Spain’s Real Estate Residency Finally Approved
With effect from the 29-09-2013, the Spanish Government has approvedthe Investors’ Support and Internationalization 14/2013 Act which includes, among others measures, a Spanish residency programme that will allow investors to become permanent investors if they invest, at least, €500,000 in a property. The law was published early this morning in the Spanish Official Gazzete (BOE) and one of the most crucial aspect of it is that it facilitates people traveling to, or residing in Spain, who intend to carry out a ‘relevant investment’.
What is a relevant investment?
According to article, 63, the following will suffice to attain residency in Spain:
- An investment of at least €2,000,000 in Spanish Government bonds.
- An investment of at least €1,000,000 in shares of Spanish companies.
- An investment of at least €1,000,000 with a Spanish-based bank or financial entity (basically, depositing that money in a savings or fixed deposit account).
- An investment of at least €500,000 in Spanish property (one or more), per applicant, provided the first €500,000 of the property value is unencumbered (mortgage free).
- A business investment that is to be carried out in Spain and is deemed of public interest for which purpose, at least one of the following conditions will be considered relevant: a) jobs it will create b) socioeconomic impact in the geographical area where the activity is to be carried out and c) relevant contribution to technological or scientific innovation.
Investment by foreign companies also qualify for residency provided it does not originate from an offshore tax haven, as per Spanish laws, and that the investor owns, directly or indirectly, the majority of its voting rights and has also the right to designate or remove the majority of the members of the board of directors.
Investment Residency Visa and Investment Residency Permit
The Act has created 2 different types of documents to enter and reside in Spain, the Residency Visa and the Residency Permit. The Residency Visa is valid for up to 1 year, and the Residency Permit is valid for up to 2 years, which can be extended for a further 2 years. This would give a total of 5 years, 4 of which are deemed proper residency and the first one, just the right to stay and live (an important distinction because 5 years of continued residency entitles the beneficiary to reside permanently in Spain). In addition to meeting the conditions to qualify for the Investors’ Residency Visa, an applicant for an Investors’ Residency Permitwill have to comply with the following:
- Hold an Investors’ Residency Visa that is not overdue by more than 90 days over the expiration date.
- Have travelled to Spain at least once during the validity of the Visa.
- Prove that the investment that enabled the applicant to receive the Visa is still in place.
What other requirements have to be met?
The Act will also require that any applicant complies with the following (standard in the Non-Lucrative or Non-Working Residency Permit):
- Not be in Spain irregularly.
- Be over 18 years of age.
- Absence of a criminal record in the country of original residency.
- Have medical insurance.
- Have sufficient money or financial means to support the applicant (and family) during the period of stay in Spain: if we are guided by the prerequisites of the Non-Lucrative Residency Permit, the applicant will need to prove earning of at least €2,128/month, plus an additional €532/month per family member.
Application Process and Timescales
The Residency Visa will be applied for and granted by the Spanish Consulate of the demarcation of the applicant. The Residency Authorization will be applied for and granted by Directorate General of Migrations. An application for a Residency Visa will be resolved in a maximum period of 10 days, except where the application is subject to the EU Visa Code. The Residency Authorization will be granted in a maximum period of 20 days from application after which period, if the Consulate has not responded, the application will be presumed granted.
How would it work, in practical terms?
An applicant that wishes to apply for a Residency Visa under the Act will first need to apply for an ordinary visa, with a view to travel to Spain and investigate investment options/opportunities, meet with lawyers, real estate agents, banks, etc. Once a decision is made and the investment carried out, the Residency Visa will have to be applied for at the Consulate. Obviously, it is possible that an investor decides to proceed with the investment operations remotely (for instance, purchasing a property via a lawyer, with a Power of Attorney) and, on conclusion of the property conveyance transaction, he applies for a Residency Visa with the required proof of his investment i.e. Property Title Deeds. The Act does stipulate that the investment needs to be maintained during the period of the validity of the Residency Visa or Residency Permit, and that routine checks may be carried out to verify if this is the case.
