Guidance on Regulations of Hungary’s New Guest Investor Program: A Roadmap for Practitioners

Csaba Magyar
Budapest

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Following Hungary’s announcement of its new golden visa – the Guest Investor Program – late last year, the market has been waiting to learn what detailed regulations will govern the program. In the below article, we provide a comprehensive guide to the detailed rules.

The act’s provisions on entry and residence of third-country nationals will enter into force in several phases, but most of the provisions will apply from 1 January 2024. The provisions of the legislation currently in force distinguish between short-term and permanent or long-term stay.

A permanent stay will be any stay in Hungary exceeding 90 days within a 180-day period. Third-country nationals can stay in Hungary permanently for business or investment purposes

• as self-employed guests; or
• as guest investors.

It is appropriate to refer to a guest investor residence permit as a golden visa, which is a common expression in international jargon, although the legislation does not use this term.

The rules regarding the residence permit offered to guest investors will not enter into force until later, on 1 July 2024.

The legislation also delegated the Hungarian government the power to (by decree) set forth the procedural rules and conditions for applying for a guest investor visa. Currently, this government decree has not yet been adopted.

1. Regulations for the Guest Investor Visa

As a guest investor, the first step towards obtaining a guest investor residence permit is to apply for a guest investor visa. In other words, this is a two-step process: Applying for a guest investor residence permit will be possible only after obtaining a guest investor visa.

A guest investor visa allows for stays of more than 90 days and multiple entries within a period of 180 days. The validity period of a guest investor visa cannot exceed two years. The guest investor visa becomes invalid once the guest investor has obtained a residence permit.

Guest investor visas can be issued to third-country nationals whose stay is of national economic interest. It is considered to be of national economic interest to make one of the following investments:

• The acquisition of investment certificates issued by a real estate fund registered with the National Bank of Hungary, for at least EUR 250,000; or
• acquiring outright ownership of residential property located in Hungary, with a minimum value of EUR 500,000; or
• making a monetary donation of at least EUR 1 million to an institution of higher education operated by a public trust performing public functions.

a. Stipulations for the real estate fund investment option

For the real estate fund investment option (EUR 250,000), the following conditions will apply:

• The investor must hold the investment certificate of the real estate fund for at least 5 years.
• Only a fund manager who holds a financial license and manages the fund based on the investment principles set out in advance in the fund management policy it has drawn up may establish a real estate fund.
• Only fund managers who hold a site security certificate or are registered with the Constitution Protection Office can act in relation to guest investor visas.

To justify the national economic interest, at least 40% of the net asset value of the real estate fund must be invested in residential real estate projects realized in Hungary.

b. Stipulations for the direct real estate investment option

For the direct real estate investment option (EUR 500,000), the following conditions will apply:

• The property must be strictly residential (commercial or industrial property is not eligible)
• The property must be uncontested and free of encumbrances and claims.
• Upon the acquisition of ownership of the residential property, a prohibition on alienation and encumbrance of the residential property must be registered in the land register for five years, counting from the date of the conclusion of the sales contract.
• The residential property must be owned for five years exclusively by the third-country national applying for the guest investor residence permit, although it is also acceptable for the residential property to be owned jointly by one or more family members (spouse, minor children) of the third-country national.

A foreign natural person can acquire ownership of real estate in Hungary with permission from the government office having jurisdiction over the location of the real estate.

A property transfer tax of 4% is payable on the purchase of the property, calculated based on the market value of the property. The legislation does not exclude the possibility for the investor to utilize the property, for example, by renting it out. Hungary’s personal income tax on rental income is limited to 15%.

c. Stipulations on the visa application

When applying for a visa, the applicant must declare they hold or plan to hold at least one of the above investments. Thus, at this stage of the procedure, it is not necessary to already possess an investment; it is sufficient to make a commitment. In such a case, three months are available for making the investment, counting from the date when the applicant entered the territory of Hungary with a guest investor visa.

In addition to the above, the applicant shall also prove that they have a legitimate source of funds for the investment, which funds shall be available in or transferable to the territory of Hungary. This also implies that the amount to be invested has to be specifically available in Hungary. Understandably, this is not a requirement for the investments already made; it is only for future investments.

The Hungarian government will issue a decree laying down the requirements for demonstrating proof of health care and financial coverage for third-country nationals.

