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Popular countries for second homes end visa programs
Two European countries, Ireland and Portugal, put an immediate stop to their golden visa programs for non-EU nationals last week, February 2023. Spain also announced legislation to be considered to end their program.
What is a Golden Visa?
Whether it’s called ‘residence by investment,’ ‘citizenship by investment,’ or a golden visa or golden passport, the concept is the same. Essentially, if you have enough money, you can invest in property, housing, business, or other specified area and receive the right to live – or say you live – in a country.
For example, the program in Portugal, among the most popular in Europe, allowed people to purchase property in specified locations for $500,000 or more. In return, they received golden visas, known officially as residence permits for investment, for themselves and their families. They could have the permits for five years, then, they could apply for permanent residency in Portugal, even though the minimum required stay in the country was only a few days a year.
Why the programs began
The visa schemes have been used to attract investments in many European countries that were hit in the 2007–2008 global financial crisis. Originally designed for Caribbean countries, they emerged as a way for governments to attract quick investment, often in their property markets.
Ireland’s Justice Minister Simon Harris explained in a statement on 14 February 2023, “The Immigrant Investor Programme was established over a decade ago during a time of unprecedented economic difficulty to stimulate investment in Ireland that would be of strategic and public benefit to the State.”
Golden Visa programs make money
Since the Golden Visa program began in 2012, Ireland approved investment of almost €1.25 billion through the Immigrant Investor Programme. The total profit of the program is as high as €6.9 billion.
Research from Global Witness and Transparency International suggests the EU’s 28 Member States have secured about €25 billion of foreign direct investment through these schemes over the past ten years, according to the International Bar Association.
European Union has concerns
In 2019, the European Commission acknowledged that golden visa schemes posed inherent corruption and money laundering risks. However, the Commission did not act against the participating countries.
Three years later, in March 2022, the European Parliament proposed a significant revamp of EU investment migration schemes.
Speaking about his decision to end Ireland’s golden visa program, Haris said, “These programs – which have often been accused of being involved in many unlawful affairs – have been under review for quite a period. We have also taken on board a number of reports and findings from international bodies such as the EU Commission, Council of Europe, and OECD on similar investment programs.”
The plans to curtail Portugal’s golden visa have been discussed by the country’s authorities for over three years, after being sternly criticized by the EU authorities, along with other golden visa programs operated by several other EU Member States.
Senior Campaigner at Global Witness, Naomi Hirst, said, “If you have a lot of money that you acquired through dubious means, securing a new place to call home far away from the place you stole from isn’t just appealing, it’s sensible. These schemes offer a safe haven from authorities who might be looking to seize stolen assets, and the freedom to travel without raising suspicion.
In Spain, Íñigo Errejón, the leader of the Más País, the party that has submitted a bill to the Congress to scrap the golden visa by purchase of property, noted that the government does not control where the money to purchase real estate comes from, a concern that has been also raised by the European Union.
“How easy it is for some gentlemen to come and request a residence permit and buy a house with half a million euros. It looks almost colonial. We have presented a very simple reform, to eliminate this class advantage that is given to some, which is bad for transparency and for containing housing prices,” Errejón said.
Russian aggression accelerates concerns
In 2022, the European Commission called on EU governments to stop selling citizenship to investors. The call came as part of a move to crack down on the combined multi-billion-Euro industry. In the wake of the Ukraine war, there were concerns that these schemes could be a security risk.
The European Parliament stated that it considers schemes granting nationality on the basis of a financial investment (CBI schemes), also known as ‘golden passports’, are objectionable from an ethical, legal and economic point of view and pose several serious security risks for Union citizens, such as those stemming from money-laundering and corruption.
The Commission’s Joint Statement, made two days after Russia invaded Ukraine, included the language, “We commit to acting against the people and entities who facilitate the war in Ukraine and the harmful activities of the Russian government. Specifically, we commit to taking measures to limit the sale of citizenship—so called golden passports—that let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems.”
While the EU makes recommendations, individual EU member states decide whether to act on them or not.
In February 2022, the UK government scrapped its golden visa scheme. The decision to end the scheme came as part of a move to clamp down on dirty money from Russia. In March 2022, Ireland suspended the scheme for Russian citizens as part of sanctions imposed on the country for the invasion of Ukraine.
Going Forward
The golden visa programs are said to have become the legal way to move illegal money. The threat of many, including the Russians, to use the investment programs for their own benefit (beyond gaining a passport or citizenship) has accelerated the need to shut down the programs.
However, the programs are profitable, leading some to believe that they will be reincarnated in different forms. “These programs have opened and closed in many different countries for a very, very long time,” Nuri Katz, the founder of a citizenship-by-investment services firm said. “My guess is in Portugal they’ll reform the program, not close it permanently.”
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
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