Malta’s moral victory over the landmark citizenship case against EC has given “revived hope” for Montenegro to reopen its special economic citizenship program for real estate investments. The calls are getting loud from industry experts and stakeholders, asking the Montenegro government to restart the CBI program, a subject of debate.
In a landmark case this month, the Advocate General of the Court of Justice of the European Union, issued an “Opinion” to dismiss the European Commission case against Malta. EU law does not prevent Malta from granting its citizenship to wealthy foreign investors. The Commission had not proven that EU citizenship law requires any “genuine” or “prior genuine” connection between the member state and the individual, apart from what is necessary under national law to legally grant citizenship. Should the final judgment favor Malta, it could pave the way for more golden passport programs opening in Europe, especially in Bulgaria, Cyprus, Croatia, Moldova, Montenegro and Albania.
Background
The Montenegro Citizen by Investment scheme in the economic interest of Montenegro operated for a limited time from 01.01.2019 to 31.12.2021, extended until December 31, 2022, on the basis of a maximum of 2,000 applications for citizenship. When the program was ended, less than 1000 applications were received (850 approved as of Sep 2024), falling short allotted quota. The Government of Montenegro expected to raise 1 billion euro invested mainly real estate sector (in approved hotels or resorts) through the economic citizenship program. Under the fast tracked citizenship scheme, foreigners must invest EUR 350,000 to EUR 450,000 for Montenegrin citizenship. Foreigners are required to invest atleast EUR 250,000 in north of Montenegro plus pay EUR 100,000 as one time contribution for Govt to acquire citizenship in Montenegro. The real estate investment is increased to EUR 350,000 in capital Podgorica and coastal resort areas.
Tourism Real Estate
Several hotels projects which are under construction have greatly benefited funded by Montenegro CIP. The list official construction of hotels and resorts approved by Government of Montenegro are
- Kolašin Resort & Spa“, Kolašin
- Hotel Breza, Kolašin
- Hotel Kraljičina plaža, Miločer, Budva
- Durmitor Hotel and Villas“, Žabljak
- Bjelasica 1450 Kolašin
- K16 Kolašin
- Boka Place
- Bobotov hotel and resort
- Elite Hotel & Residence, Kolašin
- Montis hotel & resort, Kolašin
Montenegro’s Attractiveness
The Montenegro CIP has been major attraction, highly appealing to many foreign investors for these reasons
- Montenegro is a candidacy for EU membership, enhances the value of Montenegrin citizenship and passport power. Investors see potential future benefits from EU citizenship, such as easier access to European markets and greater mobility.
- Montenegro maintains a visa free agreement with the European Union for its citizens.
- Montenegro’s Low tax environment is another highlight. Montenegro has the lowest 9% corporate taxes in Europe.
- Montenegro has NATO membership and uses euro as official currency.
- Montenegro’s natural beauty and coastal location make it attractive for tourism investments particularly in real estate through hotels and resorts, these are highly appreciating investments. Montenegro has the lowest property prices all in Europe.
Closure
The Montenegro decided to end the citizenship by investment scheme to pursue its EU membership ambitions amidst pressure from the EU to halt granting citizenship for investments. The Russia’s war on Ukraine is another factor that contributed to the demise of program. The European Commission welcomed the Montenegro’s decision to terminate the investment citizenship program.
Roadblocks
Montenegro will be facing several hurdles by reopening its economic citizenship program. These include
- EU candidacy – Montenegro could put its aspirations for EU-membership in danger be reinstating the CIP. Montenegro wont be able to complete all the negotiation chapters.
- Schengen area – Montenegro has indicated its intentions of joining schengen area post EU membership. Montenegro could put visa waiver agreement at risk with the EU schengen area.
- Strict vetting – Montenegro needs to prove strict due diligence and vetting controls on applicants applying for citizenship, protecting the program from abuse and money laundering.
- Ukraine War – Russia war on Ukraine, could facilitate large number of Russian nationals seek citizenship evading EU sanctions.
EU has called for gradual phasing out of golden passport programs by 2025 and ensuring that third countries do not administer harmful RBI/CBI schemes
Conclusion
Montenegro CIP reopening is a subject of debate. Should Montenegro decide to reopen the ECP (Economic citizenship program),it would greatly benefit the economy it would pump in another half a billion euros into the economy, creating more jobs and taxes. EU Montenegro is a candidate country for EU membership and acquis negotiations are still on.