Do I have to be in Spain for more than 6 months during any year period?
Specifically, NO! The Act stipulates that Residency Visa or Residency Permit holders do not need to spend more than 6 months in Spain, with a view to renew the permit (which implies that, as stipulated in the law, provided they are in Spain at least once during the period of the Residency Visa, they are pretty much free to spend their time as they wish, in Spain or in any other country).
Can I become a Permanent Resident in Spain or a Spanish Citizen through this method?
YES. In fact, the Act specifically states that the applicant’s absences will not prejudice the right to permanent residency (5 years onwards) and citizenship.
Can a person still apply for permanent residency without having to invest the sums in this law i.e. buying a property worth say €200,000, with a €180,000 mortgage?
The Act has not modified the 2 other main types of residency permit applications, which are:
- Non-Lucrative Residency Permit (Autorización de Residencia No-Lucrativa)
- Self-Employed Work and Residency Permit (Autorizacion de Residencia y Trabajo Por Cuenta Propia)
This means a person can still apply for residency in Spain via the regular -above- procedures.
Can I apply if I already have a (unencumbered) property in Spain worth €500,000?
The Act does not include investors who already had a property in Spain prior to its enactment although, nothing stops them from selling, buying again and then apply for the Investors Residency Visa and further, the Investors Residency Permit. People that comply with the other financial criteria (having cash deposits, shares etc.) can apply.
Good to see it published finally. The only suprise here is the retrospective nature. ie it is for purchases from now and not recently. Perhaps you could clarify this?
The Act does not state that those who already have property can apply, but rather those that invest once the law has come into force.
Owners of property over €1,000,000 could actually sell, lodge the proceeds with a Spanish bank and then apply, or re-mortgage their home, give the loan back to the lender and seek residency.
This is good news , some good points such as potential permanent residency, not having to be ther for six months or more at a time etc but shame about the “cash only” purchase options (no mortgage) and the level at half a million euros is high.
Hello Martin,
The threshold is certainly high but this was a requirement (I would call it imposition) by the EU who saw the €160k limit, as previously announced, excessively low.
I would say that this measure may attract between 10 to 15 thousand people a year mostly from the Middle East, Russia, China, North Africa -Magreb countries- and possibly South America.
I am given various reports, each stating that there is either NO minimum stay or Minimum 6 months stay.
How do I find out the official law? it makes a huge difference if the investor cannot yet relocate full time
Hi Louise,
You can get the law by clicking on the link in para 1.
The law stipulates that there is no minimum stay in Spain to maintain this residency permit and so, all reports should be consistent with this. This requirement was specifically inserted as had it not, it would have become an obstacle for most investors who are not able, nor wish, to spend any specific length of time in Spain.
Dear mr Antonio
Thanks for the information,
I am Syrian nationality,and since 1992 Iam leaving and working in Qatar
My question,what the best and quick way which I can get resident visa
In Spain??what your suggest ??
I ask you kindly to replay me a.s.a.p
Best regards
What the quick and easy way to have resident statment in Spain
Regards
Hello Salem,
Currently, the quickest way would be pursue an investment as explained in this new law. If this is not possible (which would not be for most) then we suggest that the 2 other alternative routes are explored: non-lucrative residency permit or self-employed work and residency permit.
Let us know if you are available for a phone call on Monday morning.
Antonio
Some ideas on this interesting topic, below are what I think are the pros and cons of buying property, as opposed to putting down a bank deposit:
– The investment of €500,000 is half of the minimum bank deposit.
– Property can appreciate in value over time if one buys at the right price in the right location.
– Property can be used by friends, family or even rented (3-4% p.a.).
– Overall property may be a better investment, in the long run.
Cons:
– Costs are high (transfer taxes 8-9%) in comparison to the bank deposit route.
