. travel ban and persons who have been denied a visa by a country with whom Malta has a visa-free travel agreement, whereas applicants showing on any other sanctions or watch lists must be reported by agents to the Malta Individual Investor Programme Agency 48 ..

In Cyprus, applicants must submit a criminal record report from his/her country of origin and (if different) country of residence, which must be dated no more than 90 days prior to submission. The Cypriot police also undertake a search in both Europol’s and INTERPOL’s databases 49 . The investor’s name and family members’ names must not be included in the list of persons whose assets, within the boundaries of the European Union, have been frozen as the result of sanctions. In addition, according to the new rules introduced in July 2018 50 , applicants, who submit their claims via a service provider, are required to submit a due diligence report issued through an internationally accepted database (for example World-Check 51 , Lexis Diligence 52 , Regulatory DataCorp Inc. 53 , etc.). In cases where there are concerns regarding national security, the application is additionally evaluated by the Central Intelligence Agency of Cyprus. Cyprus is not connected to the Schengen Information System.

In Bulgaria, legislation requires the applicant to present a clean criminal record certificate and a document showing that no criminal proceedings are pending or ongoing against the applicant. The Council for Citizenship gives an opinion on citizenship requests, following a written statement by the Ministry of the Interior and the State Agency for National Security (SANS). The latter carries out checks on all applicants for Bulgarian citizenship (including those applying through investor schemes) within the scope of its competence, such as police intelligence or police record databases. The competences of SANS include counter-terrorism, counter-intelligence, and combatting organised crime and corruption 54 . There is no publicly available information about the exact information databases checked and the internal regulations of SANS – stipulating the specific databases to be checked – are classified 55 . While Bulgaria is not yet part of the ‘Schengen area’, it has however full access to the SIS, since August 2018. No information was available concerning whether the authorities use SIS to check applicants for citizenship. No information was available on the Bulgarian policy concerning persons subject to EU restrictive measures.

II.8 Anti-money laundering measures vis-à-vis the investment

Regarding checks on the origin of funds, all EU Member States 56 have notified transposition measures for the Anti-money Laundering Directive (“AMLD”). 57 Under this legislation, the obliged entities (inter alia, credit and financial institutions, notaries and lawyers, and real estate agents) 58 must carry out customer due diligence measures 59 , which include identifying the person with whom a business relationship 60 is established (e.g. opening a bank account, money transfers of a certain amount, 61 legal advice provided in carrying out a business transaction such as buying immovable property, etc.), identifying the final beneficiary of the company or trust that carries out such transaction (‘beneficial owner’) and checking the origin of funds. The obliged entities are not required (or even encouraged) to communicate this information to the State’s competent authorities; however, they must do so when there is a suspicion that the funds involved in a business relationship/transaction are, or might be, the proceeds of criminal activity or related to terrorist financing (by filing the corresponding ‘Suspicious Transaction Report’ to the Financial Intelligence Units 62 ) 63 . Obliged entities must do this on their own initiative under the anti-money laundering legislation. Obliged entities must also provide the Financial Intelligence Unit at request with all necessary information. Furthermore, Member States must hold adequate, accurate and current information on the beneficial ownership of legal entities and trusts, including the details (nature and extent) of the beneficial interests held, in a central register (‘Beneficial Ownership Register’). This information must be provided, inter alia, to other Member States’ competent authorities 64 . Formally, there is no obligation on the bodies involved in carrying out the checks on the origin of funds in investor schemes to communicate to the Member States’ competent authorities the results of these checks unless there is a suspicion. However, in practice some cooperation exists in relation to investor citizenship schemes.

Identity Malta 65 , as part of the consultation carried out in the study, confirmed that to the extent possible the due diligence definitions and procedures of the AMLD are followed in the four-tier process of due diligence it uses. It is obliged by legislation to verify the source of all funds paid by applicants for citizenship 66 . The main applicant must confirm that his/her ‘wealth has been obtained from completely legitimate sources, and is not, whether directly or indirectly, derived from the proceeds of criminal activities of any kind’. The main applicant must also submit administrative documentation, ‘Form SSFW – Statement of Source of Funds and Wealth’ 67 , accompanied by bank statements for the previous three months for the account from which funds for the IIP are being remitted 68 . All information in relation to the source of wealth must be triangulated before a piece of information is considered verified – the MIIPA seeks verification from three independent sources: the applicant and two independent service providers 69 .

The Cypriot legal framework on investor citizenship schemes makes direct cross-reference to the anti-money laundering legislation. This requires Cypriot Banks’ compliance departments to implement due diligence measures to verify and validate the origin of the funds used in the investment. This is done based on the proof (bank transfer receipts) that must be submitted by all applicants (investor and family members) that the transactions were made through Cypriot banks from a foreign country to the Cypriot bank account of the seller/company/investment fund. The due diligence costs are borne by the applicant 70 . In cases where information is located that the applicant might be implicated in financial crime, the application is sent for evaluation to the Cypriot Financial Intelligence Unit.

In Bulgaria, the checks on the origin of funds (in accordance with the Bulgarian Law on Measures against Money Laundering) is carried out by the Invest Bulgaria Agency 71 , in the procedure to obtain a permanent residence permit (which is a prerequisite for applying for citizenship under the investor scheme). In this procedure the applicant must provide a declaration of the origin of funds in compliance with the anti-money laundering law 72 . As part of the application for citizenship that then follows, the Citizenship Directorate and the Citizenship Commission verify whether or not the declaration and checks carried out by the Invest Bulgaria Agency are valid.

II.9 Information about who obtains citizenship under these schemes

Under none of the three investor citizenship schemes is information systematically available about the people who successfully obtain citizenship via this route, or about their origins. In neither Bulgaria nor Cyprus is there any legislative requirement to publish information about people granted citizenship as a result of their investor schemes 73 . On the other hand, Malta’s IIP law contains a disclosure obligation requiring yearly publication within the Government Gazette of the names of all persons who during the previous twelve calendar months were granted Maltese citizenship by registration or naturalisation including those persons who were granted Maltese citizenship under the IIP 74 . The Maltese government first published the list of persons naturalised as Maltese citizens between July 2013 and December 2014 in the Government Gazette of 31 July 2015. It subsequently published lists in the Government Gazette of 22 December 2017 (figures for 2015-2016) and 21 December 2018 (figures for 2016-2017) 75 . The published lists do not distinguish between citizenship obtained under the IIP and other routes to citizenship, such as marriage 76 . In addition, the lists are sorted in alphabetical order by first name meaning that it is not evident where whole families have obtained citizenship or where it is individual applicants 77 . There are no details published by Malta of the origins of the successful applicants. Eurostat figures published in 2018 on the acquisition of citizenship in the EU show however that, while the nationality of the applicants for citizenship by investment are not known, the largest group of persons naturalised by Bulgaria, Cyprus and Malta are Russian citizens 78 . As regards the number of applications granted, Cyprus and Malta both have caps on the numbers of applicants who can benefit from their investor citizenship schemes. The Cypriot Government, as of 2018, decided to limit such citizenships to 700 per year 79 . In Malta, the number of successful main applicants (thus excluding dependants) is capped at 1,800. However, the Maltese authorities are in the process of updating the law and, following a public consultation, increasing the cap for main applicants by another 1,800. Bulgaria imposes no cap on the number of foreign investors that can apply for citizenship.

