It’s the end of an era for Golden Visas in Europe…
It all happened very quickly.
In the space of three days last week, two European countries suspended their residence-by-investment programs—so-called “Golden Visas.”
The news is still coming in…a lot of details are still unknown…but I wanted to bring you an update on what we do know.
Stay tuned to the end for my thoughts on what you should do now if you want European residency…
The Background
What is a Golden Visa? It’s a way for countries to get money from investors, in exchange for residency.
In the wake of the 2008 financial crisis, several European countries set up these schemes.
The concept was simple: Spend a chunk of money in the country, and you’d get the right to live and work there.
It could be in the form of a real estate investment (typically $500,000 or above), starting a business in-country, or putting cash in an approved fund…
The programs have been attractive to wealthy investors from outside the EU, because they provide access to the whole Schengen Area—27 countries…
Portugal was the first the establish a Golden Visa program. Spain, Greece, Cyprus, Italy, Ireland, and others, followed suit…
But now, it looks like this “Golden Age” of residency programs is coming to an end.
Going Once…
Abruptly last week, Ireland abolished its program—after official figures were released showing 90% of investors obtaining visas were wealthy Chinese.
Ireland’s Immigrant Investor Program received five times as many applications in 2022 as in 2021, due at least in part to the fact that Ireland’s neighbor, the UK, had just closed its similar program.
Irish officials were apparently alarmed that of the 1,316 applications submitted in 2022, 1,275 came from Chinese nationals…
This is at a time when Ireland has a housing crisis and is accepting record numbers of refugees due to the war in Ukraine. (Although, the Irish program only allowed investments in Irish REITs, not physical property.)
Wealthy Chinese buying their way into the country undoubtedly looks bad to the Irish public, and could be a stick for opposition parties to beat the government with…
Existing applications will be allowed to proceed in Ireland, and those who already have visas will not be impacted.
Here’s the crux of what’s happening…the details on the Irish situation above should give you a clue:
While economic desperation led to the creation of the Golden Visas—political calculations are the reason for their demise.
Going Twice…
Just a couple days after Ireland’s announcement, the forerunner of this whole trend, Portugal, declared that its program would be closed.
Why now? What’s changed, and suddenly put these visas under threat?
Well, the writing has been on the wall for European Golden Visas for some time…
The programs were established during a different era in Europe, when EU countries in the midst of the Great Recession were strapped for cash and hungry for ways to attract outside investors.
But over time, many concerns about Golden Visa programs have arisen…
The European Commission—the EU’s governing “executive committee”—hates them, and has done everything it can to discourage countries from establishing them, and tried to shut down existing programs.
There’s a perception that Golden Visas offer preferential immigration treatment to rich foreigners, that they’re used for tax evasion and money laundering—and that the programs are rife with corruption.
After all, you are, quite literally, buying your way into a country…
In the case of Ireland, wealthy Chinese were seen to be using the program to gain access to the European Union—when these folks might otherwise have no connection with or interest in living in Ireland…
There’s also a view—with some evidence to support it—that Golden Visas disrupt and distort local property markets.
Rich foreigners buy up properties to obtain the visa, which reduces the housing supply for locals and also pushes up prices… These were cited by Portugal’s government as reasons it was scrapping its program.
Since 2010, Portuguese property prices have gone up by more than 80% —at the high end for the EU.
There’s been a lot of political pressure (especially from left-wing parties) to shutter the programs… But still, countries have been reluctant to give up the cash they bring in. It’s been a dilemma for national governments.
Golden Goose—Killed
Since 2012, Portugal’s program alone has brought in 5 billion euros to the country—and given Portugal 20,000 affluent new residents…
But the calls for residence-by-investment and citizenship-by-investment programs to end have persisted…
In 2020, amid allegations of corruption, Cyprus closed its citizenship-by-investment program (similar to a Golden Visa, but granting citizenship not just residency)…
In January 2023, EU satellite state Montenegro shut down its citizenship-by-investment program—in hopes of gaining favor with the European Commission in its bid to become an EU member…
And now, the tide seems to have really turned, with Ireland and Portugal both suddenly ending their Golden Visas within a week of each other.
Portugal’s program is the biggest loss. With this program, you could gain EU residency with as little as 250,000 euros—and you only had to spend one week a year in Portugal to maintain the visa… After just five years, you could be eligible for an EU passport and live and work anywhere in the 27-country bloc without any restrictions.
How the government’s decision will affect visa renewals for investors who’ve already obtained residency… whether there will be some leeway period for those who’ve already started their applications… even if there will be a transition period where new applications can still be accepted… we just don’t know yet.
None of that has been decided.
My contact in Portugal, attorney João G. Gil Figueira, told me: “There should be a grandfathering clause, otherwise it’s going to trigger a lot of litigation and potentially constitutional issues.
“But until the Government publishes something for public discussion—a proposed bill, draft, etc., it’s all speculation as to the actual changes.”
The government has said it will use the next month for public consultation, and announce final decisions after that…
What Now?
The Portuguese Golden Visa had already undergone big changes in 2022.
Residential properties on almost the entire country’s coast were barred from the program—so beachfront real estate was effectively excluded.
Late last year, Portuguese Prime Minister António Costa announced that the country’s Golden Visa might have “fulfilled its purpose”—leading many to believe that abolition was imminent… But the visa received a reprieve when Costa’s governing Socialist Party refused to vote to abolish the program last December.
No more.
I do want to point out one very important thing, however… This isn’t necessarily a negative if you’re interested in living and investing in Portugal, or anywhere in Europe.
In fact, it could prove to be a net positive.
The abolition of Golden Visas may lead to a dip in the property market—a fantastic buying opportunity…
You may no longer be able to obtain residency with a property purchase, but you can still purchase for investment purposes or your own lifestyle—and obtain residency through the traditional route of spending time in-country…
Europe’s borders are still very much open for North Americans.
Besides, although the sun is setting on Europe’s Golden Visas—it hasn’t gone down in every corner of the continent just yet.
You still have opportunities to obtain residence-by-investment in Europe if that’s what you’re after…
Greece brought in changes to its Golden Visa program in January (upping the minimum property investment needed in certain areas), but no plans to shutter the program have yet been announced.
In fact, it seems likely that the 2023 changes will be given plenty of time to bed in before any further announcements are made… So, you still have opportunity in gorgeous Greece.
Spain, too, continues to operate its Golden Visa program, as does sunny island-nation Malta, and appealing Italy (although Italy has no property-purchase option)…
And Cyprus has a new Golden Visa program since its original citizenship-by-investment arrangement ended in 2020…
(In Spain, there’s a bill before parliament that would eliminate the property-purchase option for the visa, but, as of now, this looks unlikely to gain enough support. The left-wing party that introduced the bill, Más País, has only three deputies in the 350-member Spanish Congress of Deputies.)
Time To Act
If you have money to invest and you want EU residency, several options have already been taken off the table this year…
Now is the time to make your Golden Visa choice. Before it’s too late.
Lief Simon
Editor, Offshore Living Letter
