Opinion

Charles Savva: Hungary’s New Golden Visa is An Inferior EU Residency Program

Charles Savva
Cyprus


In 2024, Hungary is set to unveil its Guest Investor Program (GIP), a new development in the EU residency landscape. This initiative, distinct from the 2017 suspended Hungarian golden visa program, merits a detailed examination, especially against the backdrop of established EU golden visas like those of Greece, Malta, and Cyprus.

I will argue that the Hungarian government is about to launch a decidedly un-competitive EU golden visa program. The very name of the program is the first indication: “Guest” suggests a temporary nature.  The program does not offer any path to permanent residency. To be fair, a path to citizenship is available, but interested parties would need to spend most of the year in Hungary and also learn Hungarian, a notoriously difficult language.

This contrasts sharply with other EU countries, which offer bona fide permanent residency programs that can lead to citizenship in return for the much-wanted foreign investment that all governments crave.

No path to PR

While Hungary’s foray into the residency by investment arena with the GIP is a welcome development in a market that has experienced many setbacks in the last two years, the program’s design reveals notable limitations. Unlike the lifetime residency that other EU countries offer, the GIP provides a two-year guest investor visa, leading to a ten-year residency.

This ten-year permit is renewable, but contingent on maintaining the investment. This framework raises concerns about long-term security for investors and expatriates, who typically prefer more permanent solutions.

In contrast, the golden visa programs of Greece, Cyprus, and Malta offer lifetime residency permits immediately upon approval, ensuring a stable and predictable environment for personal and business planning. This long-term certainty is a vital factor for individuals and families mapping out their future, making these programs particularly attractive.

Other well-known EU golden visas – like those of Portugal, Spain, Latvia, or Italy – also offer a path to permanent residency and eventual citizenship, but only after several years of more or temporary status.

But Hungary’s new golden visa proposes not to offer a path to PR at all.

Double the cost for directly held properties

The investment thresholds of these programs also warrant examination. Hungary’s GIP requires a considerable financial commitment, with options including investing €250,000 in real estate funds or €500,000 directly in residential property.

This is comparable to the minimum requirements of Cyprus (€300,000) and Greece (€250,000). Malta offers an entry ticket at an even lower capital outlay, at just €150,000 in the least expensive scenario (contribution plus rental expenses) but, in this case, the funds would not be recoverable.

Prospective investor migrants, naturally, place a premium on owning properties directly rather than through a fund. In other words, Greece allows investors to obtain permanent residency through direct, free-hold property purchases of €250,000. Hungary, meanwhile, proposes to charge twice that for a temporary residency through investment in the same asset class.

Hungary’s GIP is introduced at a time when the EU residency landscape is evolving rapidly. While Hungary’s move is commendable, it’s crucial to contextualize it within the broader spectrum of EU golden visas. Investors now have a diverse range of options, and Hungary’s program, with its unique characteristics and limitations, adds another dimension to this complex mosaic.

As the GIP is set to become operational in July 2024, its long-term impact on Hungary’s economy and attractiveness as a destination for global investors remains to be seen. The program’s success will depend on how it competes with more established EU residency programs and adapts to the dynamic needs of international investors. What’s been proposed so far indicates it will have a hard time competing with its peers.

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Charles Savva AuthorSubscriber
Managing Director , Savva & Associates

Charles Savva is the founder and Managing Director of Savva & Associates, and is based in Nicosia, Cyprus. He is Canadian-Cypriot and has lived in Cyprus since 2001.

With over 22 years of experience in the Cyprus professional services space, Charles’ areas of expertise include Cypriot tax, international tax planning, and investment immigration.

Since founding Savva & Associates in 2009, Charles has advised extensively in the areas of tax optimisation (personal and corporate), and assisted HNWIs and their families obtain EU citizenship or permanent residency via investment programs.

Prior to founding Savva & Associates, Charles obtained five years’ experience working with two major banks in Toronto, Canada, and was responsible for the Financial Reporting of publicly listed mutual funds. In Cyprus, he has worked for Big 4 accounting firms, as well as some of the largest professional services providers.

He has made numerous presentations at conferences worldwide regarding the uses of Cyprus in international tax planning, and is a frequent speaker at events dedicated to EU investment immigration solutions offering citizenship or permanent residency via investment programs.

Charles holds an MBA degree in Corporate Finance from the internationally renowned Schulich School of Business in Toronto, Canada, is a UK qualified Chartered Accountant, and a member of the Society of Trust and Estate Practitioners.

Apart from his native English, he is fluent in Greek.

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