III. Investor Residence Schemes

III.1 Introduction: what are residence investor schemes?

In a very similar fashion as that developed for citizenship investor schemes, residence investor schemes are any legislative, policy or administrative initiative aiming to enhance investment by third-country nationals by granting facilities to obtain residence in the Member State concerned. While some of the schemes were adopted in the early 2000s 80 , others are more recent and can be seen as a reaction to the economic recession started in 2007 81 .

Schemes that fall inside the scope of this report are those for which the financial investment, in whatever form it materialises, is the main and primary condition for entry and residence, irrespective of the name of the scheme under national legislation 82 . This means that schemes where investing is possible but is not the main and primary condition of the entry of foreign individuals have been excluded from the analysis. This line is required to identify the sometimes very subtle difference between self-employed or entrepreneurs schemes and investor schemes. Some self-employed or entrepreneurs schemes require an investment but this comes as an additional admission condition to the main one which is the setting up of a business or the presentation of a business plan in this perspective. 83 Against this background, the following Member States are part of the scope of the Report: BG, CY, CZ, EE, EL, ES, FR, HR, HU 84 , IE, IT, LT, LU, LV, MT, NL, PL, PT, RO, SK and the UK.

III.2 Institutional structure of the schemes

In most Member States, the competent authorities running the schemes are the authorities in charge of migration issues, i.e. the Ministry of Interior (BG, CY, CZ, EL, HU, LV, PT and the UK), regardless of their specific denomination. For instance, in Bulgaria, the “Migration Directorate” is in charge of the scheme, in Hungary, the “Immigration and Asylum Office”, in Latvia the “Office of Citizenship and Migration Affairs” (OCMA) or in Portugal, the “Immigration and Borders Service” (SEF). In other instances, the police force inside the Ministry of Interior (EE, HR, IT, SK) or a regional (HU) representative of the Ministry of Interior, or of the central government (Voivode in PL, Préfectures in FR) is involved.

In a minority of Member States, the competent authorities for migration issues depend on another Ministry than the Ministry of Interior (ES: Ministry of Employment and Social Affairs; IE: Ministry of Justice and Equality; NL: Ministry of Security and Justice). Others have set up a dedicated agency (MT) or an agency part of a Ministry (EL: Enterprise Greece as part of the Ministry of Economy).

Member States may also differentiate between the decision-making authority and the implementing authorities as it is the case in the Netherlands where the decision making authority is the Ministry of Security and Justice and the Dutch Immigration and Naturalisation Service is the implementing authority.

Governing the scheme entails in most cases coordination with other public authorities, in particular for what concerns security checks and any economic assessment if required, which can lead to a double competency: in Luxemburg the Ministry of Economy is competent to assess and issue an opinion on investments in a company, while the Ministry of Finance is competent to assess and issue an opinion on investments in a management structure and on investments consisting in a deposit in a financial institution.

Specific monitoring mechanisms and reporting obligations exist in a very limited number of Member States. In Spain, the law includes an obligation to prepare an annual report on the implementation of the rules which is prepared by the Ministry of Employment and Social Affairs on a joint request of the Ministries of Foreign Affairs, Interior Affairs and Economy and is then submitted to the Council of Ministers. At present, only one report is publicly available: the first report drafted after the entry into force of Law 14/2013, which was issued in 2015 85 . In Portugal, the General Inspection of Internal Affairs carries out, at least once a year, an audit of the procedure of the investment residence permit. The conclusions and recommendations are notified to the First Commission of the Portuguese Parliament (Constitutional Affairs and Fundamental Rights, Freedoms and Guarantees) and are also made available on the Government's website. However, this website only contains one report, which dates back to 2014. It mentions several recommendations, issued due to some inefficiencies of the procedure, inter alia, the development of internal supervision mechanisms and of a procedures manual. Follow-up to this recommendation is unknown.

This means that, in most cases, the oversight of the scheme is left to general monitoring mechanisms, when they exist, such as Parliamentary scrutiny, administrative liability, general reporting of activities to the Government, or access to documents requests, and that no additional and specific diligence mechanism exists (BG, CY, FR, HU 86 , IE 87 , IT, LV 88 , MT, NL, RO, UK).

III.3 Involvement of non-public bodies and intermediaries

A very limited number of Member States has made the choice to involve private companies in the running of the scheme (CY, HU and MT), sometimes with a significant role (HU and MT). While in Cyprus, applicants are free to decide to present their application through an authorised representative whose role is limited to act as facilitators and providers of consultancy services, applications in Malta may be submitted to the competent authorities only by registered agents or accredited persons. These registered agents act on behalf of the applicant for all correspondences, applications, submissions, filings, notifications under the regulations. In Hungary, the Hungarian Parliament’s Economy Committee would authorise a number of businesses whose role was to issue the residency bonds to be purchased by the applicants. Only one company could receive the authorisation to issue bonds in a given third country. The companies that received authorisation were located in the following countries: Grand Cayman (Hungary State Special Debt Fund), Malta (Discus Holdings Ltd.), Cyprus (Migrat Immigration Asia Ltd., Innozone Holdings Limited), Hungary (Arton Capital Hungary), Russia (VolDan Investments Limited), Liechtenstein (S & Z Program Limited), and Singapore (Euro-Asia Investment Management Pte Ltd.).

III.4 Investment required

The analysis has led to conclude on the existence of a wide range of schemes, which is reflected in the investment requirement. While investment is also the core requirement of residence investors’ scheme, the nature and amount of this investment vary much more in the context of residence than of citizenship schemes.

Five types of investment options have been analysed. These are not necessarily mutually exclusive, some Member States allowing for different types of investment and their combination 89 :

·Capital investment: under this model, the requirement is to invest a definite sum either in a company 90 (BG, EE, ES, FR, HR, IE, IT, LT, LU, LV, NL, PL, PT, RO, SK, UK) or in credit or financial institutions instruments such as investment funds or trust funds (BG, CY, EE, ES, IE, LU, LV, NL, PT).

·Investment in immovable property: this model requires to buy, or to rent 91 , a real estate property of a definite value (CY, EL, ES, IE, LV, MT, PT).

·Investment in Government bonds: bonds of a definite value are purchased to the Government by the investors. These bonds imply a repayment on a maturity date, with a definite interest rate (BG, ES, HU, IT, LV, MT and UK).