The applicant shall not be the subject of a Schengen Information System (SIS) alert, expulsion, or ban on entry and stay, nor shall they be a threat to public order, public security, national security, or public health in Hungary (grounds for exclusion). The immigration authority shall also seek the opinion of Hungary’s law enforcement and national security services in relation to the application for a guest investor visa.

The deadline for processing immigration procedures shall be 21 days. The processing period starts on the working day following the day the application is received by the authority.

2. Regulations for the the Guest Investor Residence Permit

Guest investor residence permits are obtainable only by applicants who hold a valid guest investor visa.

The validity of a guest investor residence permit will be ten years, renewable for a maximum period of ten years for the same purpose only. The validity period of the guest investor residence permit may exceed the validity period of the applicant’s travel document.

The main applicant can extend his or her guest investor residence permit to immediate family members: spouses and minor children.

While the guest investor residence permit will not allow additional family members to join, dependent parents, siblings, and direct-line relatives may obtain residence permits in Hungary through separate procedures, if these are unable to care for themselves for health reasons. The validity of this residence permit shall be up to three years.

The guest investor residence permit will entitle the holder to

• stay in the territory of Hungary;
• carry out business activities;
• be an executive officer of a company; and
• take up local employment.

The above options ensure that a person with a guest investor residence permit can carry out almost any economic and entrepreneurial activity in Hungary.

a. Applying for a guest investor residence permit

The applicant must apply for a residence permit for guest investors to the immigration authority directly or via its electronic platform (Enter Hungary) no later than 93 days from the date of first entry into the territory of Hungary on a guest investor visa. 

The applicant must, within three months of entering Hungary, provide proof via Enter Hungary that they have completed one of the investments.

In accordance with the procedural rules, once the applicant has a guest investor visa, they are required to travel to Hungary and can only subsequently apply for a guest investor residence permit. No further travel to Hungary is necessary.

b. Tax rules

A person holding a guest investor residence permit will not be considered a Hungarian tax resident, provided such a person spends less than 183 days in Hungary in any 12-month period.

3. Renewal of the Guest Investor Residence Permit

Immigration authorities may grant an extension of the guest investor residence permit if the applicant still holds EUR 250,000 worth of investment certificate in the real estate fund when submitting the application. In this case, the legislation does not require that it be the same certificate as at the time of the initial application.

Should the first application be linked to the direct purchase of real estate, in order to obtain an extension, the applicant must maintain an investment of at least EUR 500,000 in the real estate on which the permit was initially granted. However, if the property has been sold (after the five-year holding period) or if the real estate investment no longer amounts to EUR 500,000, a new investment of sufficient value must be demonstrated at the time of application.

In the case of grants provided to foundations, the applicant can request an automatic extension.

The extension does not require that the applicant and their family members provide proof of residence in Hungary. Extensions will be possible for a period of up to 10 years.

4. Regulations on Permanent Residence and Citizenship

Holders of a guest investor residence permit will not be subject to any special rules on permanent residence or citizenship but, rather, subject to the same rules as anyone else.

a. National residence card

The legislation uses the term “long-term residence” instead of the “permanent residence” term often used in international practice. Holders of a guest investor residence permit can obtain permanent residence status by means of a national residence card.

The national residence is issued to a person whose accommodation and livelihood in Hungary are guaranteed and who is insured for the full range of health care services, or who can demonstrably cover the costs of health care services even in the absence of such insurance coverage.

To obtain a national residence card, the individual must already hold a residence permit (for example the guest investor residence permit) and must have resided in Hungary for at least three consecutive years prior to submitting the application.

Leaving the territory of Hungary for fewer than four months at any one time shall not constitute an interruption, provided that the total duration of such absences does not exceed 270 days in any three-year period.

A national residence card is granted only if the applicant’s long-term residence is in line with the interests of Hungary and the applicant fulfills the conditions for social cohabitation.

The government will issue a further decree regulating the granting of national residence cards and the required conditions for social cohabitation.

No national residence card can be issued to a person subject to the grounds for exclusion mentioned in the case of the guest investor visa (SIS alert, expulsion, etc.).

b. Citizenship

After eight years of demonstrated residency, an individual can apply for naturalization to become a citizen of Hungary.

During the naturalization procedure, proof of permanent residence and livelihood in Hungary and a clean criminal record are required. An additional requirement is that, as a general rule, applicants must sit and pass an exam in basic constitutional knowledge conducted in Hungarian. Naturalization shall not be detrimental to public security and national security.

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