Schengen visa annullation while inside Schengen

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But I am a bit surprised that a short-term visa could be annulled "after the fact", i.e. after it had already been used for entry into the country.

Annulment implies a visa should not have been issued and especially that it may have been fraudulently obtained. Therefore, if an official feels justified in annuling the visa, it makes perfect sense for them to do it after a person has entered or even after they have completed the trip and left the Schengen area. I see nothing surprising about that particular detail of your story.

Besides, unlike a US visa, a Schengen visa is not only useful for entry but is also the legal basis for your continuing stay in the Schengen area (at least until you are actually married). So it's not really “after the fact“ and could have several legal consequences.

In fact, I suspect it may be a common scenario. Imagine someone gets a Schengen short-stay visa to visit a country and is found working illegally in another member state. While processing and probably removing them, you would naturally annul any visa they might have.

[…] but it feels like this could still hamper future visa applications, and it's thus obviously something that we'd really prefer to avoid (especially after she already got rejected for the visa to Italy).

That is indeed its purpose and why it makes sense from the consulate's point of view. It's not merely about preventing you from entering, for refusing entry or revoking the visa would be enough for that. And it's not about travel within the Schengen area or anything like that. It's about what your subsequent actions reveal about your original intent and about making it as hard as possible for you to obtain another visa in the future.

This seems absurd, especially since the visa she obtained is a Schengen visa (not only for Country B), and Schengen rules shouldn't prevent travel among its countries (as long as the country for which we got the visa is indeed the main destination).

Many visas, especially single-entry visas with a short duration are tied to one specific trip. They are formally uniform visas covering all member states but they are not designed to give you complete freedom to come and go as you wish.

You'll note that in Can I change my itinerary and hotel reservation after getting a Schengen visa? there wasn't even a suggestion that visas were cancelled because they were used to go to another country. It seems the Czech authorities just take any cancellation as evidence that the information provided with the application was not truthful. I still think it's excessive but you could argue this is the case even if you're actually staying in the same country.

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I am a bit surprised that a short-term visa could be annulled "after the fact", i.e. after it had already been used for entry into the country.

For most travelers, a Schengen visa must be valid for the duration of the stay, so if the consulate finds evidence of misrepresentation, they can cancel the visa, thereby requiring the bearer to cut their trip short.

Once you and your fiancée are married, she no longer needs to have a valid visa to remain in the Schengen area legally, so the issuing consulate might get a bit ticked off, but there won't be much they can do.

it feels like this could still hamper future visa applications.

It could. She'd have to explain every time a visa application form asked "have you ever had a visa cancelled?" I would avoid antagonizing the issuing consulate.

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