·Donation or endowment of an activity contributing to the public good: capital is invested in a public project benefiting the arts, sports, health, culture or education philanthropic donations artistic and research activities (IE, IT, PT).

·One-time contribution to the State budget: this requires paying directly a certain amount of money to the State (MT, LV) and does not entail repayment contrary to bonds.

In addition to these, a non-financial investment such as the creation of jobs or the contribution to the economy may be required as an additional criterion to one of the afore-listed criteria (creation of a certain number of jobs in BG, CZ, ES, FR, HR, LU, LV, NL, PL, PT, RO, SK and contribution to the economy in BG, CZ, EL, ES). While the fulfilment of the condition requiring the creation of a certain number of jobs is straightforward 92 , the condition of contribution to the economy leaves more discretion to the authorities. In addition, the criterion of “contribution to the economy” has different forms: it must be “specific to an economically disadvantaged region” in Bulgaria; the investment must be made “in the interests of the country or a region” in the Czech Republic; the Greek legislation provides for a “strategic investment” without defining the concept; Spain requires a business project of “general interest”.

The financial investment can therefore be “passive” when it is made on a stand-alone basis: this is the case for the bonds system, the immovable property and the capital investment model. It can be “active” when it is done in connection to a more tangible economic objective: this is the case for capital investment in companies, donations or endowment of an activity contributing to the public good.

Differences exist also concerning the amount of the investment required by law. Regarding the financial threshold of the investment, most Member States have different financial thresholds that apply depending on the nature of the investment (BG, CY, EL, ES, IE, IT, LV, MT, PT and RO) or the type of scheme when they have several (EE, HR, LT). In the remaining Member States (CZ, FR, HU, NL and UK) the financial threshold is the same, regardless of the nature of the investment.

Member States can be classified according to the investment threshold they apply. For Member States having different investment options, only the minimum and the maximum thresholds are taken into account 93 :

·Member States without a financial threshold: EL 94 (“strategic investment”), PL (“sufficient means to generate income”).

·Member States which require a very low investment (below EUR 100,000): EE, HR, LT, LV.

·Member States which require a low investment (EUR 100,000 – less than 500,000): BG, EL, FR, HU 95 , IE, LT, LV, MT, PT, RO.

·Member States which require a medium investment (EUR 500.000 – less than 1 million): CY, ES, MT, LU.

·Member States which require a high investment (EUR 1 million – less than 5 million): BG, CZ, EE, ES, IE, IT, NL, PT, RO, UK.

·Member States which require a very high investment (over 5 million): SK (permanent residence), LU.

A further pecuniary disbursement is the payment of administrative fees, in the application procedure to obtain a residence permit. The amount of these fees range from EUR 30 to EUR 11,745.30. Member States may be classified according to the following levels:

·Member States with a fee below EUR 100: ES, HR, IT, LU, RO.

·Most Member States request a fee of between EUR 100 and EUR 250: BG, CZ, EE, LT, PL, SK.

·Member States with a fee of between EUR 250 and EUR 500: CY, LV and FR.

·Member States with a fee of between EUR 500 and EUR 1,000: EL.

·Member States with a fee above EUR 1,000 (in ascending order): IE (EUR 1,800), HU 96 (EUR 45,200 – 58,100), NL (EUR 2,137), PT (EUR 5,654), UK (GBP 1,623 for an online or post application and GBP 10,500 for a “super premium service” 97 ), MT (EUR 5,500).

III.5 Residence

Physical residence of the foreign investor in the country granting residence rights is not envisaged uniformly by Member States. While it can be reckoned that investors have particular needs in terms of mobility, the regime in place in some Member States can lead to question the mere rational of requesting residence in the said Member State.

In a number of Member States, physical residence of the investor is not expressly required once the individual has obtained the residence permit (CZ, HU, LV, MT, RO, SK, UK). Other Member States have requirements for obtaining the permit which entail that the investor be physically present. This is ensured in a more or less stringent way since such provisions vary from subjecting withdrawal of the permit in case of prolonged absence (CY 98 , ES 99 , HR 100 , IT 101 , LU 102 , NL 103 , RO (permanent residence) 104 , SK 105 ) or register in the corresponding municipal register (EE, NL) to a requirement to provide accommodation (EE, ES, FR, IT, SK).

Some Member States explicitly require the presence of the investor for a very limited period of time, such as seven days in a year (PT), one day (IE), or simply the day the application is filed (BG, EL, MT 106 ). Others Member States on the contrary focus on attracting only those investors who are willing to actively reside in their country. This is the case when the system in place display a clear policy preference for those who are actively engaged in the business they invest in or where the suspicion that the individual will not reside in the country is a ground for not granting the permit (LT).

III.6 Duration of stay and renewal of the permit

While in most Member States, foreign investors are granted temporary residence permits which enable the individual to reside in the Member State for a limited period of time 107 , a limited number of Member States grant an unlimited right of residence on the first application of an investor residence permit.

The period of validity of temporary residence permits ranges from six months to ten years. Six Member States have different validity periods for residence permits, depending on the type of investment (BG 108 , EL, ES, LT, LV and RO):

·Six months: BG, ES (when the investment is made in real estate but the purchase is not formalised, i.e. when there is only a pre-contract with a guarantee that the purchase will take place);

·One year: HR, BG, PT, HR, RO;

·Two years: CZ (up to 2 years) ES, IE, IT, LT (small investors);

·Three years: LT (medium investors), LU, NL, PL RO (if investment exceeds EUR 500,000 or creates more than 50 new jobs) PL, SK and UK (leave to enter);

·Four years: FR;

·Five years: EE 109 , EL 110 (investment in real estate or positive impact in national growth and economy), HU, LV, and MT;

·Ten years: EL (strategic investment).

In most Member States, permanent residence is granted after 5 years (ES, HR, IE, LV, UK). While a longer period may be required such as in Portugal where permanent residence may be requested after three renewals of the initial temporary permit (i.e. after a total of seven years of residence 111 , some Member States allow for a shorter period of residence. In the United Kingdom, the five-year prior residence period is reduced to two years if the individual invests GBP 10 million, or three years if the amount invested is GBP 5 million.

Some Member States allow to apply directly for permanent residence (BG, CY, HU, MT, RO and SK). This means that investors’ residence schemes may be in certain Member States a fast track to permanent residence, and to citizenship acquisition. It is worth noting that although the right to residence is unlimited in MT, RO and SK, the permanent residence permit must be renewed every 5 years.

Permits granted for a definite period may be renewed. Most Member States require that the initial conditions for the first permit are still fulfilled (i.e. the first investment) for the permit to be renewed and that the duration of the renewed permit is similar to the duration of the first permit. The renewed permit allows for a longer period of residence in ES, HR, IE, IT, NL, PT. In Luxembourg, the foreign investor must again obtain the positive opinion of the corresponding Ministry when applying for the renewal of the permit. Therefore, even if the individual maintains the level of investment (and also work positions where required), where the competent Ministry does not grant a positive assessment of the investment, the renewal will be denied.

