The scrapping of the Golden Visa is an ill-advised decision that could curb international residential investment.

Pure Living Properties has prepared this guide with everything you need to know about this golden permit and its alternatives.

The Central Government’s decision to end the Golden Visa, a tax measure introduced in 2013 granting residency to non-EU residents who invest over 500,000 euros in real estate, has not been well-received by the residential market on the Costa del Sol and related sectors (real estate, construction, architecture, design, technical installations…).

At Pure Living Properties, we share the sentiment of most of the sector and believe this measure is misguided, as it affects the image of Spain as a safe and profitable residential destination and could also lead to a flight of foreign investment to other Mediterranean countries like Greece or Italy.

Since the measure was implemented, a total of 14,576 residency permits have been granted to citizens from China, Russia, the United Kingdom, the USA, Ukraine, Iran, Venezuela, and Mexico. Ninety percent of these permits were concentrated in five provinces: Barcelona, Madrid, Malaga, Alicante, the Balearic Islands, and Valencia.

Within the province of Malaga, the Costa del Sol has garnered the vast majority of these applications. In fact, according to government data and following the increase in recent years, Marbella accounts for around 7% of the visas granted nationwide.

“Considering the data from the visas granted in these years and the countries of origin of the applicants, we can foresee that the impact on figures will not be very high in the premium real estate market in which Pure Living Properties operates, but it will damage the image that Spain projects abroad and some investors may opt for other destinations,” comments Javier Nieto, CEO of Pure Living Properties.

In the luxury housing market in Marbella and the golden triangle, that is, those priced above one million euros, more than 90% of the buyers are foreigners, mostly from Central and Western Europe. The British continue to be one of the main investors followed by other nationalities such as Germans, French, or Finns. In recent years, there has also been a notable increase in Dutch, Czech, Polish, and Ukrainian nationals, the latter two due to the conflict between Ukraine and Russia.

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“The increase in direct flights from Malaga airport to New York and to other destinations like Doha, had opened the door to new markets and there it could affect the end of the Golden Visa. We have high expectations in the American market, because it is a profile of high purchasing power investors who generate wealth in the destination and who are very interested in the quality of life and the security offered by the Costa del Sol. We trust that this decision will not hinder its growth,” points out Nieto.

The Golden Visa was created to attract foreign investment to mitigate the effects of the severe economic crisis that hit the Costa del Sol hard but affected the high-quality market to a lesser extent. Indeed, some companies in the sector grew exponentially during the hardest years of the recession.

The main attraction of this measure is that investors can obtain residency (but not Spanish nationality) and also work permits.

We remind you that the Golden Visa is also granted to foreign citizens who invest more than one million euros in bank deposits or shares in a company; more than 2 million, in public debt; or if they bet on a business project that generates employment or has a significant contribution in innovation. However, according to government data, 94% of the visas granted are related to real estate investments.

What are the requirements for the Golden Visa?

To apply for the Golden Visa in Spain, investors must meet certain requirements and present the appropriate documentation.

Investment Requirements:

– Real Estate Investment: Acquisition of real estate with a minimum investment of 500,000 euros free of charges.

– Financial Investment: Inclusion of 2 million euros in Spanish public debt, 1 million euros in shares, social participations of Spanish companies, investment funds, or bank deposits in Spanish financial entities.

– Business Project: Development of a business project in Spain considered and accredited as of general interest, based on criteria such as job creation, contribution to scientific/technological advancement, or significant socio-economic impact.

Necessary Documentation for application:

– Valid passport.

– Complete coverage health insurance, public or private, in Spain.

– Certificate of criminal records from the country of origin or the countries where they have resided during the last 5 years.

– Proof of investment made through appropriate documentation depending on the type of investment.

– Demonstration of sufficient economic resources to live in Spain without the need for work income.

Application Procedure:

The application for the Golden Visa begins at the Spanish Diplomatic Missions and Consular Offices. For those who already possess an investor visa or legally reside in Spain, it is necessary to apply for investor residency authorization through the Unit for Large Companies and Strategic Collectives (UGE-CE). This initial authorization is valid for two years, renewable for another two years, and does not require continuous physical residency in Spain

Necessary Documentation for application:

– Valid passport.

– Complete coverage health insurance, public or private, in Spain.

– Certificate of criminal records from the country of origin or the countries where they have resided during the last 5 years.

– Proof of investment made through appropriate documentation depending on the type of investment.

– Demonstration of sufficient economic resources to live in Spain without the need for work income.

Application Procedure:

The Golden Visa application begins at the Spanish Diplomatic Missions and Consular Offices. For those who already have an investor visa or legally reside in Spain, it is necessary to apply for investor residence authorization through the Unit for Large Enterprises and Strategic Collectives (UGE-CE). This initial authorization has a validity of two years, renewable for another two years, and does not require continuous physical residency in Spain, although the country must be visited at least once during the validity period.

The investment can be made individually or through a legal entity domiciled in a territory not considered a tax haven according to Spanish regulations. Additionally, direct family members of the investor, such as spouse and dependent children, are included in the Golden Visa application, offering a path to residency for the entire family.

Are There Alternatives to the Golden Visa?

Some countries like Portugal or Ireland have already eliminated the Golden Visa, and it is likely that Spain will eventually abolish this measure as well. However, foreign investors can explore various alternatives to establish themselves in the country.

These options include social rooting for those who have lived in Spain for three years in an irregular situation, the community card for family members of EU citizens, and the student visa, which allows work under certain conditions. Moreover, residency for professional internships emerges as a viable option for recent graduates. These alternatives offer flexibility and opportunities for integration into the Spanish labor market.

And for Those Who Already Have It, Could They Lose It?

Since the Prime Minister, Pedro Sánchez, announced the intention to end this measure, one of the most repeated questions is what happens now to those more than 14,000 people who have already received their residency permit in Spain?

The truth is, the elimination of the Golden Visa would not directly affect those who have already obtained their residency permit under this measure. Acquired rights are maintained, meaning that as long as the beneficiaries comply with the initial conditions and renewals of their permit, such as maintaining the investment that justified the visa grant or visiting Spain at least once during the residency period, they can preserve their residency status in Spain. Legal certainty protects investors from retrospective changes in the law.

Does Ending the Golden Visa Solve Housing Problems?

Malaga is the Spanish province where the price of real estate, both for rent and sale, has risen the most, a situation that is complicating access to housing for the general population and affecting the luxury real estate market to a lesser extent.

In the last 10 years, the price of conventional housing on the Costa del Sol has soared by more than 100%. In 2014, a standard apartment for a middle-class working family was around €100,000, and now most of the stock available in that market segment is around or exceeds €200,000.

“That is the real problem for the population on the Costa del Sol and not a measure that attracts investments that create jobs and wealth in the area. Therefore, we believe that the Government should focus its efforts on ensuring access to housing and not on creating obstacles for a sector that has become one of the main industries of the province of Malaga,” concludes the CEO of Pure Living Properties.