Spain’s Golden Visa scheme has among the most successful for incentivizing high net worth foreigners to move to the country. It has also been praised for its ease and efficiency, with residency visas granted within a matter of weeks. The Spanish Golden Visa also gives holders the right to Spanish residency without having to live in Spain (and so become a Spanish tax resident). Additionally, the Golden Visa can provide a path to Spanish permanent residence, and ultimately citizenship.
Launched in 2013, it has attracted significant interest from investors worldwide, contributing to Spain’s real estate market and economic growth.
However, on April 8th 2024, Prime Minister Pedro Sanchez announced the decision to remove real estate investment from Spain’s Golden Visa program, claiming that it has distorted the Spanish housing market making real estate less affordable for Spanish citizens. In this article, we look at the potential changes and what they mean to American investors
The Golden Visa program: An overview
Introduced in 2013 to bolster the economy post-global financial crisis, Spain’s Golden Visa scheme allows non-EU citizens and their families to obtain residency in Spain by making a qualifying investment in the country. The investment can be in several specified areas, with the most common being the purchase of real estate properties valued at €500,000 or more. Other investment options include capital investments, such as shares in Spanish companies or government bonds, or creating job opportunities by starting a business in Spain, though these require a minimum investment of at least €1 million.
Once the investment is made, applicants and their families obtain renewable residency permits, allowing them to live and work in Spain, as well as travel freely in the EU Schengen Area. Since the program’s inception, almost 15,000 Golden Visas have been issued, granting residency to international investors and their families with 94% being from real estate acquisitions, due of the lower entry threshold and practical nature of property.
While initially Chinese and Russian investors were the largest group, more recently the highest numbers have been from the US. The program attracted approximately €580 million in foreign investment in 2023 alone, mostly through property acquisitions.
Scrutiny of the Spanish Golden Visa scheme
The April 8th 2024 announcement declaring the end of the real estate investment aspect of Golden Visa Spain program is in response to current political priorities. The change comes amidst growing scrutiny of golden visa schemes across Europe by the EU and a desire to reduce the impact on the host country’s society.
The main issue stems from a difficulty of young potential buyers to obtain property, notably in popular cities like Barcelona, Madrid, Malaga, the Balearic Islands, Alicante, and Valencia. These areas are experiencing significant housing shortages, and 90% of the Golden Visas granted are in these regions. The idea is that prices are rising at all housing levels as lower priced properties are increasing in value to pass the €500,000 threshold.
Moreover, European Union officials strongly disapprove of Golden Visa Programs, due to concerns about corruption, money laundering, and tax evasion.
Possible changes and options
However, suddenly stopping the scheme would be economically damaging, and no further details have been provided since the initial announcement, and the scheme may end up being amended rather than discontinued completely.
Increased investment thresholds
Many commentators have observed for example that it would make more sense to either increase the threshold, or specify that the scheme is only available is certain cities or areas and not in others, to incentivize investment where it’s needed. While the exact details are yet to be proposed, it’s expected that the minimum investment amounts for real estate could be at least doubled to reflect changes in property prices and economic conditions since the scheme was first launched. The government looked at this last year in fact.
Focus on job creation
Another possibility for changes to the scheme is that in addition to property investment, greater emphasis could be placed on investments that create jobs and stimulate economic growth. This could involve incentivizing investment in sectors with high job creation potential, such as technology, renewable energy, and tourism infrastructure.
Enhanced due diligence
With one of the concerns of the program being money laundering due to a difficulty tracing the source of funds invested, to ensure transparency and accountability, stricter due diligence procedures may be implemented. This could involve more rigorous vetting of applicants and the sources of their funds to prevent money laundering, corruption, or other illicit activities. Strengthening integrity measures would uphold the program’s reputation and integrity and help maintain public trust and support.
The path to permanent residency and citizenship
Any potential reforms may also introduce clearer pathways for Golden Visa holders to attain permanent residency and, ultimately, Spanish citizenship. This could involve reducing the residency requirement period or offering expedited naturalization processes for individuals who demonstrate significant contributions to Spain’s economy and society. By providing clearer pathways to long-term integration, the goal is to attract investors who are committed to actively participating in Spain’s development.
Conclusion
The program has been a cornerstone of the country’s immigration and investment policies for the last decade, attracting investors and contributing to Spain’s overall economic growth. At present, whether Spain’s Golden Visa scheme will be completely abolished or undergo changes, and the nature of any possible changes, remains uncertain, along with any potential timescale.
Furthermore, it’s important to note that any proposed changes to the Golden Visa scheme will need to be passed by the Spanish parliament, which could refuse or amend the proposals significantly. This process will also take time.
If you’re thinking about investing through Spain Golden Visa program, stay informed and begin a dialogue with an attorney who specializes in the scheme, and potential aim to start your application as soon as possible before any potential changes come into affect. Note also that there are alternative pathways to Spanish residence besides investment, such as Spain’s Digital Nomad Visa.
If you have any questions about financial planning or investing as an American living in the EU, get in touch.
This article is for informational purposes only; it is not intended to offer advice or guidance on legal, tax, or investment matters. Such advice can be given only with full understanding of a person’s specific situation.
