Opinion

Laszlo Kiss: 9 Reasons Hungary’s New Golden Visa Will Be Competitive

Laszlo Kiss
Malta


I read with interest the article of my esteemed fellow professional Charles Savva about the new Hungarian Golden Visa, which he argues is uncompetitive in a European context.

As IMI provides an excellent platform to debate topics with friendly competitors, I would like to offer my two cents. Some of my opinions are based on feelings, others on facts. Let’s consider the feelings first:

The government of Hungary has a quite clear immigration policy: as it is a national prerogative according to EU law, the Preamble of the law indicates that Hungary is a sovereign state and wants to decide whom to let into the country.

Also, it states that staying in Hungary as a foreigner is not a basic human right. This legislation does not cover asylum rules, and the majority of the citizens of Hungary fully agree with this policy. That is why the word “guest” is used, even for a permit possibly valid for 10 or 20 years.

Here, I’d like to highlight some elements of the new program that Mr. Savva may not have considered or possibly misunderstood.

1. Program terms are not yet set in stone
First, this is a brand new law, and as with other countries’ new immigration laws, clarifications and modifications are expected in the near future. That is one of the main reasons I would be a little cautious to claim that it is inferior to other programs.

2. It’s not quite right to say the GIP doesn’t offer permanent residency
One of Mr Savva’s chief arguments against the Guest Investor Program (GIP) is that it “does not offer any path to permanent residency.” This is factually incorrect because, according to the current reading, applicants would be able to get a “Hungarian national card” (not the common ID card) which is the closest thing to permanent residency in the new system. This is our interpretation of the law.

Unfortunately, “permanent residency”  has different meanings legally and economically in Europe.

In Greece, applicants receive a permit that, by law, is called “permanent residency.” But a permit that needs renewal every five years and is contingent on maintaining the investment cannot properly be called permanent.

Malta (Licence no.: AKM-DISC) also does not use the expression “permanent”; instead, it issues a residency permit for an indefinite time. It makes it hard to say which program is economically permanent.

3. Physical presence requirements for naturalization apply equally among Hungary’s competitors
Mr. Savva observes that, under the GIP, applicants ultimately aiming for citizenship “would need to spend most of the year in Hungary and also learn Hungarian, a notoriously different language.”

This is not incorrect, but it’s also not a competitive disadvantage since the same is true elsewhere. Greece requires the stay, as does Malta, the UK, Ireland, the US, and so on, so where is the inferiority?

Looking at it from a different perspective, I think it is better to have real ties to the country where you want citizenship. Isn’t lack of ties to society the reason a certain country’s citizenship is refused by judges in increasing numbers? Moreover, while learning Hungarian is no walk in the park, I don’t consider Greek or Portuguese languages much easier to learn for Chinese nationals.

4. The validity period of the initial visa is immaterial
Hungary offers the possibility of an initial visa with a maximum validity of two years. This allows the applicants to enter Hungary to file the residence permit application, visit the properties they plan to purchase, open a bank account, and so on. So, the duration of the two-year visa is irrelevant, as it will be canceled as soon as the residency permit is issued – for a minimum of ten years.

5. Hungary’s new program allows post-approval investment
One competitive edge the program will have over its European peers (except Italy’s Dolce Visa) is that it permits investors to hold off on the investment until their application has been approved. In Hungary, applicants have 90 days following the initial approval to report their qualifying investment to the Immigration Office. This contrasts with Portugal, Spain, or Greece, where applicants must commit financially before they can gain approval. In the case of one of the countries mentioned, the time between investment and approval can take upwards of two years.

6. Property purchased under the GIP can be income-producing
Hungary allows the purchased property to be leased out, while Malta requires the purchased or leased property be used only by the applicant.

7. Processing time is likely to be superior to that of competitors
The last time Hungary had a residence by investment program, processing times were typically under three months. This was despite thousands of applications a year. Compare that to a certain EU golden visa peer, where it now takes 18-24 months just to get an initial interview.

8. The residence permit is good for two decades
The validity of the Hungarian residency permit issued under the GIP will be ten years and renewable for another ten, giving the investor two full decades. Even if your passport expires during this period, there is no need to apply again. And really, in our business, who among us can calculate beyond two decades? Even looking ahead two or three years is quite hard (at least for me).

9. The program is not inferior, it just offers different advantages
I would not argue that the Cyprus Permanent Residency Program, which Mr. Savva considers one of Europe’s best golden visas, is inferior even if Cyprus is not a member of the Schengen Area, unlike Greece, Hungary, Malta, Spain, and Portugal. All the EU programs have different advantages and disadvantages, making our lives exciting when we have to offer the “best” to our clients.

Hardly anybody recognized Hungary as a good residency jurisdiction in 2013, but in just four years of operation, we got 6,200 families into the program. Let us see how it develops without an ideological bias.

I humbly present the above contributions to this important discussion and acknowledge that I may, of course, later be proven wrong.

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Laszlo Kiss AuthorSubscriberParticipant
Managing Director , Discus Holdings

Laszlo Kiss is the founder, owner, and managing director of Discus Holdings Ltd., a group of companies that provides investment migration, corporate, financial, and tax planning services.

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