The Golden Visa scheme in Spain – update 2020
The Golden Visa is a scheme introduced in the wake of the financial crisis that was designed to stimulate foreign investment and thereby help to speed up economic growth and recovery at a time when investment capital was scarce within Europe.
It was a measure adopted above all by the Mediterranean countries, which have a long tradition of attracting foreign buyers, visitors and investors to their sunny coastal areas.
The scheme therefore affected especially Spain and Portugal, and while officially aimed at encouraging foreigners from outside the European Union to invest in productive assets such as retail and commercial premises, factories, farms and other types of economic capital, it soon acquired a primarily residential nature, with many buyers from Russia, China, Morocco and the Middle East making use of the investment for residency arrangement.
Spanish Golden Visa advantages
For people from outside the EU, an investment of €500,000 or over will safeguard residency in Spain, albeit subject to certain checks, and theoretically speaking there has to be an investment of this sum for each individual who wishes to have residency. The residency is renewed annually, and after a period of five years the holder of the golden visa can apply for permanent residency or even citizenship of the country they have invested in.
The advantages are obvious, as the Golden Visa scheme gives people – particularly monied people – a foothold in Europe. Besides providing access to the European market for any commercial ventures and the benefits of living in one of the world’s safest places, it also allows Asians, Arabs, Russians and Latin Americans to keep some of their assets safe in what is generally regarded as also being one of the most financially and politically stable regions of the planet.
Given that is was a somewhat unusual measure allowed as a means to help the more vulnerable European economies lift themselves out of the post financial crisis recession, and probably never intended as a permanent one, there has been growing pressure on the likes of Spain and Portugal to abandon or at least greatly modify the Golden Visa scheme. Now criticism is also being aimed at the European Commission, for not doing more to halt it.
Under the new left-wing government just coming into power in Spain, one can expect more detailed tax inspections of people with assets, including also foreign residents and especially non-residents. The so-called ‘Beckham rule’, which allows foreign expats to live and work here under favourable conditions, and the Golden Visa are unlikely to disappear. However, as the latter has stimulated property sales on the costas and in the big cities, and in the process helped to drive prices up, the new government will be looking into it as part of its plans to reduce property speculation and slow down the increase in real estate values.
So, whether it comes from the EU or the Spanish government itself, there is likely to be some kind of moderation or restriction in the terms of the Golden Visa scheme that will make it more difficult to qualify for, and therefore reduce its impact on the Spanish property market. Portugal, whose golden visa scheme was even more generous and had an even more noticeable impact, is similarly looking to overhaul the system and reduce tax exemption for some foreign residents. In this, it is looking to cool off an overheating property market in the country, as well as answer concerns in Brussels about ‘discriminatory tax regimes’, so while the golden days of the Golden Visa appear to be on the wane, the concept as such will continue for some time longer.
By Adam Neale | Property News | March 3rd, 2020