Some Member States have however chosen to set stricter requirements. In Romania, the investment requirement is increased upon renewal according to the role of the investor: associates (LLC) must make an investment of EUR 50,000 and create 10 jobs and shareholders (joint-stock company) must make an investment of EUR 70,000 and create 15 jobs. In Latvia, investors in real estate property, business and credit liabilities have to make a one-time payment of EUR 5,000 and submit new evidence. Investors investing at least EUR 50,000 must prove that the capital company has paid at least EUR 40,000 in taxes for the previous financial year or at least EUR 3,000 a month for the first incomplete financial year. Investors investing at least EUR 100,000 must prove that the capital company has paid at least EUR 100,000 in taxes for the previous financial year, or at least EUR 8,300 a month for the first incomplete financial year.

Other Member States have chosen to waive some of the initial conditions. In Estonia, under the general investor scheme, the requirement to maintain the EUR 65,000 investment can be waived if at least one of the following conditions is met: the sales revenue of a company is at least EUR 200,000 per year, or the monthly social tax paid in Estonia for those persons employed by the company is at least equal to the monthly social tax paid in Estonia for remuneration, equalling fivefold Estonian annual average gross wages.

Once resident status has been obtained, all Member States – except Cyprus and Hungary – require that the investment be maintained for the whole duration of the validity of the permit.

Failure to comply with this requirement will result in the permit being withdrawn and, thus, the right of residence of the foreign investor will be revoked. The Study found however that checks on the maintenance of the investment are not widespread. In Latvia, the national legislation provides for an ‘annual registration’ (check) to be carried out to ensure that the initial conditions under which the residence permit was first issued continue to be fulfilled, specifying the number of days of residence in Latvia. In Spain, the competent authority may carry out any checks that are considered relevant and necessary to verify that the requirements that justified the issuance of the corresponding permit continue to be fulfilled during the period of validity of the permit. However, the frequency of these checks is not established by law but occur at the discretion of the competent authority. If in light of the findings of such checks the competent authority concludes that the conditions are no longer met, the residence permit will be withdrawn 112 .

III.7 Criminality and security checks

In all Member States, posing a threat to public order or State security is a ground for rejection of the permit application. This legal requirement is a general requirement under migration law.

For what relates more precisely to the specific case of investor residence permits, security checks relate generally to the background of the applicants and to the origin of the funds. Ex-post checks may exist to verify the conditions under which the scheme was granted still exist during the validity of the permit. Overall, the Study reported that retrieving information on how the checks are carried out proved challenging and thus, no information in this regard was obtained in some Member States (BG, IT, LT, LV, SI, SK) or was not clear from the legislation (EL and PT).

Regarding the timing of the checks, in cases where an entry visa is required, checks can take place either only when applying for the entry visa (IT) or both when applying for the visa and then for the residence permit (ES) 113 . All Member States (except BG, CY, IE, RO, HR, UK 114 ) are under an obligation to consult the Schengen Information System (SIS).

Authorities in charge of the management of the schemes rely in this context on police forces and intelligence services to check the background of the applicants (BG, CY, EE, ES, HR, HU, PT, SK), authorities in charge of health and employment policies (to check that the applicant complies with health and, where applicable, employment requirements), as well as those competent to report on the civil status of the applicant. These checks relate to the criminal record of the applicants and the veracity of the document provided by the applicants.

Regarding the checks on the origin of funds, they are usually carried out by entities involved in financial transactions (e.g. banks, credit institutions, legal professionals such as lawyers and notaries, brokers and real estate agents). These entities can be private or public and include independent professionals. They have to comply with the requirements of the anti-money laundering legislation which compels the obliged entities to carry out on the source of funds. The nature of these checks differ as they can consist in validating the documents relating to the monies used to make the investment, such as bank transfer receipts, financial statements tax return report, purchase or lease contract from the land or property registries, when the investment is made up immovable property, or they can consist in a limited declaration of the competent authority 115 .

Ex-post checks exist in a very limited number of Member States (EE, ES, FR, LT, LV, HR). They consist in ad-hoc checks by the competent authorities in order to verify that the holder of the permit still fulfils the conditions of the stay during the validity of the permit. The frequency of such checks is not established by law but, rather, take place at the discretion of the competent authority. In Estonia, these ad-hoc checks are performed by the Police and Border Guard Board, in France by the Préfecture, in Spain by the General Directorate on Migrations. Latvia carries out annual checks on the annual obligation to register the permit to the Office of Citizenship and Migration Affairs. In Poland, investors can be called to the Office of foreigners to present documents confirming the purpose and conditions of stay. If in light of the findings of such checks the competent authority concludes that the conditions are no longer met, the residence permit may be withdrawn.

III.8 Anti-money laundering

The Study showed variable practices among Member States operating residence schemes to guard against money laundering. While some countries require all payments to be made through their national banks, which as “obliged entities” under the 4th Anti-Money Laundering Directive, must apply the necessary customer due diligence checks (CY), it also showed that some legislations do not provide for particular checks (HR, PT). In Hungary, there was no obligation to actually transfer the money to the territory, which had as a consequence to exclude the funds from any checks in Hungary. In Ireland, funds are double-checked, first through evidence submitted by the country of origin of the fund, and then by the competent services in the Member State. Applicants must submit documentation from their home country that attests that all anti-money laundering checks have been made and all requirements have been complied with. They must provide an explanation of all of their activities for the previous 12 months, including their income, investments and loans, evidence of the funds that are to be used for the proposed investment, evidence of the provenance of those funds and evidence that the funds are transferrable to Ireland and are convertible to euros. Evidence of anti-money laundering checks is double-checked and verified by the Evaluation Committee set up for the scheme together with the application form. The Migration Service have a list of specific information they require in relation to the following four sources of funds: business and investment activities, deeds of sale, inheritance, and divorce settlements. If the funding has been received from an alternative source the individual must provide original documentation and independent supporting documentation as evidence.

The competent authorities in charge of those particular checks vary: it can be the national Investment Agency (BG) or a Commission dedicated to anti-money laundering (ES).

III.9 Information about individuals obtaining residence under these schemes

The information and statistics available regarding individuals obtaining residence under an investor scheme implemented by Member States are generally very scarce. This is one major element accounting for the lack of transparency in the running of these schemes: while the practice of Member States varies a lot in this regard, the overall situation may be depicted as lacking transparency.

No legal obligation to publicly disclose information on successful applicants has been retrieved in any Member State.

Public statistics are not always available, and sometimes for a limited number of years on the competent authorities websites (CY 116 , EL 117 ).

Most of the times, when statistics are public, the lack of disaggregation does not allow to identify the ground underlying the permit acquisition (EL, EE, HU, FR), which makes it impossible to identify investor permits. The novelty of the scheme is an element sometimes put forward to account for this absence of clear statistics (IT, SK, CZ).

