Golden Visa Programs Face an Existential Threat (And It’s Not Brussels)

 

Investment migration, in 2021, is a $25 billion-plus global industry. That’s big enough to get you noticed. It’s big enough to get you on the radar of powerful people like Ursula von der Leyen. It’s big enough to earn you a target on your back from global regulators and clicks-addicted media outlets. 

While Brussels can’t dictate to individual EU countries whom they naturalize, and how they do it, they can make life difficult for the countries offering Golden Visa programs. 

Similarly, they can throttle CBI money flows via correspondent banking relationships. And, as a nuclear option, the EU could revoke the visa-free travel privileges of the CBI countries in the Caribbean and the South Pacific. But then who would pay for the reconstruction of Vanuatu and other island nations after every devastating tropical storm?

So, most of these threats and challenges ought to be surmountable. The IMC will keep on lobbying. Regulation will be introduced over time. Bad – and smaller – actors will be ousted, and the industry’s respectability should continue climbing over time. 

So, while disconcerting, none of these risks constitute an extinction-level risk for the industry. 

Here and there, a government acquiesces and shutters its CBI program over an embarrassing scandal, or a struggling former USSR satellite state cans its CIP in exchange for largesse from the EU. Elsewhere, EU accession hopefuls agree to discontinue their passport by investment offerings as a precondition for joining the Union.

But by and large, the RCBI train has kept chugging along.

The bad news?

The good times are not going to last. And the real trouble is approaching from another direction entirely.

Independent means visas are king in a world where applicants are willing to physically relocate

The ascent of the Portugal D7 Visa was merely a harbinger of the Golden Visa’s coming demise.

The D7 Visa has been in existence for a long time, and those of us promoting Golden Visas profited handsomely from its obscurity. Golden Visas, per definition, are backup plans, and they’re very much overkill for people actually seeking to emigrate.

In South Africa, at least, a large percentage of prospective GV applicants have been approaching retirement age for the past 5 to 10 years; they are well-heeled, and liked the idea of having a backup plan, in large part justified by also acquiring a holiday home in Europe. 

But with the Great Baby Boomer Retirement now gaining pace, those seeking to actually retire abroad could instead simply choose to obtain a D7 Visa, without any investment or hefty fees, and get on with their lives abroad once they’re ready to move.

And all of this was already coming into play by the time Brexit and Trump hit. The Covid pandemic and draconian government reactions worldwide turned this flame into a conflagration. 

Instead of wanting the option to move, masses of people from both the first and developing worlds started getting the hell out of dodge in 2020.

So, to recap:

• Golden Visas have very much been a pricey vanity product for the rarified few.
• As the pool of eligible buyers starts reaching retirement age, their need for the product is waning.
• As the D7 Visa’s reputation grew during the pandemic, the number of people willing to buy a Golden Visa with a view to settling in Europe cratered – virtually overnight.

But it would be a mistake to attribute the D7 David slaying Golden Visa Goliath only to its vastly more affordable price point; the profile of the average D7 applicant is also changing fast. 

Instead of being retirees, today, many applicants are younger remote workers seeking a better quality of life. And it’s not just developing nations who are applying; in fact, at D7 Visa, the USA and UK account for the lion’s share of applicants in any given month.

And the reason the Portuguese government is allowing non-retirees to apply, even on the basis of non-pension income, relates to the talent supply-and-demand dynamics at play, both in Portugal and across mainland Europe.

Let’s look at the EU’s population age picture below:

Country	Median Age  (2021)	Population Growth 2020	Talent Acquisition Programs
Portugal	46.2	0.2%	D7 Visa (Nomad Visa); D2 Visa; HQA Visa (D3 Visa); Tech Visa Program (for employers); NHR Tax Program
Spain	44.9	0.5%	Non-Lucrative Residency; Spanish Entrepreneur Visa; Spanish Startup Visa (coming soon?)
Italy	47.3	– 0.3.	Self-Employment Visa Program; Tax Breaks for Digital Nomads
Greece	45.6	– 0.1%	Financially Independent Person (FIP) Visa; Tax Breaks For Digital Nomads
France	42.3	0.2%	French Tech Visa; VLS-TS Visa for financially independent individuals
Netherlands	43.3	0.6%	Dutch Startup Visa Program
Germany	45.7	0.2%	Freelance Visa (Aufenthaltserlaubnis für selbständige Tätigkeit)

For fairly tiresome, often ethno-nationalist reasons, EU immigration policies have sought to keep the Global South out of the continent for the past couple of decades.

But as the populations of Europe get older with every passing year, we’re watching a reversal of talent supply and demand dynamics in real-time. 

The EU needs young, skilled migrants to sustain its economic growth in the next decade and beyond. And there is already a global shortage of skilled tech talent.

So, to remain competitive in terms of human capital, more European nations are adopting immigration legislation that makes it far easier for skilled individuals to move to Europe. And as this trend accelerates, EU nations will find themselves under pressure to “sweeten the deal” with less onerous program requirements, tax incentives, and, critically, shorter minimum stay requirements.

All of this is already undermining the usage case for Golden Visas and providing viable settlement options for people who, a decade ago, would likely have had to opt for a Golden Visa in order to get in the European door. 

In combination, these developments, more than any regulation or threat from Brussels, poses a systemic threat to classic, real-estate-based Golden Visa programs going into 2022.

The key take-outs?

• The aging – and, in some instances, shrinking – populations of Europe pose a major risk to sustainable economic growth on the continent.
• Attracting highly skilled talent is going to be an area of competitive advantage – or disadvantage – in Europe during the next decade.
• Whereas the ethno-nationalist emphasis has been on keeping third-country nationals out, there is an escalating urgency around getting foreign skilled workers and entrepreneurs into Europe.
• As more and more competing “talent acquisition” visa programs launch in Europe, the tax deals will have to get sweeter. The timelines to permanent residency and citizenship will have to get shorter, and the program requirements less restrictive, in order for existing programs to remain competitive.

  (Portugal currently sets the benchmark for overall appeal, tax benefits, and accessibility, but Spain looks set to follow suit in the coming year with their recently announced plans to create a startup-type visa program for foreign entrepreneurs.)

• Over the next decade, the governments that seize first-mover advantage to reinvent themselves within a “Government As A Service” context, including those already offering settlement visa programs, will be the biggest winners in the race for new talent and economic growth.
• As the range of business immigration and settlement visa programs in Europe proliferates, the current commoditization of European residency will only accelerate as a trend.
• And as investment requirements, earning requirements, and minimum stay requirements become less stringent over time, big-ticket legacy products like Golden Visas will increasingly become antiquated, outmoded, and impossible to sell.

First mover advantage is everything.

Firms such as Harvey Law Group were among the first to heed their sentinels and start taking Golden Visas off the shelf in April 2019. We, similarly, pivoted from Golden Visas to EU settlement visas and entrepreneurial visas in 2020.

Firms around the world are reporting a slowdown in Golden Visa sales, with many opting to start promoting Portugal’s D7 Visa with a view to stay afloat during the pandemic lockdowns.

So, if none of these emerging trends are impacting your firm’s bottom line yet, it’s only a matter of time. 

And If your firm is Golden Visa focused, and your team isn’t sitting down to seriously review your 5-year product strategy going into 2022, it may well be one of the last annual kickoff meetings you hold as a running concern.