Philippe May: Investment immigration is on your mind. Do it as soon as possible. Do it before it's too late. In my life, in this industry, in the last eight, ten years, I have seen several programs closing. And every time when a program closes, there were people who regretted not having done it, who were thinking about it, but who always had a reason to not go ahead. And then it was suddenly too late. It's never going to be easier. It's never going to be cheaper than today. So the best time to do it is now.

Salman Siddiqui: Welcome to the Investment Immigration podcast by you Uglobal.com with weekly in-depth interviews with the world's leading investment immigration professionals. Hello, everyone. I'm your host, Salman Siddiqui, from Berlin. So this week we are going to talk about the residency by investment options in Latvia. Latvia is a small Baltic nation with less than 2 million people in Northern Europe as a Schengen member country. Residents and citizens there enjoy visa free travel all over Europe. Latvia, especially its capital, Riga, is actually known for its strong transport and cultural links with Western Europe and Russia. Now, although Latvia's residency by investment program has been around for more than a decade, it has come under renewed interest in recent times. In this episode, we are going to talk about why this is the case and whether foreign investors are now seeing Latvia as a viable destination and perhaps for some, the only destination available to them in Europe. Given the fact that other residencies by investment routes such as Ireland are now no longer on the table. Also, we'll talk about the impact of the Ukraine war on Latvia's residency program and whether investments in real estate there is still a possibility. To help us understand all of this, this week, my guest is Philip May, who is the CEO of IC Holdings, and currently he's talking to us from Indonesia. Welcome to the show, Philippe.

Philippe May: Good afternoon to Berlin. Thanks for having me on the show.

Salman Siddiqui: Thank you so much. So let's get the elephant out of the room here. Latvia as Russia's neighbor and with the Ukraine war going on in Europe, why would any investor consider investing there? And how do you convince foreign investors that it's still a good option despite the volatile situation in the region?

Philippe May: Well, first of all, Latvia is a member of the EU and of NATO. The EU is a neighbor of Russia, not just Latvia. Japan is a neighbor of Russia, too. Even the US is a neighbor of Russia. Finland is a neighbor of Russia and Ukraine. Obviously they have very serious bilateral issues, but the general perception is not that this is going to spill out into an all out conflict between EU, US on one hand and Russia on the other hand. That would affect Latvia in particular. So we are perfectly fine with Latvia at EC Holdings and don't forget that there's as member country, a Latvian resident is free to travel anywhere to the Schengen and EU area visa free, which is often the purpose for taking up this residency. It's not about moving to Latvia necessarily. It's not about bringing the whole family, spending the whole time there. Sometimes it's just about having that residency, being able to go back and forth, having a plan B, having a second home, but not about putting all your assets and all your life into that country.

Salman Siddiqui: And we haven't heard much about Latvia's residency by investment program. And why is it now coming into more focus and more interest? Can you explain that a little bit?

Philippe May: There are different reasons why there has not been more publicity attached to the Latvian residency program. One reason is certainly the soon defunct Portugal Golden Visa program. That program has outshined all the other programs in Europe simply because Portugal not only offered a residence, but it offered a road to citizenship for people even who do not spend the majority of their time in Portugal. The physical presence requirements in Portugal were and actually as per today, still are limited. So you can take a residency, a golden visa in Portugal, work towards citizenship and apply. After holding the residency for five years in Latvia, the timeline is much longer and the physical presence requirement is much higher, even worse in Spain or in Italy, it takes ten years. You have to spend more than half of the year there - similarly in Greece. So Portugal was the most attractive program, and with Portugal gone, there is no other options for investors who seek citizenship by residents and all the other European programs Spain, Greece, Italy and Latvia, they are pretty much on par out of those, Latvia is the most cost efficient. So that's why Latvia came into the spotlight again. Of course, there are other smaller differences we can talk about throughout the show, but Latvia is now very much in demand among the investor migration community.

Salman Siddiqui: Thank you so much for explaining that background. And like you just mentioned, Latvia's program has been around and. Correct me if I'm wrong, I think it's been there since 2010 at least. But there has been a recent change in the program, so you would know better. Can applicants no longer apply to Latvia's program via investment in real estate? Is that true? Has that ended since 2022 because of the ongoing situation in Europe?

Philippe May: No, that's not correct. There was some misinformation in the public space. A lot of people believe that the real estate option got closed. I myself was under that impression for a short time, but obviously my partners in EC Holdings, my Latvian partners, clarified that the real estate option is still there and you can still apply for a residency in Latvia if you buy real estate worth €250,000 or more.