Regarding available public statistics targeting investor residence schemes, Spain published statistics in the 2015 Report of the MESS on the implementation of the Law 14/2013 118 , covering the period 30 September 2013 to 31 December 2014.

In some cases, parliamentary questions and freedom of information requests may enable to get more information and to make up for this structural lack of transparency. For instance, in the case of Ireland, the Irish Naturalisation and Immigration Service has provided information via Parliamentary questions on the following items: the number and value of applications per annum since 2012 under each investment option, the number and value of immigrant investor programme applications for social housing investment and nursing home investment in 2017, the criteria against which applications are evaluated, the number of applications approved under the scheme, the investment funds for which applications under the scheme have been approved to date and the amount of money invested in the scheme.

In Bulgaria, information regarding number of successful applicants can be obtained through an official request for information under the Access to Public Information Act. In Croatia, the Ministry of the Interior enables the access to data collected through the request for the access to information, available on its Website. In Lithuania, the Migration department collects statistical information that is published in its annual Migration yearbooks. However, data is not disaggregated.

The following figures on the permits granted per Member States have been retrieved both through the stakeholders consultation carried out in the context of the Study and through public websites.

This general lack of information and transparency appears at odds with the policy objective of the scheme and the possibility to assess its efficiency.

(1)

     The document is based on the external fact-finding study carried out by Milieu Law and Policy Consulting, Factual Analysis of Member States' Investor Schemes granting citizenship or residence to third-country nationals investing in the said Member State, Brussels 2018 (“the Study”). After the conclusion of the Study, BG, CY and MT were invited to provide factual feedback on the parts of the study relating to their investor citizenship schemes. The comments received from the three Member States were duly taken into account, where relevant, for the preparation of this Staff Working Document.

(2)

     Judgment of the International Court of Justice of 6 April 1955, Nottebohm, I.C.J. Reports 1955, p. 4, available at https://www.icj-cij.org/files/case-related/18/018-19550406-JUD-01-00-EN.pdf  

(3)

      The Schengen area, i.e. the area without internal border controls, currently includes 26 countries, of which 22 MS ( AT, BE, CZ, DK, EE, FI, FR, DE, EL, HU, IT, LV, LT, LU, MT, NL, PL, PT, SK, SI and ES) and four associated countries (Switzerland, Norway, Iceland and Liechtenstein).

(4)

     Decision No 565/2014/EU of the European Parliament and of the Council of 15 May 2014 introducing a simplified regime for the control of persons at the external borders based on the unilateral recognition by Bulgaria, Croatia, Cyprus and Romania of certain documents as equivalent to their national visas for transit through or intended stays on their territories not exceeding 90 days in any 180-day period and repealing Decisions No 895/2006/EC and No 582/2008/EC, OJ L 157, 27.5.2014, p. 23.

(5)

     AT, BG, SK and SI all permit discretionary naturalisation on grounds of the “economic interest of the state”, See Study Overview, p.4, and Annex III of Study, ibid, note 1.

(6)

     Bulgarian Citizenship Act, SG N. 136, 18 November 1998, as subsequently amended and supplemented.

(7)

     Foreign Nationals in the Republic of Bulgaria Act (FNA).

(8)

     The general criteria for the naturalisation of TCNs are: (i) having attained the age of 18 years; (ii) holding a permit for permanent residence or a permit for continuous residence in Bulgaria issued at least 5 years ago; (iii) not having been sentenced by a Bulgarian court for a wilful crime prosecuted ex officio by the state, and is not subject to pending criminal proceedings for such an offence, unless the person has been rehabilitated; (iv possessing an income or occupation allowing a person to subsist in Bulgaria; (v) having a command of the Bulgarian language subject to verification according to a procedure established by an ordinance of the Minister of Education and Science (this requirement may be avoided in certain limited cases specified by the law), and (vi) release from previous citizenship or possibility to be released therefrom at the time of acquisition of Bulgarian citizenship (this requirement may be avoided in certain limited cases specified by the law).

(9)

     Bulgarian Investments Promotion Act.

(10)

     In both schemes the applicants must be of legal age (above 18), have a clean criminal record, and their physical presence in Bulgaria is not necessary (only when submitting the application). The terms ‘ordinary’ and ‘fast-track’ are used due to the fact that, in the ordinary scheme the five-year permanent residence period required for naturalisation is maintained, while in the ‘fast-track scheme’ this requirement is lowered to one year.

(11)

     See section II.5 for details.

(12)

     Cyprus Civil Registry Law.

(13)

     Council of Ministers’ Decision 81.292 and website of the Civil Registry and Migration, available at http://www.moi.gov.cy/moi/crmd/crmd.nsf/All/DABB1713307D8C4CC2257D2C0045433C?OpenDocument

(14)

      http://www.moi.gov.cy/moi/moi.nsf/All/0A09FCB93BA3348BC22582C4001F50CF  

(15)

     Decision 906/2018 of 21 May 2018 on the “Cyprus Investment Programme”. Due to the timing of these changes, it was not possible to take into account the most recent changes in Cypriot legislation and practice in the study.

(16)

   Chapter 188 of the Maltese Citizenship Act. According to Article 22(1) of the Constitution of Malta, ‘[t]he acquisition, possession, renunciation and loss of Maltese citizenship shall be regulated by law.’

(17)

     LN 47/2014. A correction was made due to differences in the Maltese and English versions of the law. These changes relate to the correction of typographical errors and have no impact on the substantive requirements, which have not been amended since the adoption of the law in 2014. Legal Notice 59 of 2014, Correction of Laws Order, 2014 (Legal Notice 47 of 2014).

(18)

     LN 106/1989.

(19)

     ‘Invest Bulgaria Agency’, an executive agency to the Bulgarian Minister of Economy, is also involved in the procedures for granting permanent residence and citizenship. In particular, it supports the Bulgarian Minister of Economy in the application of the state policy in the field of encouragement of foreign investment. Website available at http://www.investbg.government.bg/en

(20)

     Chapter 497 of the Laws of Malta, Public Administration Act, 27 November 2009, Act I of 2009 as last amended by Legal Notice 243 of 2017, Act II of 2018 and Legal Notice 96 of 2018; See also subsidiary Legislation 497.07, Identity Malta Agency (Establishment) Order, 10 September 2103, Legal Notice 269 of 2013, as amended by Legal Notices 101 of 2016 and 95 of 2018.

(21)

     LN 96/2018.

(22)

     Article 111A(3) of the Civil Registry Law.

(23)

     Search at the website of the House of Representatives indicated no reference to the Scheme: http://www.parliament.cy/easyconsole.cfm/page/search  

(24)

     Council of Ministers Decision No. 84.068 dated 9.1.2018 and the following Decision 906/2018 dated 21.5.2018. Further detail on the new Committee is available at http://cipregistry.mof.gov.cy/en/  

(25)

     Council of Ministers’ Decision 906/2018.

