Golden Visa – Introduction
Who would be an internationally mobile multi-millionaire, or dare I say it, billionaire these days?
It wasn’t so long ago that dozens of countries around the globe were practically falling over themselves to tempt some of the planet’s wealthiest people to spend some of their fortunes on their respective patches.
Of course, there was a catch.
A costly catch, well beyond the means of most people but mere pocket change for some of the individuals interested in moving from their place of origin to a more economically, culturally or politically stable location.
UK is not OK
In the case of the UK, anyone granted clearance under what was known as the Tier One (investor) visa scheme needed to invest in excess of £2 million in shares or loan capital in “active and trading UK registered companies”
That the scheme could lead participants to obtain citizenship was hugely popular. Between its introduction in 2008 and 2021, in fact, some 13,276 applicants and their dependents were granted what became known as ‘golden visas’.
However, the influx was not without criticism.
A decade after Tier One status was unveiled, for instance, one of the UK’s leading economics think-tanks suggested that one less desirable consequence of foreign investment (of all kinds – not just the golden kind) was a hike in average 19 per cent house prices in England and Wales, exacerbating difficulties which many people had getting a foothold on the property ladder.
That report was published only weeks after the poisoning in Salisbury of the former Russian intelligence officer Sergie Skripal and his daughter, an incident which prompted a so far unpublished review of the visa scheme.
It would ultimately take Vladimir Putin’s decision to invade Ukraine for the Government to finally withdraw its golden visas because, as the then Home Secretary Priti Patel told the British Parliament it was no longer clear that it “offers the best means of encouraging investment-related migration”.
Although golden visas were at the hear of only some of the foreign investment referred to above, these two issues, house prices and the attraction of some ‘unsavoury individuals’ as cited by Patel, appear to be replicated around the world.
The EU angle
The European Commission also increased pressure on member states to follow suit because of the “inherent risks” posed by investor citizenship schemes.
Within the last few weeks, Spain has become the latest country to announce an end to its ‘golden visa’ scheme, echoing the Royal Economic Society’s observations on house prices rather than national security.
Ireland terminated its own ‘cash-for-visas’ system in February last year but has since warned that it will take “years” to clear a backlog of applications.
Having announced that its scheme would be scrapped, Portugal promptly backtracked, deciding to tighten the rules instead.
Malta, meanwhile, simply dug in its heels, a decision which has seen it referred to Commission’s Court of Justice.
Greece has also recently announced significant changes to its Golden Visa program, raising the required investment for prospective foreign investors from 250,000-euro property investment.
Again, this is said to because of an over-heating property market.
As of 31 March the investment threshold will see a substantial increase, with a new minimum set at 800,000 euros for properties in high-demand regions including Attica, Thessaloniki, Mykonos, Santorini, and islands with populations exceeding 3,100.
For other areas, the starting investment requirement will be adjusted to 400,000 euros.
One of the reasons that the issue hasn’t disappeared is that whilst many territories share concerns about being seen to host those who could be regarded as apologists for conflict, money talks.
Where next?
If oligarchs don’t fancy coming to the UK, for instance, they can always consider Italy, Hong Kong, Latvia, Jersey, Mauritius, Namibia or Singapore where golden visa schemes or their rebranded equivalents remain.
Meanwhile, back in the UK…
It could be said that, in the UK, things aren’t much better for non-doms – those individuals who, like Rishi Sunak’s wife, may live in the UK but whose permanent residence is elsewhere.
Up to now that has enabled them to claim significant tax breaks by not having to pay UK tax on foreign income…but no more.
One of the eye-catching elements of the Spring Budget unveiled by the Chancellor of the Exchequer, Jeremy Hunt, last month was the abolition of that exemption and its replacement by a residence system ().
That will mean all UK residents living in the UK for more than four years paying the same tax on their foreign income and gains, regardless of their domicile status
Should Labour take power at the next General Election – which is widely expected to take place this autumn – they plan to turn the screw even tighter.
Golden visa – Conclusion
It seems that there is a common cycle when it comes to golden visas and, indeed, other fiscal carrots to attract the wealthy.
Often it seems that jurisdictions seem to become victims of their own success. Sure, the financial benefits might pack in the wealthy punters, but where does it leave house prices and, importantly, those locals looking to buy them.
Often, it seems, in the political game, this is enough to lead to change…
…and an end to the gold rush.