‘Golden visas’: Europe tightens residency rules for the rich

In his Tennessee high school valedictorian speech in 1998, Benjamin Trotter invoked Socrates: “I am neither Athenian nor Greek, but a citizen of the world.”

Fast-forward two decades, and Mr. Trotter began to feel less at home in his own country. Worn down by divisions in American society, he began to fantasize about living in a place where he wouldn’t have to worry about the erosion of his rights as a member of the LGBTQ+ community. His gaze turned to Europe.

Being a citizen of the world, though, comes with a steep price tag: €350,000 ($377,000).

That’s on the low end for what is known as a “golden visa,” a document that grants residence to investors who make a significant contribution to a country’s economy. In exchange for Mr. Trotter’s investment, Portugal would grant him residency, giving him access to the entire European Union and, eventually, one of the most accepted passports in the world.

Since he applied, though, the tide across Europe has begun to turn against residency-by-investment programs, set up in the aftermath of the 2008 financial crisis to attract foreign capital.

Last month, Spain became the latest country to announce the end of a golden visa program for real estate, following recent moves by Portugal, Ireland, Bulgaria, Latvia, and the United Kingdom. Some politicians say they are trying to tackle affordable housing crises worsened by recent influxes of wealthy foreigners. Others point to the security risks of selling residence permits to the highest bidders.

The shift in policy reflects a deeper challenge facing Europe when it comes to regulating the future of globalization. The growing expectation of free mobility is coming up against concerns about who gets to reap its benefits – and under what conditions.

​​“European values are not for sale,” said Didier Reynders, EU commissioner for justice and consumers, in a 2022 press release urging member states to retract their golden passport programs. Whether that’s true in practice is another question.

​​“It’s not the end of the golden visa,” says Paula Schmid Porras, a Spanish immigration lawyer and professor of law at the University of Seville. Applicants in Spain, for example, can still qualify by investing in sectors the government is seeking to encourage. “If you’re poor and an immigrant, it’s difficult” to earn residency in Spain and other countries, she adds. “But if you’re rich, you have a red carpet.”

Russians, Chinese, and Iranians the big golden visa winners

Golden visa schemes emerged in the 1980s, first in the Caribbean, and then in Canada and the United States. The trend gained popularity in Europe in the early 2010s as governments looked to boost struggling economies. In Spain, foreign capital helped restore a collapsed real estate market.

The programs tend to have few requirements, in some cases needing only a short visit to the country each year. While some promise full citizenship, others offer residency rights and a pathway toward naturalization. Their prices range from €150,000 to over €1 million, earning Europe an estimated €21.4 billion between 2011 and 2019.

During the pandemic there was a surge in interest in golden visas among Americans looking for lifestyle alternatives. But the largest share of beneficiaries are those whom researcher Kristin Surak has called “the non-Western winners of globalization.” In Spain, the majority of golden visa recipients are elites from Russia, China, and Iran, says Ms. Schmid Porras.

Russia’s invasion of Ukraine in 2022 prompted the EU to worry more about security considerations; the EU Commission urged member states to end their investor citizenship schemes and tighten controls on investor residency programs. Concerns about money laundering and other illicit activities pushed Ireland, the U.K., Bulgaria, and Latvia to scrap their golden visa programs. But Hungary, the EU country most sympathetic to Moscow, is relaunching its golden visa.

“The risk arises when there are no proper checks on the procedures,” says Roland Papp, a senior policy advisor with Transparency International, an anti-corruption watchdog. He says business partners of Syrian dictator Bashar al-Assad gained EU residency through a Hungarian investment program. The EU took Malta to court in 2022 for a golden passport program it says doesn’t meet European law.

Whose houses are they, anyway?

Others are pushing back against the local ramifications of an increasingly globalized world. Spanish Prime Minister Pedro Sánchez announced the end of his country’s real estate golden visa in an effort “to guarantee that housing is a right and not a mere speculative business.”

In 2023, a record 15% of the homes sold in Spain were bought by foreigners, and double that in some provinces like the Balearic Islands and Valencia. Many become short-term rentals for tourists.

Yet those in the real estate industry say the decision won’t do much to ease Spain’s housing woes. Less than 0.6% of the homes sold in 2023 were bought through the golden visa scheme, according to property website Idealista.

“They needed to blame someone,” says Mr. Trotter, sitting at a sunny cafe in Madrid. “In reality, they love the investment.”

Like Spain, Portugal scrapped its golden visa for real estate investments last year. But hopeful residents with the resources can still invest in qualifying sectors ranging from sustainable agriculture to culture and scientific research.

Those types of programs make a difference “for the progress and development of that country,” says Joana Mendonça, head of the legal department at Global Citizen Solutions, an investment migration firm.

“The ability to move around the world and to travel and to seek the best place for one to settle – I think this is something we should facilitate,” she adds. Yet she acknowledges that “not everyone is able to invest that amount of money.”

Mr. Trotter, too, knows it’s a privilege to be choosing where his spot in the world might lie.

“It was simply the luck of the draw of being born on a certain soil,” he says. “To turn a blind eye [to other migrants] seems irresponsible.”

He applied for his golden visa in 2021, before Portugal’s recent restrictions. As he waits for it to be processed, he has hopped from Mexico to Spain to Italy, exploring an artistic side of himself through pottery and sculpture that used to lie dormant in the U.S.

“I do want to put some roots down and start creating a community, but I need the legal right to do so,” he says.

In the meantime, he’s still working to emulate Socrates, with no regrets about leaving his home country behind: “It’s really nice to be away from that hamster wheel.”