By Moustafa Daly
Hungary, an EU and Schengen Area country in Central Europe, just announced it will soon be relaunching its golden visa program, which it had previously scrapped in 2017.
A government draft bill introducing the golden visa, in addition to other routes for skilled foreign labor, is put forward to parliament for deliberation and voting - with the final version expected to see the light within the year.
The golden visa regulations are not yet so clear, according to industry professionals, but the parliament is en route to come up with a finalized version by the end of 2023. It’s expected that the golden visa would finally be available to investors by September 2024.
The program was previously scrapped after a sanctioned individual was able to obtain a golden visa. When this was revealed by authorities, it led them to promptly scrap the program due to fears of further security breaches.
What are the requirements for Hungary’s new golden visa?
As per the draft bill, foreigners aiming to pursue the country’s golden visa must invest an amount between €250,000 to €1 million.
The real estate route, often most preferred by foreigners, entails investing at least €500,000 in a residential property – industrial and commercial property aren’t qualifiable investments.
The lowest qualifiable amount for the golden visa is €250,000, which investors can use to get the golden visa by buying bonds in Hungarian real estate funds. The funds will only be available at designated real estate agencies. However, the government has yet to announce it.
Investors could also elect to donate €1 million to projects of public interest to Hungarians, channeled through designated asset management foundations.
Hungary’s golden visa to face stiff competition
Being part of the Schengen Area, Hungary’s golden visa program will inevitably be attractive to investors primarily seeking EU mobility, directly competing with established programs of countries like Greece, Cyprus, and Spain.
How can Hungary face such competition?
Hungary is banking on its attractiveness to businesses due to having one of Europe’s lowest corporate tax rates, at 9%, and it plans to focus on attracting investors from Asia that are interested in utilizing its relatively low taxes for an advanced economy.
Another advantage working for Hungary is its affordable real estate, which means investors will be able to get higher value for money when investing in Hungary than other, more expensive locations like Greece and Spain.
How can Hungary’s golden visa evade EU scrutiny?
It’s no secret EU authorities are skeptical of golden visa programs within the union and elsewhere, likethe Caribbean. Over the past two years, the bloc has taken several legal moves to regulate golden visa programs and eliminate golden passport programs on the continent. To that end, the European Commission has taken Malta to court over its program, and regularly issues statements about different golden visa programs it views as potentially problematic.
Scrutiny and criticism from the EU, however, is nothing new to Hungary. Its strive to attract capital and talent is critical for its development efforts, and thus, Hungary is prepared to fight its way to boost its economy amongst its wealthier and more advanced neighbors, according to industry professionals.
Moreover, the draft bill doesn’t only open up routes for investment migration, but also aims to open up routes for skilled migrants too – joining in an EU-wide race to attract skilled labor to address the union’s detrimental labor shortage.
Hungary will aim to preempt EU concerns by emphasizing a strict due diligence process to keep the program from being utilized by unwanted individuals.
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