The world of Golden Visas: what is Investment Migration?

During the last decades, the world has seen an increase in international flows of money and capital. Globalization has become irreversible, multinational corporations have flourished and high-net-worth individuals are everywhere.

At the same time, there have been some serious economic difficulties that have motivated many governments worldwide to offer special incentives for top investors in order to attract them and their money to their territories: be it ease of doing business, some sort of tax relief or other kinds of privileged conditions as simple as having a fast-tracked application for the visa.

There are three main reasons for an individual to be interested in this: economic convenience, lifestyle and security.

1. Economically speaking, there are countries that grant HNWIs (and not necessarily too high-net-worth) rights that make relocation worth the trouble, usually tax reliefs.
2. As for lifestyle, we could mention here all those who are attracted to the idea of living in a country that appeals to them for its climate or any other reason. Having an option to get quickly a visa to enter, stay, leave and come back to a country at please is quite interesting for a certain type of global citizen of nowadays.
3. When it comes to security, we must not forget that a big part of the nations in the world are unfortunately either in a situation of war or of institutional weakness and instability. For many who have a lot to lose and the means to get out of those places, the golden visa is a way to take him or herself and their families and resources to another jurisdiction without applying to the refugee status, extremely hard to get. This is what is happening, for instance, during the last decade with the wealthy Venezuelans who are investing massively in Spanish real estate.

Overall, there are now over 80 countries which offer golden visas or programs of the like. And looking at how fast the number has got there, it seems that it could easily double by the next two decades. It all depends on how governments assess the profitability of doing these changes or exceptions to the ordinary migration rules.

Although there are programs like this all around the planet, from the Caribbean microstates to India or some European Union members, we are going to focus on our particular case, which we know much better than any other, as you may expect.

Spain has become a popular destination for investors, above all those dealing with real estate. Since its creation in 2013, over 35.000 visas have been approved, representing billions of euros along the last decade. Despite not being an impressively high number, once we realize that each of those visas imply often amounts of over a million euros, they suddenly sound much more important.

There are 3 ways to get this visa in Spain: 1) investing in real estate; 2) investing in stock shares and 3) setting up an innovative business highly relevant for the country. The first option requires a minimum investment of 500.000 euros (unencumbered and unmortgaged), the second one requires 1 million euros in private stock shares or 2 million in the purchase of state bonds, and the third has no amount of money and rather depends on a quite ambiguous analysis of how strategic it would be to accept such a corporation in Spain (job creation, economic and industrial innovation, etc.). 

The fact that real estate in Spain is known for its profitability and remarkable size, together with the relatively low amount of investment required, makes of this type the favourite one for golden visa appliers. More than two thirds of the golden visas have been issued for it.

But what can you actually do with a golden visa? How is it different from any other? Well, there are a few good reasons to like it.

1. Fast-tracked application: instead of 2 to 3 months, it can take barely 1. The process is twice as quick.
2. No need to spend a minimum number of days yearly: you can even come for a weekend a year and still be entitled to renew your visa, unlike the rest of them, which require spending most of the year residing in the country.
3. No need to become tax resident to keep it: not having an obligation to stay here for more than 183 days, investors do not have to be recognized as tax residents in Spain, what is quite convenient for those who have tax resident status in less progressive jurisdictions.
4. Initial concession for 2 years: not 3 months nor one year, as the rest are.
5. No limits to place of residence or right to work: you could settle anywhere you want and work and live at please with no restrictions; the self-employment ordinary visa, for instance, compels the newcomer to work only in a certain region and in a certain sector.
6. Travel freely around the Schengen area (practically the entire Europe): with the Spanish visa come the Schengen travelling rights, which allow for free travelling for up to 90 days every 6 months without having to go through any more trouble with immigration and visas. This can be done with ordinary visas too, but the flexibility offered by the golden visa makes it more valuable.

As for where people invest or buy, it is interesting to see that Catalonia and Andalusia both get together about 80% of all. The rest of Spain, including Madrid, lag well behind these two. And the reasons are pretty straightforward: the Mediterranean coast offers great opportunities for trade and investment, what has made of them very dynamic harbours and convenient places to build and settle in. Although Andalusia is one of the poorest regions of the country, its coastline enjoys a privileged situation comparable to most of the richest areas of the Iberian Peninsula.

In regards to the nationality of those who apply for Spanish golden visas, China is showing outstanding figures in the last years and gets over half of the total, followed from afar by Russia, India, Iran, Venezuela, the United Kingdom and the USA. It is true, though, that now that Brits need visas to relocate around Europe, they are likely to scale positions on that ranking, given the tight connections they have with Spain as the biggest foreign community in the nation.

Golden visas are becoming popular. They are a natural product of globalization and they have come to stay. Will the rest of the nations jump on the bandwagon to benefit from this initiative? Will this push for tougher competition between states and force them to offer better and better privileges for wealthy individuals? All this seems likely, so we can say investment migration is on the crest of a wave.