(26)

     Article 25 of the Maltese Citizenship Act.

(27)

   The Regulator reverts back to the respective agent with his findings.

(28)

     Article 25B of the Maltese Citizenship Act.

(29)

     Regulation 4(3) of LN 47/2014.

(30)

     LN 47/2014.

(31)

     Consultation (in writing) with national stakeholder (Identity Malta representatives, competent authority, 15 March 2018), Information gathered by research for the Study, ibid, note 1.

(32)

     Both the applicant and the registered service provider have to submit a signed declaration confirming good practice in providing the service and that applicant is fully informed about the procedures of the scheme.

(33)

     Under the capital model, the requirement is to invest a definite sum either in (i) a company (BG, CY) or (ii) credit or financial institutions instruments such as investment funds or trust funds (BG, CY, MT).

(34)

     This model requires buying or renting a real estate property of a definite value (CY, MT).

(35)

     Bonds are purchased from the governments by the investors (BG, MT).

(36)

     Maltese legislation requires a “contribution” be paid to the Maltese government, which is deposited in the National Development and Social Fund.

(37)

     For the purposes of this Table, the term ‘investment’ covers any pecuniary disbursement required as part of the process for obtaining residence under the investors’ residence scheme.

(38)

     A combination of the investments admitted under the Cypriot scheme is allowed, provided that the total investment amounts to at least EUR 2 million.

(39)

     Cyprus Securities and Exchange Commission (CySEC) is the independent public supervisory authority responsible for the supervision of the investment services market and transactions in transferable securities carried out in the Republic of Cyprus. https://www.cysec.gov.cy/en-GB/cysec/vision-mission/

(40)

     With proven physical presence in Cyprus, with significant activity and turnover and employing at least five Cypriots or citizens of EU Member States. The number of employees must increase if more than one applicant invests simultaneously or almost simultaneously in the same business or company. The employees of the companies need to have legally and continuously resided in Cyprus during the five years preceding the application submission.

(41)

     Regulation 7(5) and (6) of LN 47/2014.

(42)

     Among others, in stocks, bonds, securities, special purpose vehicles or other investment as provided from time to time by Identity Malta by means of a notice in the Gazette.

(43)

     Information confirmed through consultation with national stakeholder (Identity Malta, competent authority, 8 March 2018), obtained for the purposes of the Study, ibid, note 1. The Maltese authorities also pointed out that, regarding the property investment requirement, there are spot checks on properties and a compliance form must be presented to the IIP on a yearly basis, signed by both the applicant and the responsible agent).

(44)

     Ibid, note 1.

(45)

     See Deliverable B.1 of the Study, ibid, Office of the Regulator Individual Investor Programme (ORiip), Fourth Annual Report on the Individual Investor Programme of the Government of Malta (1st July 2016 – 30th June 2017), November 2017, p. 31:

https://oriip.gov.mt/en/Documents/Reports/Annual%20Report%202017.pdf  

(46)

     Further details available at: https://iip.gov.mt/due-diligence/  

(47)

     Information gathered through consultation with national stakeholder (Identity Malta, competent authority, 8 March 2018). This is in line with Regulation 7(2) of LN 47/2014 that states that the ‘due diligence checks shall be of a four-tier nature’ without further specification.

(48)

     Maltese Individual Investor Programme Handbook 2018. Also excluded are persons who have been denied a visa by a country with whom Malta has a visa-free travel agreement.

(49)

     Information provided by the Ministry of Interior Officer on 29 May 2018.

(50)

  http://www.moi.gov.cy/moi/moi.nsf/all/07F0364738A716E4C22582C40023E6C0/$file/CYPRUS%20INVESTMENT%20PROGRAMME_13.9.2016.pdf?openelement  

(51)

      https://risk.thomsonreuters.com/en/products/world-check-know-your-customer.html  

(52)

      https://www.lexisnexis.com/en-us/products/lexis-diligence.page  

(53)

      https://rdc.com/  

(54)

     Information gathered through consultation with national stakeholder (representative of the Migration Directorate, competent authority, 7 March 2018).

(55)

     Information gathered through consultation with national stakeholder (representative of the Migration Directorate, competent authority, 7 March 2018).

(56)

     Except for Romania. Source: Eur-lex, ‘National transposition measures communicated by the Member States concerning Directive (EU) 2015/849’ available at:

https://eur-lex.europa.eu/legal-content/EN/NIM/?uri=celex:32015L0849

(57)

     Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (Text with EEA relevance), available at:

https://eur-lex.europa.eu/legal-content/En/TXT/?uri=CELEX%3A32015L0849 .

(58)

     Article 2 of Directive (EU) 2015/849.

(59)

     Articles 10-24 of Directive (EU) 2015/849.

(60)

     ‘Business relationship’ is defined in Article 3(13) of Directive (EU) 2015/849 as ‘a business, professional or commercial relationship which is connected with the professional activities of an obliged entity and which is expected, at the time when the contact is established, to have an element of duration’.

(61)

     Article 11(b) and (c) of Directive (EU) 2015/849.

(62)

     Article 32 of Directive (EU) 2015/849.

(63)

     Article 33 of Directive (EU) 2015/849.

(64)

     Article 30 of Directive (EU) 2015/849.

(65)

   The due diligence checks are currently made by the Malta Individual Investor Programme Agency; at the time the interviews for the Study were conducted, the body in charge was Identity Malta.

(66)

     Regulation 7(4) of LN 47/2014.

(67)

     Form SSFW: https://iip.gov.mt/wp-content/uploads/2018/08/MIIP-Form-SSFW3.pdf  

(68)

     Identity Malta Agency, ‘Malta Individual Investor Programme Checklist and Guidelines’, Version 2.0 – 2015, pp. 14/15.

(69)

     Information gathered through consultation with national stakeholder (Identity Malta, competent authority, 8 March 2018).

(70)

     Council of Ministers’ Decision 906/2018.

(71)

     The Invest Bulgaria Agency is an executive agency of the Bulgarian Minister of Economy and supports the Minister in the application of the state policy in the field of encouragement of foreign investment.

(72)

     Article 39, paragraph 6 of the Regulations for the Application of the Foreign Nationals in Bulgaria Act.

(73)

     The Regulator of the Maltese IIP publishes annual reports, which contain figures concerning the numbers of applications received, the regions of the world from which they come and the numbers of applications approved and turned down. See for example the Fifth Annual Report on the IIP, November 2018.

(74)

     Regulation 14(2) of LN 47/2014.

