Malta’s so-called golden passport scheme that lets people become citizens through financial investment is contrary to European law, the EU’s top court has ruled.

The EU commission took Malta to court in 2022 over the scheme, which grants foreigners a Maltese passport and thereby the right to live and work in any EU country in return for paying at least €600,000 (£509,619), buying or renting property of a certain value, and donating €10,000 to charity.

The EU’s Court of Justice said the scheme “amounts to rendering the acquisition of nationality a mere commercial transaction”.

Malta’s government has not yet responded to the ruling, which former Prime Minister Joseph Muscat called “political”.

He said he believed the scheme could continue with “some changes”.

The country risks hefty fines if it does not comply with the judgment.

The EU’s Court of Justice said “the acquisition of Union citizenship cannot result from a commercial transaction.”

Malta has repeatedly insisted that it was correct in its interpretation of EU treaties, Reuters news agency reported.

In 2022, it suspended the scheme for Russian and Belarusian nationals in the wake of Russia’s invasion and Europe’s crackdown on Kremlin-linked individuals.

Tuesday’s ruling goes against a report last October from the court’s Advocate General at the time, Anthony Collins.

He said the commission had failed to prove that EU law requires a “genuine link” between the person and the country to grant lawful citizenship, adding it is for each member state to decide who is “to be one of their nationals and, as a consequence, who is an EU citizen”.

Although each EU member state determines how they grant nationality, the court said Malta’s scheme “jeopardises the mutual trust” between member states.

The EU has previously called on countries to end the practice, noting that investor citizenship schemes carried “inherent” security issues, as well as risks of money laundering, tax evasion and corruption.