Ireland follows, Portugal also abolishes
Russian signatories use overseas escape routes
[Asia Economy Reporter Jeong Hyunjin] The European 'golden visa' system, which grants visas to non-citizens in exchange for money, is rapidly disappearing. Introduced to attract investments from non-European Union (EU) member countries, the system has faced various side effects such as security issues arising from the Russia-Ukraine war and rising local real estate prices, prompting countries like Portugal and Ireland to abolish the program.
◆ Ireland and Portugal 'End' the Program
According to Bloomberg and other sources on the 20th, the Irish government announced on the 14th that it would no longer accept visa applications for non-EU nationals possessing assets of at least 2 million euros (approximately 2.73 billion KRW). Two days later, on the 16th, the Portuguese government also announced the suspension of golden visa issuance. This move by EU countries follows the UK's abolition of the system a year ago.
The golden visa system grants residency visas to individuals who purchase property, make large investments, or donations in the host country. Applicants must be adults over 18 years old, have no criminal record, and possess a certain level of wealth. Since obtaining a visa in one EU country allows easy movement to others within the region, millionaires actively utilize this system.
Ireland operated a golden visa program that provided residency to those who donated 500,000 euros or invested 1 million euros annually for three years. Through this, the Irish government reported attracting investments totaling 1.25 billion euros.
Portugal's required investment amount for obtaining a golden visa is 280,000 euros, lower than other EU countries. As a result, it attracted the interest of wealthy individuals, with 1,300 billionaires arriving last year alone. Over ten years of operation, Portugal secured 5.8 billion euros in investments through this program.
Spain, Italy, and Greece currently operate similar programs but are likely to strengthen regulations. According to recent reports by Euronews, a bill to tighten golden visa regulations or abolish the system has been submitted to the Spanish parliament.
◆ Impact of Russia-Ukraine War... Real Estate Issues Also
The reduction of this system by EU countries is partly due to the Russia-Ukraine war. Since February last year, Western countries including the US, EU, and the UK have imposed successive sanctions on Russia. There is concern that some Russian individuals subject to sanctions or supporting the war may hold EU visas. This raises the possibility that they might avoid sanctions or flee to EU countries currently involved in the conflict.
According to foreign media reports, the EU urged member states in March last year to terminate golden visa programs and stop selling visas to Russians and Belarusians. The EU is also pressuring countries like Malta, which operate 'golden passport' programs granting citizenship, not just residency. Members of the European Parliament have expressed hopes for establishing common EU regulations to combat money laundering, corruption, and tax evasion.
The UK acted earlier than the EU. The British government halted its golden visa program in February last year, just before Russia's airstrikes on Ukraine, citing the need to reduce money laundering and fraud. The UK Home Office revealed that since the program's inception in 2008, over 14,500 golden visas had been issued to Russians. Last month, the UK included ten Russian oligarchs holding golden visas in its sanctions list.
Additionally, rising domestic real estate prices have contributed to the abolition of the golden visa system. Portugal allowed property purchases as part of the investment for obtaining golden visas. This caused real estate prices to surge in Lisbon and other areas, with a significant increase in short-term rental housing. Bloomberg reported that rents in Lisbon rose by an average of 36% within a year. As of January, rents jumped from 1,300 euros in 2015 to about 3,800 euros in 2023.
The luxury yacht 'Nord,' presumed to be owned by Alexey Mordashov, a Russian oligarch (new tycoon) subject to Western sanctions [Image source=Reuters Yonhap News]
◆ Americans Seeking 'Golden Passports' Flock to Malta
The main users of golden visas and golden passports have been Chinese and Russians. According to EU data from 2021, over 50% of golden visa recipients in the EU were Chinese nationals, with Russians accounting for about 10%, making them the second largest group. For golden passports, Russians made up nearly 50%, the largest share.
However, foreign media reported that last year Americans showed strong interest in securing European residency or citizenship. The US economic media Business Insider recently cited data from investment immigration consulting firm Henley & Partners, stating, "For the first time, Americans are applying for golden passports and visas more than any other nationality." Henley & Partners reported a 447% increase in related inquiries from the US since 2019.
Global investment expert Jeff Offdike analyzed that Americans are applying due to inflation, social and political instability, and the collapse of the middle class in the US. Mehdi Kadiri, Henley & Partners' North America head, said that the second most popular program among Americans was Malta's golden passport scheme.
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