(75)

     The Malta Government Gazette, 31 July 2015, Government Notice 751 – Persons Naturalised/Registered as Citizens of Malta: https://www.gov.mt/en/Government/DOI/Government%20Gazette/Documents/2015/07/Government%20Gazette%20-%2031%20July.pdf ; The Malta Government Gazette, 22 December 2017, Government Notice 1434 – Persons Naturalised/registered as Citizens of Malta: https://www.gov.mt/en/Government/DOI/Government%20Gazette/Documents/2012/12/Government%20Gazette%20-%2022nd%20December.pdf ; The Malta Government Gazette, 21 December 2018 https://www.gov.mt/en/Government/DOI/Government%20Gazette/Documents/2018/12/Government%20Gazette%20-%2021st%20December.pdf  

(76)

     Identity Malta Agency, ‘Malta Individual Investor Programme Checklist and Guidelines’, Version 2.0 – 2015, p. 5.

(77)

For further observations on this see Daphne Caruana Galizia’s Running Commentary, ‘Government publishes list of citizens naturalised last year’, 1 August 2015: https://daphnecaruanagalizia.com/2015/08/government-publishes-list-of-citizens-naturalised-last-year/

(78)

     Eurostat news release 59/2018 of 9 April 2018.

(79)

     Council of Ministers’ Decision 906/2018.

(80)

     RO adopted a scheme in 2003, LT in 2004 and BG in 2005.

(81)

     The UK adopted a scheme in 2008, EE in 2009; LV in 2010; HR in 2011; IE, SK and PT in 2012; HU, PL and NL in 2013; EL and ES in 2014; MT in 2015; FR and CY in 2016; IT, CZ and LU in 2017. The HU scheme was suspended in March 2017.

(82)

     This is why, for instance, the Romanian scheme, which is according to the national legislation “for commercial purposes” is included.

(83)

     For more information on this type of legal migration channel, see the Volume II of the Study for an impact assessment on a proposal for a revision of Council Directive 2009/50/EC (“EU Blue Card Directive”) on Admission of Entrepreneurs, accessible at: https://ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/legal_migration/volume_ii_-_admission_of_migrant_entrepreneurs_en.pdf  

(84)

     As already said, the Hungarian scheme was suspended in March 2017.

(85)

     MESS, ‘Report on the implementation on the Section on International Mobility of Law 14/2013 of 27 September on the support to entrepreneurs and their internationalisation’ (Informe sobre la aplicación de la Sección de Movilidad Internacional de la Ley 14/2013, de 27 de septiembre, de apoyo a los emprendedores y su internacionalización), April 2015, available at:

http://extranjeros.empleo.gob.es/es/UnidadGrandesEmpresas/ley14_2013/documentacion/Informe_anual_de_la_Seccion_de_Movilidad_de_la_ley_14_2013.pdf

(86)

     In Hungary, Transparency International Hungary, in collaboration with a Hungarian daily magazine, ‘Magyar Nemzet’ requested public interest information pertaining to the operations of the companies authorised to issue residency bonds and to establish the volume of residency bonds purchased from the Parliament’s Committee for Economic Affairs and from the Government Debt Management Agency in 2016. Court litigation based on freedom of information against the Committee and against the State Debt Management Agency followed. The defence of both defendants was based on secrecy laws, which, in their interpretation, apply to the purchase of state residency bonds and prevent any information from becoming public. The litigation was suspended (Nagy Boldizsár: In Whose Interest? Shadows Over the Hungarian Residency Bond Program, Transparency International Hungary, 2016. page 71).

(87)

     In Ireland, the Irish Naturalisation and Immigration Service has provided information via Parliamentary questions on the following items: the number and value of applications per annum since 2012 under each investment option, the number and value of immigrant investor programme applications for social housing investment and nursing home investment in 2017, the criteria against which applications are evaluated, the number of applications approved under the investor scheme, the investment funds for which applications under the investor scheme have been approved to date, the four investment options available under the programme, the amount of money invested in the scheme, the members of the Evaluation Committee.

(88)

     In Latvia, as any State institution, the OCMA reports annually about its work to the Government. The Office prepares a general overview of its work and detailed overviews per subject matter. The most recent report on the investors’ residence scheme for the period from 1 July 2016 to 30 June 2017 was presented to the Government in November 2017. See the OCMA 2017 Report on progress and results of implementing Article 23(1), points 3, 28, 29, 30 and 31 of the Immigration Law, available at http://tap.mk.gov.lv/lv/mk/tap/?pid=40441522

(89)

     BG, CY, EE, EL, ES, FR, IE, IT, LV, LU, MT, NL, PT, RO, UK.

(90)

     This is irrespective of the role that the investor has in the company or title under which the investor participates in the company – owner, shareholder, manager.

(91)

     In Greece, renting is possible through 2 options:

a)To make an agreement with a minimum term of ten years for the lease of hotel accommodation or furnished tourist residences in tourist accommodation complexes which are worth minimum EUR 250,000 or;

b)To make a time sharing agreement (lease) based on the provisions of Law 1652-1986 for property, which is worth a minimum of EUR 250,000. According to Law 1652-1986, such an agreement is the commitment of the lessor to grant, each year, to the lessee, for the duration of the timeshare, the use of the tourist accommodation and to provide to them the relevant services for the determined period according to the contract, and the lessee must pay the agreed rent.

In Malta, renting means a property taken on lease for a rent of not less than EUR 12,000 per annum for a property situated in Malta or not less than EUR 10,000 per annum for a property situated in the south of Malta or in Gozo (Regulations 2 and 5(3) of LN 288/2015).

(92)

     The issue may become more complex if there is a requirement to maintain the jobs for a certain time.

(93)

     This explains that Member States may be listed several times.

(94)

     In this case, foreign investors must obtain a decision by the Interministerial Committee of Strategic Investment which characterises the investment as strategic (not defined by law).

(95)

     As already said, Hungary suspended their scheme in April 2017.

(96)

     The applicant had to pay a so-called ‘intermediary commission’ to the companies authorised to issue the bonds, and not to the State. The commission varied according to the company used by the applicant to purchase the bond.

(97)

     Under this service, a courier collects the application forms and documents, staff visits the applicant to obtain biometric data and the decision on the application is usually given within 24 hours. See https://www.gov.uk/government/publications/visa-regulations-revised-table/home-office-immigration-and-nationality-fees-2018  

(98)

     The foreigner cannot be absent from the territory for more than 2 years.

(99)

     In Spain, it is a requirement that the foreign investor not be absent from the Spanish territory for more than 6 months a year.

(100)

     In Croatia, one of the reasons for withdrawing the permit is that the foreigner has been abroad for more than 30 days. Exceptionally, a foreigner who, for a justified reason, leaves Croatia for up to 90 days, will not have his/her temporary stay suspended if he/she has previously notified the competent police authority or police station of her/his departure. If, after leaving Croatia, extraordinary circumstances arise, a foreigner must notify Croatia’s diplomatic mission or consular office within 30 days of the occurrence of these circumstances.

(101)

     The applicant cannot abandon the Italian territory for a period longer than half of the period of validity of the residence permit.

