Raymundo Larraín Nesbitt takes us through the so-called "Golden Visa” law that offers residency permits to non-EU nationals in return for an investment of €500,000 in Spanish real estate.
The Spanish Government has finally approved the long-awaited Investor’s Residency Law (popularly dubbed as ‘Golden Visa’ law). Keen to give the ailing real estate sector a gentle nudge, it had long been mulling the idea of investor visas. Inspired by similar laws in fellow European Union member countries, Spain enacted on the 27th of September 2013 the Entrepreneur’s Law. It introduces, amongst a wide array of measures, for the first time residency visas and permits for non-EU investors.
By Raymundo Larraín Nesbitt
Lawyer – Abogado
Law 14/2013, of the 27th of September 2013, on support for entrepreneurs and internationalisation introduces in articles 61 through to 67 the conditions that have to be met by non-EU investors to qualify for Spanish residency. The law distinguishes clearly between residency visas and residency permits. I will elaborate in more detail what these are further below.
This new law allows non-EU investors to qualify for the highly coveted so-called Golden Visas. To summarise, this new law enables non-EU nationals to attain qualified residency permits in return for investing in Spanish real estate (and other assets), leading to permanent residency in Spain if certain conditions are fulfilled.
Applicants pursuing investor visas / permits need to comply with the following general requirements which are specific to Non-Lucrative Residency Permits (art 62):
– Non-EU national (art 61)
– The investor applicant must be of legal age (18-years-old or over)
– The investor must not hold a criminal record whether in Spain or in the previous five years where he has resided
– Not be already in Spain irregularly – Have access to medical insurance whether private or public
– Have sufficient financial means to support both himself and his family whilst in Spain. This should definitely not be an issue for those who have the socioeconomic profile to qualify for a Golden visa in the first place; it goes without saying.
– Pay the relevant application fee
Distinction between Investor Residency Visas and Residency Permits
In addition to the above general requirements set out in art 62 which are common to both types, applicants must also meet those stipulated in articles 63 (Investor Residency Visas) and article 66 (Investor Residency Permits).
This law distinguishes two types of permits:
Residency Visas (art 63): on following the requirements (see below) one qualifies for a residency visa which entitles an investor to reside in Spain for up to one year (art 65).
Residency Permits (art 66): however, if an investor wishes to stay longer he must qualify additionally for what is known as a residency permit. This permit entitles an investor to live for up to two years in Spain and is renewable providing the requirements are still met (art 67). This permit will be granted on the following twenty days of having applied for it. It can be granted by the Administrative Silence Rule (ASR) in case of non-reply by the Authorities. This path leads eventually to Spanish citizenship.
In both cases the investment needs to be maintained during the validity of the Residency Visa or Permit. Spanish Authorities may carry out routine checks to verify this is still the case.
One may attain a residency visa on investing in any of the following asset classes in compliance article 63.2:
a) Investing at least €2,000,000 in Spanish Treasury bonds
b) Investing at least €1,000,000 in shares of publicly trading Spanish companies or non-trading ones
c) Depositing at least €1,000,000 in Spanish bank accounts
d) Acquisition of real estate located within Spanish territory of at least €500,000 per applicant
e) A ‘major’ business investment which fulfils at least one of the following three conditions:
i) Meaningful job creation as a direct result of the investment
ii) Significant socioeconomic impact in the geographical location where the activity will be carried out
iii) Technological or scientific impact
The law adds that the investment can be made by either a physical or legal person. The legal person must not be located in one of the countries deemed as a tax haven by the Bank of Spain. A physical person must demonstrate it exercises a holding control of the company’s shares. This translates to the investor being able to control, directly or indirectly, the majority of voting rights besides having the power to name and remove the majority of members sitting in the board of directors.
To attain a residency permit one must comply with the following (art 66):
a) Comply with the requirements laid out in art 63 (see above for more details)
b) Hold a valid investor’s residency visa or one that is not overdue by more than 90 days from the expiration date
c) Have travelled to Spain at least once during the validity of the visa stay (you must be able to support this claim with evidence)
d) Provide legal support to uphold the investments made in art 63.2.a) (see above for details) have been held during the mandatory minimum legal period required by law. Depending on the first three cases different legal documents will be required to support this claim.
e) Having complied and be up to date with all Social Security and Tax related obligations.
