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Stefan Pacher, LLM (WU), LLM, TEP, IMCM, is Director, Government Advisory at Henley & Partners.
The April 2025 judgment of the European Court of Justice in European Commission v Malta1 marked a turning point in the debate on citizenship by investment, reshaping the legal and conceptual landscapes of naturalization within the European Union and its accession candidates. The Court held that “[t]ransactional naturalisation, which is granted in exchange for predetermined payments or investments”2 violates the primary law treaties of the Union. This ruling clarified that citizenship by investment programs — which grant citizenship in return for a fixed financial contribution — are incompatible with the principles underpinning the European Union’s legal framework.3
At the same time, the decision of the European Court of Justice affirms the legitimacy of discretionary naturalization processes that do not entail a fixed price for a legal entitlement to citizenship. Such procedures, often referred to as citizenship by merit, are long-standing practices in many European Union member states.4
Unlike citizenship by investment, citizenship by merit avoids the commodification of nationality. It reflects a values-driven approach, awarding citizenship in recognition of extraordinary achievements, philanthropic contributions, and the potential to advance the public interest. Merit-based citizenship represents a sovereign distinction, conferred upon individuals whose accomplishments and reputations demonstrate exceptional merit.5
Citizenship by merit may be broadly defined as a discretionary route to naturalization whereby designated government officials evaluate applicants according to a multi-dimensional profile that encompasses international reputation, professional accomplishments, and demonstrable societal impact. Residence and language requirements are typically waived. Qualifying criteria may include significant contributions to national development goals, outstanding entrepreneurial success, pioneering advances in science, or distinguished achievements in the cultural or athletic spheres.
While financial contributions can form part of an applicant’s profile, they are not the sole or decisive factor. In essence, citizenship by merit is earned rather than purchased, enabling countries to attract individuals whose skills, networks, and vision can meaningfully advance national priorities.
Austria operates one of the most established citizenship by merit regimes. Enshrined at constitutional rank in section 10(6) of the Austrian Citizenship Act, it empowers the Council of Ministers to grant citizenship to individuals whose extraordinary achievements serve the national interest. Such accomplishments must clearly exceed the norm in the fields of the arts, the economy, science, or sport; significant philanthropic contributions are also considered.6&The framework exempts applicants from residence and language requirements and does not mandate the renunciation of other citizenships, thereby creating a privileged naturalization pathway within Austria’s citizenship system.7 Austria’s legal framework demonstrates how citizenship by merit can be aligned with national priorities without violating European Union law.
From a policy perspective, citizenship by merit offers several strategic benefits. It can address pressing needs such as financing critical infrastructure, counteracting brain drain, stimulating innovation, and strengthening a country’s international profile. Merit-based pathways provide an effective means of attracting high- and ultra-high-net-worth individuals and others capable of delivering transformative value to the host country.
Furthermore, public perception of citizenship by merit is generally favorable. Applicants are typically recognized for exceptional qualifications or achievements, which makes them more likely to be viewed as assets to a nation. The economic and cultural benefits that often follow — from job creation and tourism growth to enhanced international prestige — further reinforce public acceptance.
Citizenship by merit also enables governments to align naturalization with strategic objectives. A country that prioritizes green technology, for instance, could grant citizenship to innovators in renewable energy or to philanthropists funding sustainability initiatives. Similarly, a country that aims to enhance its cultural diplomacy could extend nationality to internationally renowned artists. Regimes that grant citizenship by merit allow for a holistic assessment of each applicant, weighing potential contributions against the nation’s long-term interests.
For exceptional individuals and their advisors, the rise of citizenship by merit requires a strategic recalibration. Financial capacity alone is no longer the principal gateway to citizenship. Instead, applicants must demonstrate their extraordinary worth in ways that resonate with the host nation’s priorities — whether through philanthropic initiatives, entrepreneurial achievements, or contributions to scientific research.
Citizenship by merit applications are typically highly individualized, requiring tailored submissions that clearly link the applicant’s track record and unique offerings to the prospective benefits for the host country. Successful cases often hinge on the strength of this narrative and the alignment between the individual’s achievements and the receiving country’s strategic agenda.
The decision by the European Court of Justice has not brought wealth migration in Europe to an end, but it has restricted its most transactional form, opening the door to a more refined approach. Citizenship by merit captures this shift as a model that integrates sovereign discretion, legal compliance, and strategic openness into a coherent and purposeful framework.
As the European Union’s legal environment evolves, and as citizens increasingly demand integrity in migration policy, merit-based citizenship offers a compelling path forward — one that anchors conferred nationality in demonstrable value creation. Citizenship by merit both complies with the legal constraints of the European Court of Justice and reaffirms the deeper meaning of belonging to a political community — shifting the paradigm from commodification towards genuine contribution.
1 Case C-181/23 European Commission v Republic of Malta EUR-Lex (European Court of Justice 29 April 2025) ECLI:EU:C:2025:283 eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62023CJ0181
2 Ibid para. 101.
3 Ibidpara. 79 et seq.
4 European Commission, ‘Report from the Commission: Investor Citizenship and Residence Schemes in the European Union’ (23 January 2019) COM/2019/12 final 2 eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52019DC0012
5 S. Pacher, ‘Competence of the EU to regulate citizenship matters in light of pending infringement proceedings against Malta’ (Master’s thesis, University of Vienna) (2024) 20 et seq. utheses.univie.ac.at/detail/70145/
6 Austrian Ministry of Interior, ‘Granting of Citizenship in the Special Interest of the Republic according to Section 10 para. 6 StbG bmi.gv.at/406/verleihung.aspx
7 Case C414/24, ‘Opinion of Advocate General Richard de la Tour’, Austrian Supreme Administrative Court (26 September 2024) Ra 2023/01/0359 curia.europa.eu/juris/document/document.jsf;jsessionid=77EC364C43BA6B5950275D06F9F56188?text=&docid=303899
Henley & Partners assists international clients in obtaining residence and citizenship under the respective programs. Contact us to arrange an initial private consultation.
