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Residency permit for Spanish property buyers


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Full details of the new Spanish residency permit available for non-EU citizens wishing to invest in Spanish property. By HGF Estates

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Residency permit for Spanish property buyers

  2. 2. New Spanish Residency Law for Non-EU Foreign Property Investors Obtaining a residency permit for Spain by investing in real estate assets valued at €500,000 or more has become possible for non-EU foreign nationals with the so-called “Golden Visa”. The Spanish government recently passed Law 14/2013 that seeks to encourage international investment and new business initiatives. The new law was officially published on September 28th 2013, and came into force on September 30th 2013. The new law essentially means that non-European Union citizens could be entitled to obtain a Spanish residency permit if they are prepared to carry out a significant capital investment in Spain and meet other basic requirements as listed below. Only certain types of investment are included in this group. Those would be the following: • • • • • Investment in real estate assets (€500,000 or over). Investing in Spanish Public Debt (minimum €2,000,000). Investing in Spanish Private Companies (minimum €1,000,000). Investing in projects that are considered to be of public interest. Bank Account Deposit (minimum €1.000.000). A detailed study of the new law would include the tax, financial and regulatory aspects of it, but of more immediate interest for real estate buyers will be the sections that regulate how to obtain a residence permit when investing in property in Spain. Page 2
  3. 3. Real Estate investments of a minimum amount of €500,000 For the purposes of this law, significant capital investment may be understood to mean a minimum amount of €500,000 (per person) i.e. the minimum amount that an individual must invest on real estate is €500,000 - excluding loans, mortgages or any other encumbrances. In the case of joint ownership (for example a married couple), the minimum requirement is not met. In such situations, further study will be carried out to prove that the head of the family is able to show commitment to support the rest of the family through a sponsorship letter. Qualifying property may be purchased through an investment company, as long as the company is not incorporated in a jurisdiction considered by Spanish authorities to be a tax haven, and that the applicant for the residence permit holds the majority voting rights, being entitled to appoint the majority of the members of the Board of Directors. It is also possible for applicants to invest in several properties of lower value, as long as the full amount invested in all of them is equal to or greater than the minimum requirement of €500,000. Investors are entitled to use a mortgage when purchasing property for a greater value; the residency permit application would still be accepted, as long as there is an invested amount of €500,000 free of encumbrances. Page 3
  4. 4. Investments in Spanish Public Debt or in Spanish companies. When investing in Spanish Public Debt, the minimum amount is €2,000,000; when investing in shares of Spanish Companies, the minimum amount required is €1,000,000. Residency application may be filed retroactively, with the exception of an application via Public Debt investment, in which case there is a deadline of 60 days. A residence permit obtained in this way would be valid for one year at least, and the process would be significantly faster than the traditional one. In fact, it is expected that the new permits will be issued within ten days, and applicants will not be required to obtaining a Foreigners Identification Number (NIE). For renewing and extending this residency every two years, the requirement will be that the person is under the same circumstances as when obtaining residency in the first place. Please note that the investor is expected to have travelled to Spain at least once during the first year of residency. Applicants will also need to meet all other requirements for becoming resident, i.e. hold a public or private health insurance, have sufficient resources for themselves and their family members, and showing a clean criminal record. Page 4
  5. 5. Spanish Residency Permit for Non-EU Property Investors Basic Requirements: • • • • Min. investment of €500,000 EUR per person on real estate. Private medical insurance from a recognised Spanish provider. Proof of being able to support family and properties in Spain. Clean criminal record. FAQs Q: The same person owns three properties: one bought for €250,000, another one for €150,000 and a third one for €100,000. Is the property owner eligible for residency? A: In this case, the person IS eligible for a residency permit, as the total value invested in Spanish property matches the minimum requirement of €500,000. Q: The owner of a property, whose value is €750,000, obtained a mortgage loan for €250,000. The remainder of €500,000 was paid upon completion of the acquisition process. Is the property owner eligible for residency? A: This person would be eligible for residency, as even though he acquired the property with a mortgage, the amount of €500,000 is paid and free of burdens. Q: A husband and wife buy a property with a value of 700,000.00 EUR. Are they both eligible for residency? A: They are NOT eligible for residency permits, as each one owns 50 % Page 5
  6. 6. (€350,000 each only). However, if the head of the family can show commitment to support the rest of the family through a Sponsorship letter, residency for the others can be obtained. Q: A private contract has been signed and €550.000 has been paid towards an off-plan property. Does this qualify the purchaser to get residency? A: No, the ownership of the property has to backed with Title Deeds and proven with a certificate of registration from the Spanish Land Registry. Q: An investor buys a plot of land for €300.000, and starts construction of a property, investing so far €700,000. Does this qualify the owner to residency? A: No, as there is no Title Deed of Declaration of New Building, and the Deeds registered (for the plot) don’t achieve the minimum €500,000 to qualify. Q: Can investors get residency buying through a non-resident company? A: It is possible to do so, as long as the applicant is in control of the company, i.e owns the majority of the shares and the majority for voting rights. Q: Does the applicant have to be a Company Administrator? A: No, as long as conditions above are in place. Q: What are the deadlines for applications? A: There is no application deadline for real estate investment residency permits. Page 6
  7. 7. Q: Can applications be submitted for a real estate acquisition made last year (2012)? A: In principle yes, as there is no time limit and the interpretation is considered retroactive. Q: What are further benefits of this application? A: Quick processing, of approx. 10 days for the first period of residency of one year (by the normal means, it takes around one year). When renewing the process is 20 days, for approval with positive silence. There is no requirement to stay in Spain for any minimum period of time, as long as there is a visit during the period of validity of the Residency Visa, which also means there is no initial obligation to become a fiscal resident. Q: How long is the residency permit valid? A: In principle, one year for the first period. Then renewals are valid for 2 years, under the condition that the circumstances do not change. *Original content for this document was adapted from Manzanares Abogados Lawyers HGF E S T A T E S Page 7
  8. 8. HGF E S T A T E S HGF Estates Avda. Federico García Lorca, Bloque 1, SS1, Urb. Pueblo Quinta, Fase 2, Benalmádena 29630, Málaga, Spain Email: Tel: +34 952 567 531 Tel: +34 952 566 357 Page 8