1. Can I request a mortgage on investing €500,000 in Spanish real estate?
Yes, but only for the excess above €500,000. The law only requires that the first €500,000 is unencumbered – meaning the equity threshold must be free. The excess can be indeed financed through a mortgage loan if necessary. What is important to understand is that the first half million euros must be mortgage-free. So an investor is expected to have the financial means to come up with these funds unassisted by a lender, whether national or foreign.
2. I have read that I need to spend in Spain more than six months to qualify for residency. Is this true?
Generally yes. However this new law specifically targets affluent individuals who will normally be residing elsewhere. The law purposely waives this requirement and only requires that a would-be investor has travelled to Spain at least once during the validity of the visa (and is able to support it through evidence). So residing six months is not necessary for the specific case of a so-called Golden Visa applicant. In fact, as can be surmised from what I’ve written, an applicant may be out of the country for more than six months and still be able to qualify for it. However if you are aiming for Spanish citizenship your main business interest must be located in Spain despite not having to reside in the country continuously for six months. Prolonged absences of over six months will not prejudice the right to attain permanent residency (five years onwards).
3. Can I attain permanent residency or even Spanish citizenship through this law?
Yes eventually, assisted by lawyers specialising in residency.
4. Does this law preclude pre-existing ways to apply for permanent residency?
No it doesn’t. Existing permits and procedures are still valid. This law is specifically tailored for affluent non-EU investors and basically helps to cut the red tape.
5. Is this proposal retro-active? I already have invested €500,000 (or more) in Spanish real estate. Can I still qualify?
No, sadly you cannot. The law came into force on the following day of being published in Spain’s Official Law Gazette (B.O.E.) which was on the 28th of September 2013. Any investment made prior to the said date will not qualify for the purposes of Law 14/2013.
6. Are there any strings attached?
None, besides parting with your money.
7. Just the investor, or investor and family?
The law specifically requires that each applicant makes an investment. However a husband/wife and children under 18 can be considered included under the same application (art 62.4).
8. Are taxes included in the investment threshold?
Short answer is no i.e. you buy a new home for €460,000 plus 10% IVA = €506,000 The applicable VAT (€46,000) would not count towards being above the €500,000 threshold. So the application would be turned down on grounds of not meeting the threshold.
9. Do holders of the so-called Golden visa have unrestricted access to move within the European Union?
Holders of a Spanish Residence Permit will not require a visa to enter the Europe Schengen area. They can transit and enjoy free movement within the Schengen area for a maximum period of three months (90 days) per half-year from the date of first entry. However, please be advised that not all countries within the European Union are party to the Schengen Agreement i.e. the United Kingdom and the Republic of Ireland maintain opt-outs.
10. Where do I apply for a visa / residency permit?
Through Spanish embassies and consulates.
Spain’s widely-publicized struggling economy offers unique investing opportunities for those savvy investors with the risk appetite to profit from today’s irrational rock-bottom prices.
Spain’s housing market has clearly turned the corner in 2013. The Government has been busy approving the necessary legal amendments advised by the Troika to help pave its way out of the recession on the road to recovery. As evidence of such a recovery we have witnessed over the last six months a spectacular stock rebound across the board, led by foreign capital, which has driven blue-chip Spanish shares to former highs.
In due course, in the real economy, a resurgence of the real estate market will follow over the next years fuelled by foreign capital profiting from Spain’s (still) ridiculously low real estate prices. Granted it will not be as spectacular, and will likely take longer, than a stock rebound but it will materialise nonetheless.
It really goes without saying that the main focus on investing in Spain for residency purposes should be the asset itself. The visa or permit will follow in due course. I strongly advise before committing to invest in Spain that one first takes qualified advice from reputed experts or companies.
2013 © Raymundo Larraín Nesbitt.