(102)

     Requirement to be physically present in the territory of Luxembourg at least 6 months per year.

(103)

     For at least 4 months in every 12-month period.

(104)

     In Romania, the investor must not have been absent for more than 6 months at a time or 10 months in total. Once permanent residence is granted: the investor should not be granted permanent residence in another country, must not be absent from the Romanian territory for more than 12 consecutive months, unless during this time he/she was a temporary resident in another EU Member State and must not be absent from Romania for more than six consecutive years, regardless of whether or not, during this time, he/she may have been a temporary resident in another EU Member State.

(105)

     As of 1 May 2018, foreigners holding a temporary residence permit have the obligation to stay in the territory of the Slovak Republic for more than half of the time period granted for a temporary stay in one calendar year. Failure to do so may result in a withdrawal of the residence permit. For permanent residence, the holder has the obligation to notify competent authority in writing in those cases where he/she will stay away from the territory of the Slovak Republic continuously for more than 180 days. If the foreigner fails to inform the competent authority, a fine of up to EUR 300 may be imposed.

(106)

     To register biometric data.

(107)

     In France (stays of 12 months or less), Ireland and the UK, the entry visa is the authorisation under which the foreign investor can also reside in the territory of the Member State, thus no residence permit is required.

(108)

     In Bulgaria, the duration of the permit depends on the term of the lease, insurance, or other conditions that ensure that applicants meet the requirements for their stay in the country.

(109)

     The Estonian permit may be granted for 5 years and extended for up to 10 years; however, the permit may be issued for shorter periods taking into account evidence on the circumstances in which the issuance or extension of a residence permit is based or other relevant circumstances and whether there are any changes in any such circumstances.

(110)

     The right to reside granted under the residence permit is unlimited but the permit has to be renewed every 5 years if the investment is in real estate property and positive impact on national growth and economy.

(111)

     One year of initial residence and three renewal periods of 2 years.

(112)

     Seventh Additional Provision of Law 14/2013.

(113)

     In Spain, the consulate or diplomatic mission responsible for issuing the investors’ residence visa carries out security checks on the applicant’s background in cooperation with the Spanish police, while checks on the origin of funds are carried out by the consulate or diplomatic mission’s Economic and Commercial Office (Oficina Económica y Comercial). Such checks are again carried out by the UGE-CE when processing the application for an investors’ residence authorisation. Although the UGE-CE may draw on the conclusions reached by the consulate, it still carries out its own comprehensive checks in cooperation with the authorities competent for security and for anti-money laundering.

(114)

     The SIS is currently in operation in 26 EU Member States (only Ireland and Cyprus are not yet connected to SIS), though with different access rights, and four Schengen Associated Countries (Switzerland, Norway, Liechtenstein and Iceland). While Bulgaria and Romania are not yet part of the area without internal border checks (the 'Schengen area'), they have had full access to the SIS since August 2018. Croatia, which is also not part of the Schengen area, has still some restrictions regarding its use of Schengen-wide SIS alerts for the purposes of refusing entry into or stay in the Schengen area. The UK operates the SIS but, as it has chosen not to join the Schengen area, it cannot issue or access Schengen-wide alerts for refusing entry or stay into the Schengen area. Ireland is carrying out preparatory activities to connect to the SIS, but, as is the case for the UK, it is not part of the Schengen area and it will not be able to issue or access Schengen-wide alerts for refusing entry or stay. Cyprus is not yet connected to the SIS.

(115)

     In Portugal, the law only requires the applicant to submit an up-to-date declaration issued within the previous 45 days by the Portuguese tax and social security authorities confirming the absence of any debts to those authorities, and where that is not applicable, declaration confirming that the applicant is not registered with those authorities.

(116)

     General statistics can be found on the Ministry of Interior website for 2015 and 2016. See http://www.moi.gov.cy/moi/crmd/crmd.nsf/page13_gr/page13_gr?OpenDocument  

(117)

     On the website of the Greek Ministry of Migration monthly migration statistics can be found, however, this go only as back as one year ( http://immigration.gov.gr/web/guest/miniaia-statistika-stoixeia  

(118)

     Law 14/2013, of 27 September, on the support to entrepreneurs and their internationalisation (Ley 14/2013, de 27 de septiembre, de apoyo a los emprendedores y su internacionalización), Official State Gazette 233 of 29 September 2013, BOE-A-2013-10074, available at https://www.boe.es/buscar/act.php?id=BOE-A-2013-10074 (Law 14/2013). Report available at

http://extranjeros.mitramiss.gob.es/es/UnidadGrandesEmpresas/ley14_2013/documentacion/Informe_anual_de_la_Seccion_de_Movilidad_de_la_ley_14_2013.pdf  

(119)

     Information obtained through consultation of national authorities for the purposes of the Study.

(120)

     Information obtained through consultation of national authorities for the purposes of the Study.

(121)

     ‘Report on the implementation on the Section on International Mobility of Law 14/2013 of 27 September on the support to entrepreneurs and their internationalisation’ (Informe sobre la aplicación de la Sección de Movilidad Internacional de la Ley 14/2013, de 27 de septiembre, de apoyo a los emprendedores y su internacionalización), April 2015, available at http://extranjeros.empleo.gob.es/es/UnidadGrandesEmpresas/ley14_2013/documentacion/Informe_anual_de_la_Seccion_de_Movilidad_de_la_ley_14_2013.pdf (2015 MESS Report).

(122)

     Information obtained through consultation of national authorities for the purposes of the Study.

(123)

     Information made public by the Ministry of the Interior, upon request of a member of the Hungarian Parliament. Response of the Minister of Interior to the information request of Mária Demeter, independent member of the Hungarian Parliament, 31 May 2017, available at:

http://www.parlament.hu/irom40/15714/15714-0001.pdf

(124)

     Figures for Ireland relate to the number of applications received. Source: Parliamentary Question 262: 23 January 2018’, Department of Justice and Equality.

(125)

     Information obtained through consultation of national authorities for the purposes of the Study.

(126)

     Information obtained through consultation of national authorities for the purposes of the Study.

(127)

     Information obtained through consultation of national stakeholder (Ministry of Interior Affairs and Administration, Statement of 6 June 2018 no DAiPM-WSNPA-052-34/2018).

(128)

     Source: https://www.sef.pt/en/Documents/Mapa_ARI_EN_december18.pdf  

(129)

     Information obtained through consultation of national authorities for the purposes of the Study. Figures cover only permanent residence – Figures on temporary residence are not available.

(130)

     Government immigration statistics, available at https://www.gov.uk/government/statistics/immigration-statistics-july-to-september-2017-data-tables . Figures cover both leave to enter and leave to remain Leave to enter is the authorisation to enter and stay in the UK for 3 years and 4 months. After this, Leave to remain can be granted, which is an extension of 2 years.