Salman Siddiqui: Wow. Okay. Yeah, that's news to me too, because what I've read on the Internet was that perhaps it has come to an end in May a year ago. So that's good news to hear. So can you explain the real estate option then? Can an investor put their money in, say, a residential apartment or a villa, or does it have to be a commercial property like a hotel? Are there any limitations?

Philippe May: No, not much limitations there. So first of all, of course, a lot of things written on the Internet is wrong. And as in the case of many citizenship and residency program, when something is being proposed by the government or being discussed in parliament, some people take it at face value and some journalists make a story out of it that this or that country has announced decided in this way or another. But often it turns out that it is not actually legislation. Yet some people believe that the Portuguese program is closed, some even have believed since November when the government made an announcement. But Portugal is a democracy with a parliament, so government has to make a proposal to the parliament. Parliament has to discuss it, has to vote on it. And even when the parliament has voted, the president has to sign it off, the constitutional court has to check it, etcetera. Similarly in Latvia, there was some discussion about ending the real estate option, but that has never came into law. So the option is still there. And in Latvia, like in many Western countries, the real estate market is pretty open to foreigners. You don't have to be a citizen to buy. You don't even have to be a resident. So you can buy pretty much anything residential property, houses, freehold apartments, not much limitation there.

Salman Siddiqui: That's really very new to hear, actually, that that is still on the table. Now, before we go a little bit more on that, let's also talk about the other investment routes that are available for people looking for residences there. So apart from the real estate option, then what other options are there?

Philippe May: The most common option is the investment in a Latvian company. So ADC Holdings, we offer this route for a total sum of €100,000, which means 50,000 by law have to be invested in a Latvian company which pays a minimum of €40,000 taxes a year. So special purpose vehicle companies are set up for investors who pool their investment in the Latvian company. We make sure the funds are invested in a conservative way so that the revenues suffice to pay the required taxes, and with that the legal requirement are fulfilled. The other €50,000 is in various fees also depending individually on the case, but around €100,000. And in terms of investing €50,000, it have to be kept in the company as long as the residency is maintained. So you cannot withdraw the investment without losing the residency after it expires.

Salman Siddiqui: I see. Okay. And that's if somebody wants to buy equity in a company. Right. And the other option is to buy government bonds and the loans in a bank. And those are the other options, right?

Philippe May: We do not promote or even deal with the other options. We only deal with real estate, which is a free market. Anyone can buy any real estate. Unlike in Portugal, where there is two categories of real estate. One is on the free market where the amount is higher. One is kind of approved real estate where the amounts are lower. There is no approved real estate in Latvia, any real estate counts.

Salman Siddiqui: Right. But I'm just mentioning that the other options are still there if anyone is looking into it. So let's now talk more about the option of investing in a in a business or a company in Latvia as a route to obtain residency. You mentioned some requirements and conditions. If you could talk a little bit more about it. You mentioned like you need to have at least €100,000 in capital and then 50,000 is the fees. And then there's also 10,000 for another fees, isn't it?

Philippe May: Correct. So €10,000 is one-off government fee. There is some other fees for governmental bodies, The usual lump sum, amount of total of all fees, including our own, is about €50,000. So the total figure comes to 100,000, of which half is invested and the other half is considered a cost.

Salman Siddiqui: And are there any specific industries or sectors that are prioritized for these investments, or can one put money in basically any Latvian company? There must be some restrictions or some conditions to that as well, isn't it?

Philippe May: Well, the condition is that the Latvian company pays €40,000 tax per year. That is the key thing in which industry, in which sector the company is active. That is not defined by the law.

Salman Siddiqui: Alright. But that condition of finding a company which pays at least €40,000 in taxes, isn't that a bit high? And how does one go about finding such companies?

Philippe May: Well, that's our job. Our partners in Latvia set up such companies for their clients, for our clients. So these are special purpose vehicles where the underlying investment of the company usually goes into real estate. Nothing to do with the €250,000. It's a company investment. So we pull up to ten investors in one company use the funds to buy real estate so that there is a steady stream of income sufficient to pay taxes. And with that the requirements are fulfilled.

Salman Siddiqui: Right? And this one-time payment of €10,000 that goes to the state budget, presumably. So what is the purpose of this payment and how does the Latvian government utilize it? Is that a mandatory requirement?

