Malta has hit back at European Union pressure to scrap its cash-for-passports scheme, noting that “citizenship is a matter of member state competence”.

In a statement issued on Friday afternoon, the government said that while it was “open to ideas” about how the current Individual Investor Programme could be improved, it had no intention of getting rid of it.

And with EU economies reeling from the impact of coronavirus pandemic restrictions, the importance of such schemes “is growing, rather than diminishing,” the government said.

Instead, the government intends to relaunch the controversial scheme with some revisions, once the current scheme’s upper limit is reached. In its statement, the government said it had informed European institutions of its decision.

Malta's IIP scheme allows wealthy investors to purchase Maltese citizenship, and with it access to the European Union. 

The European Commission has repeatedly said that it dislikes such schemes, which exist in a number of member states, and on Thursday EU Justice Commissioner Didier Reynders said that the Commission had written to Malta, Bulgaria and Cyprus to urge them to “phase out” their citizenship schemes.

But Reynders acknowledged that the decision to do so rested with member states and said that the Commission was in talks with them to find “possible evolutions” of the schemes.

Malta's scheme has been mired in controversy for several years. Three years ago, a magisterial inquiry was opened into a leaked FIAU report detailing suspicions that the former prime minister’s chief of staff Keith Schembri took a €100,000 kickback on three passport sales.

Robert Abela has spoken favourably of the scheme. His law firm used to operate as an IIP agent but had its licence revoked on the day he assumed power as prime minister.

The programme has generated more than €800 million for the government between its launch in 2014 and last July. 

70 per cent of IIP income is held and invested by the National Development and Social Fund. The NDSF must disburse any of that income “for the advancement of education, research, innovation, social purposes, justice and the rule of law, employment initiatives, the environment and public health,” according to the law.