– Undoing the investment would be more costly and is reliant on getting potential buyers.
Hi Antonio,
I am interested to learn what happens after permanent residence is granted? ( 6 years after first Visa application, if I understand you correctly).
When citizenship then can be applied for? Would it assume residence is now required to be actual (180 days plus) and tax residence comes into force?
Thanks
Hi Dan,
It would work as follows:
– 1 year of Residency Visa
– 2 years of Residency Permit
– Further 2 years of Residency Permit
This is 4 years of residency after which, the law does not say what happens although we presume that further laws will be enacted to allow continuation.
General immigration law states that after 5 years, any resident of Spain becomes permanent.
One question that gets asked all the time: does a resident of Spain under this Act need to declare assets located worldwide?
Theoretically, this is the case with residents of Spain although the Act does not address this issue. However, the General Tax Act states that a person will be a tax resident of Spain when one of the following is met:
• That a person spends more than 183 days of a calendar year in Spain.
• That Spain is the main center of the person’s business activities or economic interests, directly or indirectly.
• That the spouse and under age children reside in Spain (this presumption can be refuted according to the Act).
If we refer to the above, holding an investors’ residency visa and permit under this Act would not per se make a person resident for tax purposes in Spain. This is however subject to opinión and certainly, the ultimate decision of the Tax Office.
Would it be correct to assume that if, according to General Immigration Law, permanent residence is granted after 5
years of residence, provided that the person spent these years residing in the country?
If under current Act residence is not mandatory, would it prevent those not actually living in Spain
from obtaining permanent residence?
Does the Act address these, pretty logical, concerns? (i.e. whether it is stating that the permanent
residence guaranteed to applicants who abide and follow all the requirements).
When it becomes possible to apply for naturalisation after receiving permanent residence? Would this require
taking Spanish language and other tests?
Thank you for addressing my questions which I am sure will be very beneficial to all your potential clients
and those considering finer details of this residence programme.
That is correct, 5 years of uninterrupted residency allows to become a permanent resident.
The Act states that specifically, spending a mínimum of 183 days is not a requirement, under this residency programme.
Citizenship can be attained within 10 years of permanent residency, provided the applicant can prove a certain degree of “integration” i.e. acceptable knowledge of the language, culture, customs, history etc.
Could you just clarify this point “the Act specifically states that the applicant’s absences will not prejudice the right to permanent residency (5 years onwards) and citizenship.”
We have several lawyers who advise us differently. That the client must spend 6 months a year in Spain (or the EU). Naturally this is an important point for many clients.
Hello La Vida Spain: applicants are not obligated to spend in Spain no time, other than pay a visit during the first year (stay permit). A different matter is whether they would, by virtue of being residents, obligated to pay tax in Spain.
This is a question that needs answering by the Tax Office, and we have made an enquiry to that effect. It is our opinion however that the answer would be negative, since beneficiaries of this type of residency do not have any type of connection with the country other than having a holiday home (or another type of investment) and an investor’s residency card.
Good solid information. Lots of facts and no whaffle! Good article
Hello I have a Russia client who has a working Spanish residency card. She has now been back in Russia for more than 8 months without returning too Europe once. Will she be able to enter Europe by showing her Spanish residency card, her Spanish residency card has not expired yet or will she need to apply for a tourist visa ?
Vega,
Your client is free to enter the EU so long as the card has not expired.
Renewing the card could however be challenging if they have not been in Spain for at least 6 months per year although this is not always checked.
If i become a spainish resident hoy much time can i spend away from spain?
I was told that i cannot spend more than 10 months out of spain in a 5 year period.
Wissam,
The law states that to be a resident, you need to stay at least 6 months per year. ThThis is a requirement that not all immigration authorities check but if they do (they normally check the stamps on the passport) and the person has not spent at least 6 months, they can reject the renewal.
I wonder what will happen to Brits buying property in Spain after Brexit? Hopefully there will be no major changes.