Philippe May: Yes. I mean, in Portugal they charge about five €6,000 for a residency card of one person, not of one family. So the amounts are higher there. In Spain, the amounts are lower. So each country has its own governmental fees. And €10,000, I think, is a very reasonable amount for Schengen and the EU member country.

Salman Siddiqui: Okay. So we we know this option of this special vehicle company that you set up for residences. But do you see also people interested in perhaps setting up a business or investing in a in a known business in Latvia, or is the government nudging foreign investors to put their money in certain sectors?

Philippe May: Both exist. So people who want to run a business actively by themselves in Latvia, they often apply for their residency initially through a passive investment of €50,000 in such a special purpose vehicle and then go on to set up their own company separately. They could apply directly with their own company. However, the requirements are quite complex. Applicants have to submit the very credible business plan, etc. So the investment in a company of ours, in fact, is much more convenient and efficient, and most people don't want to go to much longer and uncertain route of proving to the authorities that they have an operating company which qualifies them as an entrepreneur. Besides that, the amount of €50,000 is so small that those who are into moving to Latvia and running business full time find it more efficient to do that than to set up a company on their own where the capital requirements is usually more intensive.

Salman Siddiqui: Okay. And what does one get after that? Do you get a permanent residency immediately or you get a temporary permit? Could you explain that? Correct.

Philippe May: In Latvia, applicants initially get a temporary residence for five years, and after five years they may renew their temporary residence for another five years, or they may opt like in Portugal to apply for a permanent residency. That's the difference with Malta, for example, where investors can get the permanent residency right away, obviously at much higher cost, otherwise everybody would be there. There's a market for almost everything. So temporary first and then renewal after five years or conversion to permanent residence.

Salman Siddiqui: So how long does one have to wait to get permanent residency there then?

Philippe May: Five years after the temporary residency is issued, he can apply for the permanent residence. However, as a word of warning, the permanent residency requires a stringent language test in Latvian language, so definitely not something for most of the investors. Instead, most just keep their temporary residence and keep renewing it every five years. Given that the amount required are much lower than in countries like Greece or Spain or Italy, that's still a very attractive proposition.

Salman Siddiqui: Right. But just to clarify, I want to understand the kind of rights that someone would on a temporary residence permit has compared to, say, a permanent residency. One So you can you are saying that you can still buy property, you can still sell the property, you can still rent out that property on a temporary residence permit.

Philippe May: It's all the same. The only difference between temporary and permanent residences that permanent residency can convert to citizenship temporary cannot. You can be a temporary resident for 20 years, but still not apply for citizenship. But in terms of traveling to other countries or entering other countries from outside owning, property owning business, running accounts, permanent and temporary residences, absolutely the same taxes is the same as well. Some countries I'm not sure about in Europe, but in Singapore, taxes for permanent residents are lower, at least in the property sector. That's not the case in Latvia.

Salman Siddiqui: I see. Okay. And since you also mentioned the citizenship, how long does it take one to get citizenship if somebody is interested? Is it 20 years or is it not that long?

Philippe May: It's eight years. So you get the temporary residence first. After five years, you can get the permanent residence and then you can apply for citizenship. But again, the language requirement even to get the permanent residence is very stringent. There is also a physical presence requirement. So you need to spend most of your time in Latvia. So it's only for those who are effectively living in Latvia, not for others.

Salman Siddiqui: That's interesting. So even for the permanent residency thing, you would need to live in the country for considerable amount of time. Is that what you're saying? Correct.

Philippe May: Exactly. That's also the case in most other EU countries. Portugal is the big exception so far.

Salman Siddiqui: Okay. Now before we talk a little bit more about the other options since you mentioned Portugal, I want you to compare Latvia's residency by investment program to other similar programs that you've seen in Europe, and how is it supposedly more affordable? You mentioned that it's so much cheaper, but do you get the same kind of benefits that you would get in the other countries that were offering?

Philippe May: Of course, because a residency in a country always gives you access to the other countries as well. So Schengen countries don't issue residency permits that are limited to to their country only. And given there is no border control between the Schengen countries, it also wouldn't make any sense. So the benefits are the same.

Salman Siddiqui: And what is a typical timeline for applicants from, say, the application submission to receiving residency approval?

Philippe May: That depends on the country of origin of the applicant. In most cases, including India, interestingly, it's just about 30 days. In some cases it's 2 to 3 months. That's mostly from Middle Eastern countries. But even that 2 to 3 months is not a long time compared to what we see, for example, in Portugal. So the fast processing is another big advantage of Latvia besides the relatively low investment amount.

