Should Hungary consider opening the Golden Visa Program again?
First introduced in 2013, Hungary’s Golden Visa program allowed foreign investors to obtain a Hungarian residency permit in exchange for an investment in the country. Initially, it was successful, attracting a significant number of foreign investors to Hungary. However, following concerns about corruption and misuse, the program was suspended in 2017. Now, thanks to the turbulence of the Covid-19 pandemic, questions have arisen about whether Hungary should consider opening the Golden Visa program again. In this article, we’ll take a closer look at the pros and cons, and also explore some of the alternatives for those looking to invest in the country.
What Was The Golden Visa Program?
Hungary’s Golden Visa program was a residency by investment program that was introduced in 2013. The program offered a way for foreign investors to obtain a Hungarian residency permit in exchange for their investment. Under the program, foreign investment could be used to support economic development. The minimum investment amount varied depending on the type of investment but was typically around €300,000. Often, the investment took the form of a business, government bond, or real estate purchase.
In exchange, those who invested would be granted a residency permit, which allowed them to live and work in Hungary, and was valid for two years as long as the investment was maintained. After the fifth year of residency, the investor could apply for permanent residency or citizenship, which made the program highly attractive for investors and a great way for Hungary to stimulate economic growth – between 2013 and 2017, Hungary collected €1.14 billion.
Unfortunately, the program has faced criticism due to concerns about corruption, and as a result it was suspended in 2017. Currently, it is unclear if, or when, the program will be reopened.
Pros Of Reopening the Golden Visa Program
When considering whether Hungary should reopen the Golden Visa program, it’s important have a clear understanding of both the pros and cons. Some of the key benefits include:
Attracting foreign investment: Foreign investors are often attracted to Golden Visa programs because they offer a way to obtain residency in a country without the need for a job offer or a family connection. In return, the investment they make can be used to support economic development.
Boosting the economy: The Golden Visa program could also provide a significant boost to Hungary’s economy, as investment can create jobs, stimulate growth, and contribute to the country’s overall prosperity.
Increasing tax revenue: The tax income from foreign investors who obtain residency could also provide a significant source of revenue for the government.
Cons Of Reopening The Golden Visa Program
While there are a number of pros for reopening the program, there are also some cons that the country is taking into account when it comes to conversations around the Golden Visa.
Potential for corruption: One of the primary concerns with the Golden Visa program is the potential for corruption that could occur with the reopening of the scheme – in the past, there have been concerns about misuse of the program, with some individuals using it to launder money or obtain residency without making a real investment in the country. Reopening the program would require significant oversight and regulation to prevent these types of abuses.
Decrease in local property affordability: The Golden Visa program could also lead to a decrease in local property affordability, particularly in areas that are popular with foreign investors. This could make it more difficult for local residents to afford to buy or rent property in these areas, and lead to class divisions throughout Hungary.
Social tensions: The Golden Visa program could also lead to social tensions between local residents and foreign investors. Some residents may view the program as unfair, particularly if they perceive that foreign investors are receiving special treatment or taking advantage of the country’s finite resources.
What Alternatives Are There For People Who Want To Invest Or Live In Hungary?
Fortunately, Hungary offers several alternatives to the Golden Visa Program for individuals who want to invest or live in the country, including the Residency Bond Program, which bases residency on government bond investment, and the Entrepreneur Residency Program which has been designed for established startup businesses that can support themselves financially. Consideration has also been paid to highly skilled workers who hold a valid job offer, as the government is keen to encourage those with specialised skills to join the workforce.
However, it’s important to remember that Hungary isn’t the only country that offers lucrative support for investors – there are plenty of other options that are just as tempting. For example, as an investor you can secure residency by investment in Malta through a number of pathways, and the country is well-known known for embracing foreign investment.
The reopening of Hungary’s Golden Visa program could have significant benefits for the country, by boosting the economy and increasing tax revenue, but it also comes with significant risks. As the decision to reopen the program would need to be carefully considered and balanced against these risks and concerns, it’s likely that more individuals will begin to turn towards other countries to invest their money in exchange for the prospect of a residency permit.