(Bloomberg) -- It’s never been so difficult or dangerous to try to reach another country if its government doesn’t want you there. A record number of migrants died in their search for a new life in 2023, when governments spent unprecedented sums on border enforcement.
But for those with a big enough bank account, residency in another country can be had for cash. Several countries offer these “golden visas,” and some even dole out full citizenship to foreigners via “golden passports.” The price varies, with some visas accessible for only wealthy applicants, and others set at more affordable rates.
The practice is coming under growing scrutiny. Law enforcement agencies are concerned that golden visa programs facilitate criminal activity and are riddled with corruption. Critics say they entrench inequality by giving opportunities to the rich that are denied to others. Many people see citizenship and residency as fundamental rights that should never be sold to the highest bidder.
As a result, several governments are moving to end their golden visa programs or limiting who can apply for one.
What’s a golden visa?
Often known as a “residence by investment program,” a golden visa allows individuals to obtain temporary or permanent residency in a given country so they can live and work there. The investments may include buying a house, creating a company or making a donation.
In some cases, the buyer isn’t even required to reside full-time in the country, making the visas a useful plan B for people who want the option of traveling to those places but have no intention of moving there permanently.
Are golden visas new? Why are they popular?
Some of the programs have existed for decades as a useful way for governments to raise funds and encourage foreign investment. Canada launched its Federal Immigrant Investor Program in the 1980s and the US has the EB-5 visa program, which paves the way for foreign investors to obtain a green card.
Across the Atlantic, golden visas gained popularity during the European debt crisis, when a handful of countries began selling residency to try to attract foreign money and plug budget deficits. Portugal, Ireland, Greece and Hungary were among those countries, after they received bailouts from the European Union and International Monetary Fund.
Today, variations of these pay-to-play visa programs have been adopted across Europe and in countries around the world. Sometimes, a critical mass of vocal opponents conclude that the downsides (inflated house prices, absentee homeowners and allegations of corruption) outweigh the advantages, and governments drop them.
How do golden visas work?
Portugal, for example, started offering golden visas in 2012 to non-EU nationals willing to spend at least €500,000 ($557,000) on a property, invest in a fund, or start a company and create jobs. Later, the requirement for property investment was lowered to €350,000.
In 2013, Greece, Spain and Hungary began their own golden visa programs, offering residence permits in exchange for real estate investments.
These programs also gave the right to travel freely across many EU countries. Most allow applicants to seek EU citizenship within a few years.
Hungary, which shut down its golden visa program in 2017 amid allegations of corruption, plans to restart a new version this year, allowing those who put at least €250,000 into local property funds or €500,000 into Hungarian real estate the right to apply for a 10-year, renewable residency.
Who opposes golden visas, and what are they doing about it?
The European Commission, the EU’s executive branch, has warned for years that golden visa programs expose the bloc to money laundering and security risks. The war in Ukraine has heightened those concerns.
Faced with growing pressure to address a housing crunch, European governments have started to phase out golden visas, even if they only account for a fraction of property deals in the overall market.
The UK, Ireland, the Netherlands, Greece and Malta have either ended or tightened the rules around their golden visa or equivalent policies.
Spain said in April it would also end its program as it tries to increase the amount of affordable housing available for locals.
Neighboring Portugal amended its program — one of the most popular in Europe — by removing real estate investments as a basis for golden visa applications.
About 90% of the money raised by Portugal’s golden visa program went into real estate. It attracted billions of euros into the property market and was so popular with Chinese investors that billboards at Lisbon’s airport advertising luxury properties were written in Chinese. More recently, Portugal’s golden visa program has been increasingly popular with US investors.
Beyond Europe, Australia in January paused applications for individuals who invest more than A$5 million ($3.5 million) into the country — part of a broader immigration policy overhaul designed to entice more skilled migrants.
5. How hard is it to get a golden visa now?
While in Portugal it’s no longer possible to get a golden visa by purchasing residential real estate, some options are still available: investing in a qualified investment fund worth at least €500,000, scientific research activities, or investing in the share capital of a company that creates five jobs or maintains 10 jobs.
Since Sept. 1, Greece has increased the minimum amount that foreign property buyers must pay to secure a golden visa to €400,000. (The government also plans to extend its golden visa program to investors who are willing to put at least €250,000 into local startups.)
The cost of obtaining citizenship-by-investment is also rising in the Caribbean, where such programs make up more than half the national revenue of some tiny island nations.
Some Caribbean passports allow visa-free travel to the UK and EU as part of bilateral agreements, and European regulators have voiced concern that the schemes can serve as a gateway for criminals. So European governments are putting pressure on Caribbean nations to restrict them.
All five nations in the Caribbean that have golden visa programs — Dominica, Grenada, St. Kitts and Nevis, Antigua and Barbuda and Saint Lucia — agreed this year to begin charging at least $200,000 for their passports. The nations also increased due diligence and rolled out tighter controls in response to the EU and US concerns.
--With assistance from Alice Kantor, Paul Tugwell and Jim Wyss.
©2024 Bloomberg L.P.
