The EU has officially opened up infringements proceedings against Malta and Cyrpus over their golden passports scheme.

In a statement, the EU said it believes that such schemes have implications for the Union as a whole. When a Member State awards nationality, the person concerned automatically becomes an EU citizen and enjoys all rights linked to this status, such as the right to move, reside and work freely within the EU, or the right to vote in municipal elections as well as elections to the European Parliament

“The effects of investor citizenship schemes are neither limited to the Member States operating them nor are they neutral with regard to other Member States and the EU as a whole.”

“The Commission considers that the granting of EU citizenship for pre-determined payments or investments without any genuine link with the Member States concerned, undermines the essence of EU citizenship,” the Commission said.

Cypriot and Maltese governments have two months to reply to the letters of formal notice. If the replies are not satisfactory, the Commission may issue a Reasoned Opinion in this matter.

Launched by former Prime Minister Joseph Muscat in 2013, the Individual Investor Programme allowed foreign nationals to purchase Maltese citizenship at a cost of €650,000. Family members of buyers are then allowed to purchase passports at €50,000, a fraction of the price.

The scheme has long been controversial with issues over transparency raising concerns. It has drawn criticism from the EU before. However, this is the first real indication that the EU believes passports falls firmly under their jurisdiction.

IIP has been at the centre of major corruption allegations. Former Prime Minister’s chief of staff Keith Schembri, Nexia BT’s Brian Tonna, Karl Cini, and Manuel Castagna are all out on police bail over links to kickbacks from the scheme.

Malta has kickstarted plans to change the IIP with a residency programme. However, there is little difference between the two, with the only major difference being that buyers will have to live in Malta for three years before applying for citizenship.

It seems it has done little to ease EU concerns. A few weeks ago, an EU spokesperson said that both Malta and Cyprus were under the microscope for their golden passport schemes.

The spokesperson said that the commission had already contacted Home Affairs Minister Byron Camilleri over the issue.

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