As European governments become more desperate to find ways to attract wealth and investment to their nations – having squeezed their own citizenry dry (and illustrating exactly why those born into any seemingly prosperous nation should still diversify internationally, as when things turn bad they often do so quickly) – they are increasingly opening the doors to foreigners with a little extra cash. Hoping these foreigners will do what the struggling local economy cannot and prop up assets prices and inject a little money into the economy. Case in point: Spain – which last week proposed to become the latest EU country to offer permanent residency in exchange for a real estate investment of €160k.
The EU countries of Portugal, Ireland, Cyprus and Latvia currently offer similar programs, with minimum real estate investments of €500k, €400k, €300k, and €70k respectively. Thus, the Spanish proposal would undercut them all except Latvia. Such increasingly common programs present a shortcut to diversifying for those with the means.
Now, you would not necessarily want to base your savings in a jurisdiction with such financial instability and increasingly socialist tax policy. Or yourself for that matter, unless you’ve always really wanted to live in Spain. Still, having another place to potentially call home in the event you need it could be an attractive option (not to mention the possibility that it could lead to eventual naturalization in an EU country, along with the benefits that come with it). As a wise International Man once put it, in order to minimize your political risk it is best to have your savings in one country, your citizenship in another, and your physical self in a third country. Maybe for some of you, Spain is now the right place to consider for planting one of those flags.
The residency-for-real-estate plan was proposed by Spanish Trade Minister Jaime Garcia-Legaz with an aim to boost Spain’s sagging real estate market which currently has between 700,000 and 1 million unsold new homes on the market. This is a significant number considering that the US, which has five times the population of Spain, had only 145,000 unsold new homes earlier in the year. Though the Spanish Trade Minister noted the program is primarily aimed at Russian and Chinese investors (i.e., BRIC oligarch money), it is expected to be open to all foreigners. The Spanish proposal has not yet been finalized, but it has the support of the current Spanish administration and is expected to pass in the coming weeks.
However, there are still some important questions unanswered at the moment, such as:
- How soon can you sell the property without losing the residency status?
- How can one become naturalized and obtain a Spanish passport after obtaining residency through this program?
- Can foreign investors enjoy the resident status while leasing the property, in whole or in part?
I visited a nearby Spanish consulate to seek further details, but they were unable to give any until the measure becomes official. Nonetheless, it appears that Spain is about to become the latest EU country to offer such a program, and probably not the last.
You cannot fully diversify your political risk and thus weaken the grasp that any particular government holds on you without obtaining residency/citizenship in a second (or multiple) countries. For those not lucky enough to have ancestors in a country that offers citizenship through lineage (often the easiest path to a second passport), programs such as the Spanish proposal offer a potential alternative.
No matter in which country you seek a second passport/residency, it is a complex, but very possible and necessary, process to complete. International Man is here to help you navigate through the complexities of becoming internationally diversified.