Europe closes its golden visa gates to foreign investors

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Golden Visa schemes have, for many years, offered wealthy non-EU nationals residency and a gateway to the Schengen area in exchange for investment. However, in light of growing criticism, the golden age for Europe’s golden visas appears to be drawing to a close. On 16 February 2023 Portugal’s Prime Minister, António Costa, announced that he would ‘eliminate the issuance of new golden visas’ to ‘fight against price speculation in real estate’, while Ireland’s Department of Justice has also recently stated that it would cease its programme on security grounds.

Portugal’s golden visa was one of the most sought-after schemes in Europe but it also attracted heavy criticism for making housing unaffordable for many Portuguese citizens. Indeed, the decision to end the scheme was largely driven by frustrations following a surge in house prices due to foreign investment, particularly in Lisbon and Porto. Property prices have also risen as a result of foreigners purchasing houses and apartments to rent to tourists via websites such as Airbnb. The influx of wealthy residents from overseas has also led to opposition to the perceived ‘gentrification’ of certain areas and a resulting hike in the general cost of living.

Nonetheless, President Costa has reassured current Golden Visa holders that they will be able to renew their visas, provided their property is linked to their permanent residence, or a family member’s, or if it is put on the rental market.

The popular visas were originally created to allow individuals to move to Portugal in an effort to fix the country’s public finances, following a 2011 bailout from the EU and IMF. Applicants were required to carry out property investments of at least €350,000, or create at least 10 jobs in Portugal or transfer €1.5 million. Holders have the right to live in Portugal for up to five years and the right to apply for permanent residence at the end of that period. They are also only required to stay in Portugal for a minimum of seven days a year. Since its introduction, Portugal has raised €6.8 billion as a result of the visa scheme and 90% of that money has gone directly into the country’s real estate. Consequently, Portugal has become a magnet for high-net-worth individuals in search of a better quality of life and easier travel within the Schengen area.

Portugal was not the only EU country to implement this sort of scheme; similar visas are offered by Spain, Malta and Greece, among others. However, the EU Commission has raised concerns about the security risks of such schemes which are seen, by some, as open to abuse by those seeking to launder funds. In its recent investigation into Europe’s Golden Visa schemes, Investigate Europe found that, since 2021, 53% of those who obtained residence permits within the scope of Portugal’s Golden Visa scheme came from the world’s top 30 money laundering jurisdictions. In order to address these concerns, the EU Commission issued a recommendation in 2022 requiring Member States to establish strong checks to prevent money laundering, corruption, terrorist financing and organised crime. It also urged Albania to ‘refrain from developing an investors’ citizenship scheme’. EU countries have also been barred from issuing and renewing any Golden Visas and passports to Russian and Belarusian nationals since Russia’s invasion of Ukraine in 2022.

The UK moved to abruptly withdraw its own Investor scheme in February 2022 over concerns that the scheme was open to abuse. Whilst in the wake of the withdrawal of the scheme, which largely took Investor visa-holders, prospective applicants and immigration lawyers by surprise, there were initially noises from the Government that a successor scheme would be put in place towards the end of 2022, no such scheme has materialised. In fact, the Government has recently completed a review of the Investor Scheme, the conclusion of which has been that there are ‘inherent difficulties in an investment-based immigration route based on passive wealth, both in terms of security and economic value’. It is hard to see an investor scheme coming back on the UK statute books any time soon in that context.

Evidently, the UK, Portugal and other EU Member States appear to be balancing the need for inward investment with the need to take substantive measures to cut the opportunity for fraud and also to ensure the economic and social wellbeing of their own citizens. Moreover, in light of the War in Ukraine and growing security concerns, the mood in Europe seems to have shifted. The message from the EU Commission is clear – Europe is not for sale – and, in light of this, we expect to see further action from the Commission and other Member States in an effort to clamp down on citizenship and residence investments.

If you have any questions about UK visa applications or immigration queries more generally, please contact partner Tim Hayes.