What will change exactly ‘in and with’ the Golden Visa?

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Mª Eugenia Blasco Rodellar

Since the surprise announcement by Spanish President Pedro Sánchez on April 8th to eliminate the Golden Visa, there has been much speculation about how and when this change would happen.

With the presentation by one of the coalition government parties on May 14th of the bill to amend Law 14/2013, of September 27th, on support for entrepreneurs and their internationalization, in the Congress of Deputies, we finally have clearer information on how this change might be implemented.

The reasons cited include the lack of mechanisms to adequately control the origin of the invested capital and the inflationary and market tension effects on the real estate market that jeopardize access to housing for middle- and low-income families. Additionally, the argument of inequality posed by the ease and speed of the process in these investor residency cases compared to the general residency and work authorizations for foreign citizens without that economic capacity should not be overlooked. This latter argument might be the most defensible, despite its subjective or more ideological nature, since, in practice, the control by Spanish banks regarding money laundering to receive foreign investors’ funds is quite stringent, especially compared to other European countries that even maintain or have maintained investment programs.

On the other hand, regarding real estate market inflation, according to data provided by the Ministry of Housing, since 2013 (the law came into effect in the last quarter of the year), 14,576 residencies tied to real estate investment have been granted. This amounts to an average of around 1,400 properties per year across Spain, although some investors may have bought more than one property. It should also be noted that not all properties are residential (including land, commercial premises, parking lots, etc.). This figure should be compared to the total number of real estate transactions in the country, which, according to Statista, after reaching the lowest peak since 2004 in 2013, with 300,568 transactions, has continued to rise, reaching 717,734 transactions in 2022, excluding the pandemic downturn. This translates to an average of just over 557,000 annual transactions over the past 10 years.

Therefore, about 15,000 properties sold to foreign citizens who obtained a ‘Golden Visa’ versus more than five and a half million real estate transactions. It might be too hasty to blame this 0.27% of real estate transactions that resulted in the granting of an investor residency for real estate speculation when considered in perspective to the total market. The government will undoubtedly need to implement other measures to address this issue.

In any case, it seems clear that there is no turning back if we consider what has also happened in other member countries. Therefore, we will analyze the main changes that would apply to the visa and investor residence authorization, the Golden Visa, which would be the following:

  • Among the significant investment assumptions that allow for these permits, the following are eliminated:
    • Investments in investment funds, closed-end investment funds, or venture capital funds constituted in Spain, included within the scope of Law 35/2003, of November 4th, on Collective Investment Institutions, or Law 22/2014, of November 12th, which regulates venture capital entities, other closed-end collective investment entities, and the management companies of closed-end collective investment entities, and which amends Law 35/2003, of November 4th, are eliminated.
    • The acquisition of real estate properties with a value equal to or exceeding €500,000 is eliminated.
    • In the case of a business project, the option for the designated representative of the investor to obtain the visa for managing the project will no longer be included.
  • Regarding the characteristics of investments, the new wording includes the requirement that investments must not harm the environment, be in accordance with available natural resources, and not have an inflationary effect on housing in the geographical area where they are intended to be carried out. It is anticipated that the competent authorities of the Autonomous Communities may issue a binding report for the visa granting process.
  • The specification of investments made by married couples under community property or similar regimes that do not amount to double the thresholds previously provided, whereby the investment was considered made by one of the spouses, is eliminated.
  • Investments in public debt securities, shares or equity interests in Spanish companies, or bank deposits in Spanish financial institutions remain eligible. However, the investment must have been made within a period not exceeding 60 days prior to the application submission, contrasting with the requirement of the previous year.

While the residence permit for investors remains in place, one of its most well-known conditions will disappear in Spain, following the trend of most of the European Union Member States.

Once this measure is approved, we will continue to monitor closely to analyze if it indeed has the desired impact on the national real estate market.

In any case, non-EU citizens who wish to obtain residency in Spain, whether through investment or not, have other alternatives under immigration regulations. It only requires conducting a personalized analysis of each situation and needs to determine the best option. If you have any doubts or need advice on this matter, please feel free to contact us.

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