Salman Siddiqui: Yeah, that is really fast, actually. 30 days to 60 days is really good. And I'm also surprised by you sharing this with us that people from India and the Middle East are really looking into the residency by investment option in Latvia, because traditionally, from what I had heard, was people from, say, Russia or, you know, close by countries were taking advantage of the program because it makes sense. It's close by. But you're saying that other countries are also have been there and they are taking huge interest.

Philippe May: Yes, that's correct. For Indians, it's a bit faster than for those from the Middle East because the countries are categorized differently. It's also a matter of banking. People become shareholder in a Latvian company. The Latvian company has to maintain a bank account. So bank due diligence applies. And again, that is more stringent for some Middle Eastern countries. But nevertheless, the total amount of time required is very low.

Salman Siddiqui: Now, you mentioned the due diligence process, so let's talk a little bit about that. What does that entail? Who in Latvia does an applicant have to take their applications? I mean, is there a specific authority there? What they have to be careful about, if you can share some insights into that.

Philippe May: Well, the requirements are pretty similar like in other EU countries, applicants have to provide a criminal record from their country of residence and their country of origin. That's the key document. As for the source of funds, the due diligence is outsourced to the banks. So the banks where the companies hold accounts, check the source of funds of the shareholders of the company. So it's an indirect due diligence by the government. They licensed the bank and the banks check the due diligence and the source of income should be declared. Besides that, the usual documents are required like passports or in the case of couples, marriage certificate, etcetera. Attested or with an apostille. And then the Latvian authorities at the immigration office and the affiliated agencies, they do their checks against the databases.

Salman Siddiqui: Right. Thank you for sharing that. And also, if you could share with us that, does an applicant have to visit Latvia for their application or can they get it an affidavit with a lawyer to represent them and file an application on their behalf?

Philippe May: They have to visit Latvia. We can submit the application on their behalf, but eventually they have to go to Latvia to do their biometrics. And once done, they have to collect their identity card in person as well. So they need to spend a few days, a few working days in Latvia to finalize the process.

Salman Siddiqui: And once they have finalized that process, they don't have to stay there for a month or two or they can just leave. No.

Philippe May: Correct. So there is no physical presence requirement to maintain that residency status.

Salman Siddiqui: Okay, great. Thank you for sharing all of that. Let's talk also about one aspect of the residency program is the ability to include family members in the residency application. So can you explain the requirements and benefits of including family members in the application? Are there any specific requirements of who can be included, who cannot be included? So if you could talk about that.

Philippe May: Latvia is very simple and straightforward in this matter. A family application can include besides the main applicant, a spouse and children up to 18 years. That's all.

Salman Siddiqui: Okay. And do they have to pay an extra for each family member?

Philippe May: Yes, there is a small extra fee of about €5,000 that we charge as an administrative fee, but the investment amount remains the same.

Salman Siddiqui: Okay, great. And if you could share some success stories of foreign investors who have taken this residency route in Latvia, if you have any experiences, please share with us, especially if you're seeing a trend of people, including their families there, or is it mostly foreign investors looking to, for example, park their money in real estate? What are you observing?

Philippe May: Well, if you go to Latvia and you look around, you will see some Asian restaurants. And these restaurants are usually run by investment migrants from Asia. These are normally very successful businesses, not spectacular, not huge conglomerates, small businesses, but nevertheless very profitable. Then you have real estate investors who do not just buy and hold real estate, but who develop real estate. Those are usually from Eastern Europe. So you do see an impact of the program on the national economy, and you do see success stories on the ground of such immigrants.

Salman Siddiqui: Right. And if you could also tell us about the kind of regulations or safeguards that are in place to protect foreign investors’ interests and their investments in the country, like, you know, anything can go wrong in an investment. Like if somebody invests in a company and they face some legal issue. I mean, are there any protections for that investment in place?

Philippe May: Well, that's maybe a bit too general of a question, but for sure, people who invest in a company that is holding real estate, which is then rented out, they go into a low risk industry. Latvia, as a full-fledged EU member, has a robust legal system. So it's not an environment where you need local partners in order to get things done where corruption is rife. In fact, Latvia and if you go, you can see and you can experience this is a very well-organized country. The small size is definitely helpful. And even if you do a secondary research and you browse the Internet, you won't find many bad stories from Latvia. Latvia is not known for being a shady place or being prone to scandals, so generally the legal environment is safe. Foreign ownership of local assets is permitted. And the investors don't usually face challenges if they don't venture out into high risk business like anywhere in the world.

