The Cabinet of Ministers of Latvia has supported the refusal to grant a residence permit (residence permit) to foreign buyers of real estate. Now the future of the Golden Visa program depends only on the deputies of the Latvian Parliament.
About the author:Roman Golubev
Editor-in-Chief of the "Square meter" magazine and the Varianti.lv portal
Tightening the conditions of the investment residence permit program in Latvia does not happen for the first time. In September 2014, the amount of minimum investment in real estate was increased from €143,000 to €250,000. And so far, the purchase of real estate is the most popular way to obtain a Latvian investment visa.
According to previously published information from the Ministry of Internal Affairs, in the period from July 1, 2010 to December 31, 2020, 19,000 foreigners (investors and their family members) received a residence permit in Latvia through the investment articles of the Immigration Law. They brought €1.55 billion of direct investments to the Latvian economy. And 83% of them, or €1.29 billion, went directly to the purchase of Latvian real estate (not counting side investments related to the repair and furnishing of apartments and houses).
Almost 10% of investment proceeds (€158 million) were directed to the subordinated capital of Latvian banks, 6% went to the authorized capital of Latvian companies, and another €11.5 million - to the purchase of interest-free government bonds.
As of December 31, 2020, since the beginning of the investor amendments to the law "On Immigration", that is, since 2010, 186 refusals to grant a residence permit have been recorded. In another 1,672 cases, the Latvian residence permit for foreigners was canceled.
However, if in the first years of the program it had golden times and the number of applicants was measured in thousands (the most active applicants were Russians), then in recent years, after a number of toughenings, its popularity has come to naught. In 2019, according to all articles of the law "On Immigration", 146 applications for a residence permit were received from non-resident investors, and only 107 in 2020. In the vast majority of cases, the "golden visa" was requested on the basis of the purchase of real estate in Riga, the outskirts of the capital city and Jurmala.
The Immigration Law provides different grounds for obtaining a residence permit: investing in a Latvian business, a bank deposit that cannot be claimed for five years, the purchase of interest-free government bonds.
Minimum investments in the fixed capital of the enterprise is from €50,000 to € 100,000, depending on the number of employees and the annual turnover of the company, plus a contribution to the state budget - €10,000.
Deposits in banking institutions - from €280,000 in the form of subordinated capital for a period of at least five years plus state duty on obtaining a residence permit - €25,000.
Deposits in interest-free "special purpose bonds" – €250,000, plus when obtaining a residence permit for the first time you need to pay a fee of €38,000.
But now the situation is much more serious. We are talking about the complete exclusion of the very basis for obtaining a residence permit in the form of buying real estate from the law. The legislators propose to delete the articles concerning investments in subordinated capital of banks and the purchase of interest-free government bonds. In the dry balance, only foreigners who invest in the authorized capital of Latvian companies will be able to apply for a Latvian residence permit through investments, no exceptions.
The Ministry of Internal Affairs of Latvia assures that the new amendments to the law "On Immigration" have been developed in order to create a system of entry and stay of foreign investors in the country that meets the interests of Latvia.
Is it unexpected? Hardly.
Conversations about the cancellation of a residence permit in exchange for real estate in the political elite and the government of Latvia have been going on for years. The issue became particularly acute after the high-profile banking scandal of 2018, when the US authorities accused ABLV Bank (one of the largest banks with Latvian capital) and a number of other financial organizations of money laundering. As a result, several banks lost their licenses.
Against this background and after approval by the Cabinet of Ministers, the prospect of a radical change and the actual abolition of the "golden visa" program looks quite realistic. And the Latvian real estate market itself is quite prepared for such changes. It began to rebuild back in 2014, when the entry threshold for the program increased. The result secured the lockdown of 2020. Spacious comfort-class housing and houses in the suburbs of Riga, Jurmala, which were previously bought by foreign investors, are now being bought by Latvian citizens with pleasure. And for the sake of investing funds, and as their own housing.
Ahead of the discussion and approval of bills in the Seimas. It remains to wait.
Although there is some good news. The annotation to the draft laws emphasizes that non-residents who have a valid Latvian residence permit obtained on the basis of the previous versions of the law "On Immigration" will be able to continue to apply for the extension of ID cards for a new five-year period.
Legislators are considering the possibility of a ban, but the program is still working and applicants can use it. For example, back in 2014, when Latvia increased the amount of the entry threshold, the decision was announced about six months before the changes.
In addition, last time those who managed to purchase real estate before September 1, 2014, in the future had the right to issue a residence permit on the original terms, as those who made the transaction at the time of the previous version of the law. It cannot be argued that this will be the case now, but the precedent is indicative.
I assume that the changes will not happen at one moment and there will be a period during which everyone will be able to exercise their right.
Get the residence permit by real estate while you are allowed to:
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