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The Government paralyzes the granting of 'golden visa'

17/03/2022

The Government has decided to temporarily block the express channel for Russian citizens to obtain a residence permit in Spain that domestic legislation offers to all those non-EU citizens who are willing to make a strong economic or financial investment in Spain, better known as ' gold visa' or 'golden visa', as confirmed by government sources.

The Minister of Foreign Affairs, José Manuel Albares, issued a few days ago an internal order to immediately suspend the granting of this type of visa to Russian citizens and to paralyze all residence permits currently in process, within the framework of the sanctioning measures approved by the European Commission in response to the Russian attack on Ukraine, explain sources from the Diplomatic Information Office.
The measure adopted by Foreign Affairs appeals directly to the Ministry of Industry, on which the network of Spanish commercial offices abroad depends, from which this type of visa can be requested, and also to the Ministry of Inclusion, Social Security and Migration, where the Large Companies Unit is located, which is in charge of administratively processing the granting of these 'golden visas'.

With this decision, the Government of Spain goes beyond the framework approved by Brussels, which only obliged member states to block the granting of visas to Russian diplomatic and political personnel and the list of personalities from that country sanctioned by the European Union .

A key driver for the real estate market
Residence permits for investors or 'golden visas', used successfully for decades by countries such as Malta, landed in the Spanish legal system in the midst of the financial crisis, in 2013, within the Law to Support Entrepreneurs and its internationalization.

In a country knocked out by the crisis and without access to financial markets, the Government played the trick of exploiting the tourist attraction of Spain to attract foreign investors. Since then, they can obtain a residence permit in Spain if they acquire a property for more than 500,000 euros, if they invest more than one million euros in shares or participations in Spanish companies or if they acquire more than two million euros of Spanish debt.

The instrument has worked. Since its approval in 2013, and according to official data from the Ministry of Foreign Affairs, the Government has granted 1,005 residence permits to Russian investors - the second nationality that most requests them after the Chinese -, of which nine out of ten have been granted to from a real estate investment.

In fact, the capital attracted by the 'golden visa' was key to sustaining the real estate sector during the toughest years of the financial crisis. According to a recent report by the European Parliament, between 2013 and 2017, 15% of home purchase operations by foreigners were related to this type of visa. Its popularity has been such that it has encouraged a business niche for law firms and real estate specialists in 'golden visa'. Some businesses that now consider that the Government's veto can even be considered "discriminatory", despite being endorsed to a certain extent from Brussels.

Russian money has been one of the great animators of the luxury real estate market in recent years. According to data from the College of Registrars, in 2021 the natives of Russia acquired 159 properties of more than 500,000 euros, above the Americans (115) and the Chinese (57). And that figure has been reduced since the conflict broke out on the Crimean peninsula, since in 2014 the Russians acquired 315 properties in Spain for more than half a million euros.

Alicante, Barcelona and Malaga have been the three most attractive provinces for these buyers. The Association of Real Estate Developers of the Province of Alicante (Provia) has already demanded that the Government maintain the 'golden visa' and "not criminalize Russian citizens, since most of them do not support the conflict."

The purchases carried out by the Russians have stopped dead and dozens of institutions look closely at every movement of Russian capital in Spain. Sources from the College of Registrars explain that from the Anti-Money Laundering Registry Center (CRAB), integrated into this organization, a constant search is carried out for the assets that may be owned by any of the 862 people or 53 entities sanctioned for their ties with the Kremlin. Any operation with these assets is now blocked.

A tool in the spotlight

The Ukraine crisis and the fact that the Russians have been among the biggest users of this tool have put the 'golden visa' in the spotlight. Last week the European Parliament approved a legislative initiative to prohibit the granting of European citizenship at the cost of investment and establish a series of common rules for the granting of the controversial 'golden visa'.

The initiative aims to force an audit to be carried out on applicants for these visas, to require a minimum period of residence in the EU and to carry out a more selective regulation of investments, so that they provide added value to the economy.

Transparency International has spent years denouncing the indiscriminate use of this type of visa in the EU, which in its opinion can hide money laundering operations.

Information provided by ABC ABC Post