Salman Siddiqui: Right. So if a foreign investor is now considering Latvia as a destination for their residences, what investment route you recommend to them? Is it mostly real estate is the number one option or the special purpose vehicle that you mentioned in a company is the one you recommend?

Philippe May: Yeah. The company investment is much more popular than real estate simply because the amount is five times lower. If one buys a real estate, it has to be a minimum of €250,000. Plus there is additional paperwork required. Plus there is no approved real estate. So when you buy, you have to do your own research. While in Portugal, if you buy an approved real estate, you know, okay, that real estate has been checked by the government and deemed eligible for the golden visa. That's not the case in Latvia. So real estate requires a higher amount and maybe a bit more due diligence on behalf of the investor. And of course, because of the significant difference in the amount, the company investment is by far the most popular option.

Salman Siddiqui: I see. Okay, great. Now, before we go that, I want to talk a little bit more about Latvia's program and seeing the trends that we're seeing in Europe, how a lot of programs are facing pressure from the European Commission, especially in terms of due diligence. And maybe they've been told to shut down at least certain parts of their programs. So given this climate that we have in Europe now, if an investor is looking at Latvia and they're thinking about it, what would you say to them that you don't see any kind of indications that similar things might happen there? What are your words or perhaps encouragement that you say to investors about that?

Philippe May: I would tell them the same that I have been saying for years. If investment migration is on your mind, do it as soon as possible. Do it before it's too late. In my life, in this industry, in the last eight, ten years, I have seen several programs closing. And every time when a program closed, there were people who regretted not having done it, who were thinking about it, but who always had a reason to = not go ahead. And then it was suddenly too late, especially in Hungary. We have seen that in Portugal. Now there is a bit of a grace period so people can rush. So my advice is go ahead, don't wait, because there is no retroactive closure. Those who got their residency permits, they will keep it even after a program is closed. That's a general misconception. People think, oh, the program is closed, I lose my golden visa. No, you don't lose anything. But there cannot be new applicants. And given the amount required by Latvia is relatively low, I would say the program is almost too good to be true. So don't delay. Go ahead and apply. The EU is waging a kind of ideological battle. It's not about security. We all know that security issues are when you have illegal undocumented migrants coming over the border in Greece or in Italy en masse without any documents.

That's a security issue. Not when wealthy investors who provide police clearances and due diligence to bank comes in a few thousand. So it's a negative attitude toward wealthy people. It's the hate, the rich rhetoric of the left. You see that every day, obviously, with the far left Green Party holding sway over political life. So we don't know what will be the outcome of all this. Obviously, not all the EU countries are as negative as, let's say, Germany when it comes to wealthy people. So that's why we still have a large number of EU countries with residency program. Latvia is one of them. Malta is another one and these programs will remain there for a while. But we don't know how long and maybe a country will close it even without any pressure of the EU, just because it feels that the program has served its purpose. That may even happen outside the European Union. So anyone interested who has the means to do it don't wait too long. It's never going to be easier. It's never going to be cheaper than today. So the best time to do it is now.

Salman Siddiqui: Okay, good. And you explained a lot of things there. The only thing I would say back to that is your European Commission certainly has its gaze on programs in the EU especially, but certain concerns about due diligence. If a country's due diligence is robust, then they shouldn't have a problem with a country's residency program. But moving on, I want to talk about if there are any restrictions on certain nationalities who can apply for Latvia's residency by investment program. Are there any restrictions, for example, from people who are from Russia or from Belarus or any other country where they are problems for them if they apply for residency? What are you seeing in terms of that?

Philippe May: Other the two countries you have mentioned? I'm unaware of any restrictions. De facto, some nationals from sanctioned countries like Iran or North Korea, they may face issues when dealing with the banks in Latvia, but from the government side, only Russia and Belarus are restricted at the time being.

Salman Siddiqui: Thank you so much for clarifying all of that, Philippe. And you know, you've already explained the program to us. A lot of people, I'm sure, got new information from this episode, especially the fact that the real estate option is still there on the table in Latvia. Some people, I'm sure, will not even aware that Latvia has this kind of program with so many options there.

Philippe May: Some people are not even aware that Latvia exists. They don't know it's a country.

Salman Siddiqui: That is true. So thank you again, Philippe, hope to see you again in our show in the future.

Philippe May: Thank you very much. Have a good afternoon in Berlin.

Salman Siddiqui: You've been listening to the Investment Immigration podcast by Uglobal.com. Join us again soon for more in-depth conversations exploring investment immigration opportunities from around the world.

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