Tajick: Have The Dominos Started to Fall for EU Golden Visas?

Last month, Portugal announced the closing of its Portugal ARI Golden Visa, the poster child of European Golden Visas. What preceded the much-anticipated announcement was the less-expected announcement that Ireland would also close its Immigrant Investor Programme. I expect other EU countries to follow suit in the coming months.

The dominos are starting to fall.

These announcements caught many of us by surprise. In effect, when the EU Parliament tabled a resolution on RCBI on March 7th, 2022, it didn’t explicitly call for the end of Golden Visas in the Union. Instead, it proposed intensive regulation of them and called for an end to citizenship by investment (CBI) using the Schengen area access as a prized asset.

Since then, the EU Commission has been consulting with different stakeholders. The consultations seem to have been enough to convince Portugal and Ireland to discontinue their Golden Visas of their own accord. The UK suspended its own Tier 1 Investor program a year ago. Those suspensions mark the end of the European residence by investment programs (RIPs), which once offered the “friendliest” path toward citizenship. 

Are we witnessing the beginning of the end of investment migration in Europe? 

After the recent closures, only a few decent Golden Visas remain in Europe. The question is, how many will still be operating by the end of 2023? 

There’s always a need to provide foreign investors with legal status in a country. It’s just common sense. Every country should offer a form of investor visa. In the right environment, the RIPs will return. It might take a few years, but they will be back. Governments and parliamentarians come and go; in five or ten years, most elected officials in the continent will have never heard of investment migration or forgotten about a bill they voted on ages ago. 

And, in Europe, we are never far from financial calamity. A decade ago, the Eurozone crisis led to the creation of most of the continent’s investor programs. Today, Europe is fighting inflation, but in a year, it may be fighting the collapse of property prices. Suddenly, a Golden Visa will have a purpose again. Ultimately, whether this happens will depend on the economic environment.

Ireland is battling inflation and has a GDP (PPP) per capita above $130,000 (more than twice that of the UK). Based on its current economic environment, it can certainly do without new foreign investors, even after its phasing out of some attractive tax loopholes, such as the notorious “double Irish with a Dutch sandwich.” However, in the case of Ireland’s dual economies, the country is undoubtedly at risk of a severe economic correction in the coming decade. 

For Portugal and Ireland, the current economic outlook seems to have played a part in their decisions. They are two of the Eurozone’s best-performing economies and, for many, the Golden Visas have fulfilled their purpose. Other countries may not give up so easily, especially if they don’t provide an attractive path to EU citizenship. It remains to be seen what guidelines the EU Commission will recommend to its members. 

See also: Podcast: “99% Chance” Italy’s Dolce Visa Will Get a Real Estate Option in March

Is the industry at fault?

The public and the private sectors are never at fault, as a whole. You might point the finger at a few companies or individuals, but when an issue is systemic, the problem is with the system. The government makes the rules, and when they are well thought out, they produce the expected results.

That said, when the expected result is stimulating the economy in the most effective way possible to the tune of billions of euros a year, it might be a hard ask of a government policymaker on a EUR 50,000-a-year salary. When looking at most European RIPs, you see many inefficiencies, design flaws, and a poor understanding of the market’s fundamentals. 

Ultimately, you get what you paid for: Investor programs with limited economic output. Closing your investor visa is not an indication that the program has fulfilled its purpose; rather, it’s an indication that the government lacks the expertise to run the program efficiently. 

Could the industry have prevented what happened?

Perhaps, at the very start, in 2018 and 2019, it could have. Some industry stakeholders did participate in the public consultations in 2019. By the time the damning EU Parliament report of 2019 came out, the RCBI question was effectively settled. It was an uphill battle requiring Parliament members to vote against the motion tabled in early 2022. There was little the IMC or the industry could have done to prevent it. Even if the Russian invasion hadn’t happened, convincing the 66 Parliament members who voted in favor of the resolution would have required lobbying on a scale only seen in the American TV show House of Cards. 

What remains in Europe?

Before the start of the Covid pandemic, the leading European RIPs were those of Greece, Spain, Portugal, the UK, and Ireland. Now, only the first two remain, with question marks hanging above them. Other valued RIPs likely to remain standing are those of Italy, Malta, and Cyprus (which lacks Schengen access).

There are still many other paths to gaining Schengen residency, but how many will still be truly interesting to the investment migration industry? Crafting an “investment” scheme out of an Entrepreneur program might satisfy the appetite of a few companies but is not a scalable practice.

What is certain is that the quality of the offering will be going down across the board, so the client’s expectations need to go down as well. This might cause a “recession” in the industry until both the demand and supply adapt. Roughly half of the RBI demand was geared toward the EU.

The industry might want to start looking into diversification. There are other prime EU countries with investor visas and a five-year path toward citizenship, such as France and Luxembourg. Some might find it worth exploring the Investor Visas in Andorra, San Marino, and the Baltics. In Australia and New Zealand, Investor Visas are already in overdemand, so most are unlikely to be able to shift their clients there. An efficient EB5 at full capacity would greatly ease the burden. Perhaps a pleasant surprise will come from Quebec now that interest rates have made the QIIP profitable again. 

See also: “We Simply Need to Open More Doors”: Industry Long-Timers React to The Blackest Week in Investment Migration History

Could there be hope?

Investor programs are important for any country’s immigration portfolio. The EU’s suspension of those programs is a sign the continent is taking a step back – hopefully, to go back to the drawing board. They have paid the price for their lack of expertise in producing this type of economic development policy. Perhaps an EU think-tank with some of the continent’s most notable experts could help governments finally produce the expected results.

My hope is that in the next few years, the EU Commission will bring forward a series of RCBI best practices for its members to follow. If those guidelines are sensible and reasonable, we might see new RIPs blossom out of the next economic crisis to hit the continent. 

RBI could still have a future, but CIPs with Schengen access seem to be on their last legs. Some are confident that their clients are not bound to Schengen access. Motivations can indeed be diverse, but I, for one, expect a collapse of the demand if/when the Caribbean CBI passport holder gets their Schengen access de facto suspended. Other than Turkey, I doubt anyone will benefit from this. 

More from Stephane Tajick:

• Are We Witnessing the Extinction of Citizenship by Investment?
• The Compromise That Reduces Political and Popular Opposition to CBI
• Helping Governments Design RCBI Programs: The 6 Recurring Problems
• Who’s to Blame When Investment Migration Programs Have Little Economic Impact?