EU Residency By Investment in Hungary: Two Established Routes And One Soon to Open
Helpers Hungary
Sponsor
This year has seen many Golden Visas either raise their investment thresholds or scrap them altogether. Golden Visas are becoming more restrictive, less profitable, and overall more expensive.
But getting a residence permit in an EU country shouldn’t be hard, and that is the policy Hungary has adopted. The EU nation still wants foreigners to invest in its country. It wants them to obtain residence permits and contribute to the nation’s socioeconomic development. In short, it wants you to win so that it wins alongside you.
However, Hungary’s residence by investment opportunities (yes, more than one) haven’t received the same media coverage or hype in the past decade, which is a shame considering that it has two of the simplest, quickest, and most affordable options in Europe, while a third one is also in the making.
At Helpers Hungary, we have more than 20 years of experience in Hungarian inbound immigration, and we want to give these remarkable schemes the praise and attention they deserve. Hence, in this piece, we will cover three ways to obtain a Hungarian residence permit through investment.
The Real Estate Route
Real estate investments are a favorite among global investors looking to diversify their portfolio by acquiring low-risk assets with a high potential for appreciation gains and solid rental yields.
However, real estate investments under Golden Visas have deteriorated in the past few years. They are either discontinued (in the case of Portugal) or suffer from extremely high markups stemming from local developers using the Golden Visas and a foreign investor’s unfamiliarity to drive up prices.
Hungary’s scheme doesn’t suffer from these issues, mainly because of how Helpers Hungary has shaped its real estate investment route.
Under this scheme, an investor does not acquire real estate directly but instead establishes a local company that then purchases real estate in order to rent it out for profit.
An investment of €240,000 is required to establish the company and buy the properties (we advise buying two). Once complete, an investor will obtain a temporary residence permit for one or two years that they can renew if they maintain their investment and reside as tax residents in Hungary.
By having a local company buy the real estate, developers are now dealing with a local entity that, logically, looks for the best ROI margin, and they act accordingly.
Investors – who own the company – will also technically own the properties and the profit it delivers. Since Hungary has one of the lowest corporate tax rates in the EU (9%) and double taxation treaties with 84 countries worldwide, this route offers investors a way to maximize their rental ROI through savvy tax structuring.
Investing in real estate is safe and, in Hungary, it is also highly profitable. The average rental yield in Budapest is 5.1%, higher than Paris (4.39%), Brussels (4.11%), Berlin (3.55%), and Zurich (3.08%).
In some districts of the capital, rental yields can reach an average of 8%, well above what most real estate investment offers.
But rental yields are just part of the story. Appreciation rates in Hungary are outstanding. Last year, house prices in Hungary grew 8.6%, which means that investors are looking at a combined ROI of around 13.5% a year.
Since the company is the basis of the investment mechanism, investors can quickly sell and buy properties while maintaining their residence permit, making it an excellent way to acquire higher ROI margins.
Helpers Hungary will take care of the details regarding how and where to establish the company, and we will even source top-tier property investments that can get great value for your money.
The Hungarian real estate investment route is beautiful in its simplicity, and it actually pays off.
The Business Route
The Gainful Activity Visa is another remarkable option on offer in Hungary. The premise of the visa is gracefully simple – those who establish a business in the country can obtain a one or two-year residence permit.
There is no minimum investment amount, but we do advise a minimum of €50,000 in the capital; it just needs to make financial sense in alignment with the business activities and scope.
Applicants only need to provide a solid business plan and the corresponding funds. Investors can establish a branch, subsidiary, a local entity (preferably an LLC), or even buy an active business in Hungary.
This visa offers an excellent pathway for those wanting to obtain a residence permit in an EU country while simultaneously gaining a foothold in one of the world’s most dynamic, cross-border open markets.
It is also the most affordable residency by investment scheme in the EU, clocking in at one-tenth of the Portuguese Golden Visa’s fund investment threshold.
For those looking for visa-free entry into the Schengen Area (which a Hungarian does grant), this opportunity even offers a lower investment amount than Caribbean passports, nearly half of the minimum you’ll find there, and it provides an asset that can generate income instead of a non-refundable donation.
The value for money under Hungary’s residency by investment schemes is unmatched, and this is exactly why it is becoming one of the most popular investment migration programs in the world.
The newly proposed program
While the above two options are currently available, there is a third route being debated in Parliament right now. Once it is accepted, it will become available sometime in 2024 (date to be announced). In this state-backed investment residency program, investors will have three options for supporting the Hungarian economy and, in exchange, they will get residency for themselves and their family members for ten years, which is indeed a uniquely valuable opportunity.
Investors will be able to choose from the following options:
- EUR 250,000: investment in bonds issued by a real estate fund approved by the Central Bank of Hungary
- EUR 500,000: purchase of residential real estate in Hungary
- EUR 1 million: donation to a designated institution of culture or higher education
Not only will the residence permit received under this new “guest investor” program be valid for ten years, but it will be possible to renew it without a minimum stay requirement, which makes it an especially attractive option for investors who are more interested in visa-free travel and less in actually moving to Hungary.
The Benefits
Hungary is home to one of the world’s most fascinating cities in Budapest, drawing in an average of nearly 4 million tourists annually over the past five years (excluding COVID-restricted years).
The country’s outstanding culture, lifestyle, historical significance, natural beauty, and stunning aesthetics all factor into its charm.
Residents can also benefit from its strong education system and robust healthcare facilities, and the country’s infrastructure operates on an EU standard.
By obtaining a Hungarian residence permit, you’ll also get visa-free access to the Schengen Zone, and since Hungary is a Schengen member, there is no fear that you’ll lose that access like what happened with those who obtained a Vanuatu passport for the same purpose.
The global mobility aspect of the program is much more robust than third-country (non-EU or EEA) options, and it can only get better if you eventually acquire Hungarian citizenship.
The first two of these schemes can lead to citizenship. After just three years of residence, spending more than half of the time in Hungary, a person can obtain permanent residence (PR), and after eight years of living on a PR, they can apply for citizenship. Since the third option is supposed to grant residency for ten years, even without the investor spending too much time in Hungary, permanent residency is neither applicable nor relevant to it.
It is worth noting that the Hungarian passport ranks 8th worldwide, directly behind the US passport, and it offers visa-free access to a staggering 185 destinations worldwide.
Considering that applicants can add their spouse and dependent children without needing to increase the investment amount, the Hungarian residence by investment program offers the best value for money and endless benefits for the entire family.
To know more about the EU’s most exciting investment migration program, contact Helpers Hungary today through our website helpers.hu or email us directly at mo@helpers.hu.