Golden visas are booming in popularity, offering the security of living in stable, safe countries sometimes with lower taxes and outstanding social welfare services. However, is the golden visa about to become an expat memory in the new post-pandemic, post-Brexit climate?
Formal legal challenges brought against Cyprus and Malta by the European Commission remains an ongoing saga amid political wrangling.
The controversy has intensified due to the voluntary suspension of the Cypriot programme over unethical passport for sale practices.
So, what does this all mean for British expats planning on investing in overseas citizenship? And, if the door is indeed closing, how long do global investors have to make those decisions?
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Golden Visas: A Controversial History
The principle of a golden visa is straightforward. It showcases an appetite for innovation to draw foreign investment into struggling economies in return for access to residency benefits openly available to the current population.
In essence, wealthy individuals can buy a second passport with a mutually beneficial agreement that grants them eligibility rights to live, work or study in their country of choice.
Participating nations gain substantial capital injections into state funds, property markets, government bonds and charitable enterprises.
Portugal is a perfect example, as the most popular golden visa route currently available in Europe.
As of August 2021, statistics show that:
- 9,767 foreigners and their 16,615 dependents have invested €5.8 billion (£5 billion) in Portugal’s economy
- Most applicants – almost 80 per cent in 2021 – invest in property, sweeping up renovation projects and new developments.
- In the first quarter of 2019, golden visas generated €249 million (£213 million) for the Portuguese economy.
- 489 expats opted to put cash on deposit, contributing €1 million each held by Portuguese banks
While it seems pointless to argue against the fact that these programmes offer incredible benefits to local economies, the pitfalls require careful review.
The Challenge Against Golden Visas
Going back to the ideology of a golden visa scheme, we start to see cracks – although not, perhaps, signifying that these programs aren’t working, but they don’t always meet their objectives.
Sticking with Portugal, one of the investment routes is involved with preserving national heritage.
To date, only one applicant has chosen this €250,000 (£214,000) donation option.
Job creation and business investment is another crucial factor. Yet, only five applicants have decided to invest in business and employment, in contrast to more than 9,000 buying a property.
Let’s recap the basics of the legal challenge brought by the European Commission:
- EU citizenship, or long-term residency, grants travel freedom throughout the bloc and impacts every member state, not just that with the golden visa scheme
- Legal experts raise concerns around the accessibility of such programmes by organised crime groups, with the potential for corruption, money laundering and tax evasion
- Foreign nationals with criminal records can secure legal protections and travel rights in the EU.
In October 2020, the European Commission began infringement proceedings against Cyprus and Malta, based primarily around safeguarding the legitimacy of links with the EU as a baseline to qualify for naturalisation.
However, it’s vital to recognise that while these two nations have attracted EU attention, they are but two of the 20 (out of 27) member states offering golden visas and passports.
The argument centres on the EU treaties establishing that member states have a mutual trust. Therefore, pre-existing interest in the bloc is a precondition for anyone to qualify for full EU citizenship rights – regardless of the financial contribution.
The Future For Golden Visas
While much remains to be seen, any potential closures of a golden visa route will undoubtedly be a blow to authentic overseas investors seeking a life of warm climates, generous returns and the travel freedoms associated with an EU passport.
It’s not over yet – and there is no certainty that the European Court of Justice will bear out the challenge from the commission if it gets that far.
Many participating nations are withdrawing, restricting or revising golden visa pathways, making it harder to gain residency, and limiting investment options to those economic areas that need it most.
- From January 1, 2022, applicants in Portugal cannot achieve residency by buying property in Lisbon or Porto. Instead, qualifying investments must be in low population density areas across the Azores or Madeira
- In addition, criteria for investment thresholds will rise. For example, cash on deposit eligibility increases from €1 million (£860,000) to €1.5 million (£1.29 million), and investment funds must be €500,000 (£430,000) rather than €350,000 (£300,000)
- Cyprus suspended a golden visa scheme in November 2020 but may yet reinstate the option of investing from €300,000 (£257,000) in property
- Malta Golden Visa has rebranded its investment migration scheme – with little impact on the attitude of the European Commission
The legal challenges are rippling out to countries with similar programs which are not under the same level of EU scrutiny.
Spain, a mainstay of the British expat market, has introduced an increased wealth tax on residents holding assets over €10.7 million (£9.18 million).
And, while the UK government has continuously reiterated that tax increases are not on the table, the newly announced 1.25 per cent National Insurance hike is a sign that many countries face widespread pressure to cope with the strain of the pandemic.
One thing is sure – golden visa applicants currently have a window of opportunity. And no one can guarantee, with any confidence, that it isn’t gradually swinging shut.
Is The Door Closing On Golden Visas For UK Expats? FAQ
Most EU countries have a golden visa scheme or a residency by investment programme. For example, golden visas are available for new applications from non-EU nationals in Austria, Belgium, Greece, Italy, Malta, Portugal, and Spain.
Each has varying eligibility requirements and minimum investment thresholds. EU citizenship entitles the holder to travel freely throughout the bloc and live, work or study – although minimum contributions and processing timescales apply.
No, Portugal golden visa programme is not closing. Still, it is making substantial changes to the qualification thresholds and the flexibility of real estate investment routes.
From January 2022, investors looking to buy a property can only move to the Azores or Madeira, excluding Lisbon, Porto and the Algarve, which have previously been the most attractive regions.
Further, investment requirements are increasing, with the minimum donation threshold rising from January 1, 2022.
The crux of the EU golden visa argument is that a passport to any individual European state grants unilateral entry to any other – and, with 27 countries involved, that makes for a debate about the control each nation has about who is allowed to travel across borders.
At a basic level, you shouldn’t become an EU citizen without having a vested interest in the country – for example, a family tie, business or home.
However, golden visas are far from unique to Europe. Investors in many nations can pay for residency rights or passports – from St Lucia to Vanuatu, Canada and the UK.
The most likely outcome is that golden visas and passports will continue, but possibly with tighter restrictions in the EU to increase criminality checks.
France is not one of the many EU countries offering a golden visa programme.
If you wish to live permanently in France, you’ll need to apply for a visa or residence permit, depending on your reason for relocating.
Under a valid visa for at least five years, foreign nationals living in France can apply for a Carte de Residence or permanent residence card.
It seems unlikely that EU golden visas will cease entirely – the EU has as much vested interest in retaining member states as in eliminating potential loopholes for criminals to gain citizenship.
Particularly following threats from other nations to leave the bloc in the wake of Brexit, the EU will inevitably be keen to make compromises to ensure it doesn’t dilute membership further.
However, with the legal scrutiny of golden visas, many investors will consider other locations or visa routes, such as citizenship by descent, for example, if a family member holds a passport or by living in the country for a minimum period.
For example, suppose you have a valid residence permit to take up a job. In that case, you will usually be eligible to apply for permanent residence within five to ten years, with the potential to upgrade to citizenship after that – golden visa or not.
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