The Myth of EU Citizenship

written by A. L. Hart Havens on August 15, 2021

One of the most common misconceptions in the offshore space is the notion of EU citizenship. More specifically, there is a widely held belief that citizenship in one European Union country allows holders to relocate to any other EU country and enjoy virtually the same rights and privileges afforded to the host country’s citizens. Despite the lofty rhetoric of European unity and the issuance of common-design passports, this is not quite how it works.

This essay aims to dispel the myth of EU citizenship and demonstrate that the actual residency benefits within the European Union afforded to citizens of EU member countries are not particularly lucrative when compared to the conditions applicable to citizens of non-EU western countries like Americans, Canadians, and Australians.

A Far Cry from Citizenship-Equivalent Status

With this assertion in mind, let’s have a look at five points taken directly from the European Union’s Your Europe website concerning the residency rights granted to EU-country citizens within the European Union.

·      As an EU citizen, you have the right to move to any EU country for a period of up to 3 months as long as you have a valid identity card or passport. If you want to settle in another EU country but you have no intention to take up any work or education there, you need to prove that you have sufficient resources for you and your family during the time you want to stay in your new country and have comprehensive health insurance.

·      Students and other people not working for payment, such as those in retirement, must have sufficient resources for themselves and their family, so as not to be a burden on the host country’s social assistance system, and comprehensive sickness insurance cover.

·      As an employed person in your host country, you should register your residence […] after the first 3 months. When you register, you will get a registration certificate. This certificate confirms your right to live in your host country. You will need a valid identity card or passport, a certificate of employment or confirmation of recruitment from your employer, and (if self-employed) proof of your status as self-employed.

·      You may live in the other EU country as long as you continue to meet the conditions for residence. If you no longer meet these requirements, the national authorities may require you to leave.

·      EU citizens have the right to permanent residence in another EU country after legally residing there continuously for 5 years. You can lose your right to permanent residence if you live outside the country for more than 2 consecutive years.

These rules show in unmistakable fashion that newly arrived EU-citizen foreigners are nowhere near being on par with an EU host country’s citizens or even with its permanent residents.

Furthermore, citizens of non-EU western countries are subject largely to the same requirements as those presented above. For example, US citizens – in the absence of covid restrictions – are also allowed to visit any European Union country for 90 consecutive days without a visa and may seek employment during that time. The track to permanent residency in EU countries is often five years for non-EU citizens as well.

Now, this does not mean that there are zero benefits to EU-country citizenship. But as the next section explains, these benefits are a far cry from citizenship-equivalent status.

Advantages of EU-Country Citizenship

A major perk enjoyed by EU-country citizens seeking to relocate within the European Union is the waived requirement to secure a work permit when applying for a job. For example, an Italian citizen applying for a job in France is subject to the same hiring conditions under the law as a French applicant, and companies are not permitted to give preferential treatment to French applicants over Italian applicants.

By contrast, a French employer would be required to obtain a work permit for a US, Canadian, or Australian applicant and, depending on the specifics of the job and industry, may also be required provide evidence to the French government of a lack of qualified French or EU-country citizens before receiving permission to hire the non-EU candidate.

All other things equal, the Italian applicant would have an edge over the American, Canadian, and Australian candidates when applying for a job in France, particularly because hiring the Italian candidate would give rise to fewer bureaucratic obstacles for the hiring company to contend with.

Another benefit of EU-country citizenship is the right to start and operate a company in another EU country without needing to navigate through an excessive amount of additional red tape compared to the rules applied to the host country’s own citizens. This opportunity is not available to non-EU citizens.

Furthermore, EU-country citizens have the right to relocate within the EU as economically inactive citizens. And while they are indeed required to consistently demonstrate to the host country that they possess sufficient resources to support themselves, citizens of non-EU countries by contrast are generally barred from establishing residency in an EU country simply by virtue of proving economic solvency.

Among the further-reaching benefits are the right to vote in certain political elections of the EU host country as well as the possibility of obtaining better mortgage terms and taking advantage of lower capital gains tax rates.

For example, Spain charges a 19% capital gains tax on nonresident foreigners who are legal residents of another EU country, which is lower than the 24% rate that the country applies to nonresident foreigners living outside the European Union. Although this particular Spanish law interestingly makes an issue of EU legal residency rather than citizenship, it should be noted that such rules vary widely across EU countries.

Arguably the most lucrative benefit of holding the citizenship of an EU member country is the right to work for the European Union or an EU institution such as the European Commission, the European Central Bank, or the European Court of Justice, as employment opportunities at these institutions are usually exclusively reserved for EU-country citizens.

Although the candidate-selection process can be quite competitive with many positions requiring foreign language skills, aspiring bureaucrats who succeed in making the cut are effectively set for life following the completion of a typically nine-month probationary period.

Generally speaking, EU government jobs are highly sought-after due to the excellent pay and extremely generous perks, which are complemented by a low-stress working environment, virtually unlimited paid sick leave, and firmly-rooted job tenure.

US and Canadian government employees who believe they have cushy jobs may be inclined to think again after learning of the very comfortable arrangements enjoyed by their European Union counterparts.

An EU-Wide Residency Permit of Sorts

The European Union’s long-term residency permit was introduced in 2006 in an attempt to provide some of the benefits afforded to EU citizens to qualifying permanent residents of EU countries who are from outside the European Union, although the rules differ among the 25 participating countries of the EU’s 27 total member countries. The agreement does not include Ireland or Denmark (or the UK prior to Brexit).

For example, the German-issued EU-wide residency permit (Erlaubnis zum Daueraufenthalt-EU) is made available to non-EU citizens who are self-supporting long-term residents of Germany of five years of more. It is designed to enable these permanent residents to relocate to other countries within the EU under conditions approximate to those applicable to German citizens.

The Dangers of EU-Citizenship Misconceptions

The idea that holding any EU country’s citizenship is effectively equivalent to holding citizenship in all 27 EU member countries has led many people to believe that there is no discernible benefit to acquiring additional EU-country citizenships.

This fallacy has given rise to an unfortunate complacency among many EU-country citizens who could easily qualify for citizenship in another European Union country. For example, an Irishman fortunate enough to be entitled to Portuguese citizenship may be inclined to refrain from pursuing naturalization under the erroneous assumption that all bases throughout the European Union are already covered. This is simply not the case.

Finally, Brexit has shown that it is indeed possible for a country to leave the European Union in spite of the EU’s concerted efforts to sabotage and punish any attempts by member countries to reassert their national independence. And as the bloc could potentially grow smaller or shift eastward and/or southward in the future, a current member country may eventually part ways with the European Union, thereby suddenly and unexpectedly placing that country’s citizenry outside of the union’s boundaries.

While some people would prefer to steer clear of the EU, for those who wish to retain citizenship ties with the union, obtaining an additional EU-country citizenship in anticipation of such a development would certainly serve to mitigate the fallout of any future shifting of the EU’s outer borders.