The Schengen Area

Many a times one may have heard the term “Schengen Area” used in political and commercial use, but what exactly does it signify? Schengen is a designated area within which natural borders are abolished, allowing free movement of people and trade, alongside efforts to strengthen the common judicial system and police cooperation.

A brief history of Schengen

Signed in 1985 in Schengen, Luxembourg, and pioneered by Germany and France, it initially saw 5 European countries sign the first agreement: France, Germany, The Netherlands, Luxembourg, and Belgium.

In 1990, a Convention was signed in order to concretely implement the abolition of internal border controls, to define the procedures of issuing a uniform visa, and to operate through a centralised system knows as Schengen Information System (SIS).

Further in 1999, the Treaty of Amsterdam saw the Schengen Agreement incorporated within the European Union’s legal framework.

Over time, what initially started as a handful of like-minded states soon evolved to encompass a total of 26 countries, both EU and non-EU.

Countries part of the Schengen Area

As mentioned, a total of 26 member countries located on the European continent are now part of the Schengen Area.

As of 2021, it comprises of:

• Austria
• Belgium
• Czech Republic
• Denmark
• Estonia
• Finland
• France
• Germany
• Greece
• Hungary
• Iceland
• Italy
• Latvia
• Liechtenstein
• Lithuania
• Luxembourg
• Malta
• Netherlands
• Norway
• Poland
• Portugal
• Slovakia
• Slovenia
• Spain
• Sweden
• Switzerland.

22 of the listed countries fully implement the Schengen Acquis, the set of rules and legislations (Decisions, Delegated Acts, Directives, Implementing Acts, Regulations, Treaties, and the case-law of the Court of Justice) that make possible the proper functioning of the Schengen Area.

The remaining 4 (Iceland, Lichtenstein, Norway, and Switzerland) are members of the European Free Trade Association (EFTA) and have adopted the Schengen Acquis through the use of specific agreements.

Affiliated non-Schengen Countries

Countries that are not members but have opened their borders to the Schengen Area states are the Vatican City, Monaco Monte-Carlo, and the Republic of San Marino; however, they do not befall the visa-free zone.

To be noted is that territories that fall under the 26 Schengen Area countries above listed which are not part of the European continent, are not regarded as part of the Schengen Area. Examples of such are Greenland, the Faroe Islands, Aruba, and French Polynesia to mention a few. The only exceptions to this rule are The Azores, Madeira, and the Canary Islands, all seen as special members of the EU and therefore part of the Schengen Zone.

Other countries within the European Union, namely Croatia, Bulgaria, Romania, and Cyprus, have since put forth a request to join the Schengen Area but are still undergoing strict assessments.

Key benefits of Schengen Agreement

The principle of the Schengen Agreement is to promote international cooperation, be it political, economic, or societal.

Benefits of conducting business within the Schengen Area are:

• the increased speed at which trade can be operated at. The long hours spent at border patrol checks are cut down as services and goods are shipped back and forth between member states without hindrance, thus making them more competitive over non-Schengen regions.
• The freedom of movement enjoyed by people residing within the member states, allowing them to travel back and forth within the Schengen Area without having to request for visas every time they migrate country. This not only helps save precious time, but also mitigates the bureaucratic efforts of each state and promotes healthy business relationships.
• As a consequence, costs of import/export are also dramatically reduced, making trade within Schengen even more profitable.
• Furthermore, people who are part of a Schengen member country can also benefit from working, studying, and living in any of the Schengen Area regions.

How to gain access to the Schengen Zone

In order to access the Schengen Zone one must be seen as part of a member state. This can be achieved in a variety of ways by both EU and non-EU citizens by acquiring citizenship, residency, or through tax residency programmes.

Below is a comprehensive list of methods to access the Schengen Area:

• European Citizenship: By acquiring a European Passport of one of the Schengen Zone members, individuals are granted citizenship and automatically have access to the entire Schengen Area, enjoying the benefits aforementioned.

  An example of such is the naturalisation of individuals and their families to member states of the Schengen area, granting them citizenship. Malta, for example, allows for the naturalisation to Maltese citizens those who make an exceptional service to the country through direct investment.

• European Residency: Another method to access the Schengen Zone is to apply for what is known as a “Golden Visa”, the Residence by Investment Programmes which can be accessed by making an investment with a very strong or exclusive real estate component. Countries such as Malta, Portugal and Spain offer Golden Visa Programmes, for example.

  Residency in an EU country means the ability to live freely in the country of choice and gaining access to all Schengen Area member states for up to 90 days in a 180 days period.

  Even though they are not direct Citizenship by Investment programmes, such programmes can be a stepping stone in the path of obtaining personal and financial security through investing in stable and growing economies.

• Tax Residence Programmes: schemes designed by governments to attract high earners, entrepreneurs and businessmen to their shores which normally offer a flat tax rate or other advantageous conditions. Taking once again Malta as an example, these may include:
  • Global Residence Programme – Malta: an effort to attract wealthy individuals from outside the European Union and Switzerland or individuals from the European Economic Area seeking to take up a tax residence in Malta with a favourable tax treatment.
  • The Residence Programme: programme is tailored to European Union nationals, Swiss nationals or individuals from the European Economic Area who would consider taking up residence in Malta with a favourable tax treatment.
  • Malta Retirement Programme & Special Status: Retirees from EU, EEA countries and Switzerland who fulfil certain special criteria can benefit from a special tax status when remitting their pension into Malta.

How CSB Group can help

With a wealth of benefits at its disposal, the ever-expanding Schengen Area proves to be a welcoming and highly lucrative zone in which to conduct business.

CSB Group, with over 30 years of knowledge and experience, can help choose the best programme that fits the needs of you and your family, granting you access to the Schengen Area and, by proxy, to its numerous advantages.