At the end of 2013, the Kingdom of Spain successfully passed its first legal framework to grant long-term residency to foreign investors (Law 14/2013), following a petition submitted by SPAINRESIDENT in late 2011. Since then, SPAINRESIDENT and other experts have continued to monitor the implementation of the Law and requested further improvements.
Now, on July 29, 2015, the Spanish Parliament passed the Law 25/2015, which introduces a number or relevant improvements to the investor residency regime in Spain. As a result, the Spanish investor visa system is now at the forefront in Western Europe and fully in line with the best jurisdictions so far, such as Portugal or Greece.
Key features of the new Law 25/2015 are the following, with changes to the previous Law 14/2013 highlighted in italics:
- Now, all ascendants and descendants of the investor can obtain a residency permit, regardless of their age, thus enabling the entire family to benefit from this regime. In the previous Law, only spouse and children under 18 were eligible for the residency permit.
- Now, couples married under the joint-property system, very common in many countries, who usually acquire properties together, are not required to comply with the € 500,000 minimum investment individually. In the previous Law, joint-property couples were at disadvantage because the minimum investment requirement applied on an individual basis.
- Now, unmarried couples can also benefit from the Law as long as the register with the Spanish “domestic partnership” Civil Registry. This also applies to same sex couples. This option was not available in the previous Law.
- Now, investors can purchase their properties in Spain either directly or indirectly through a company, as long as they hold the majority of shares and the company is not based in a tax haven. In the previous Law, investments in property were required to be made on an individual basis without corporate vehicles.
- Now, the investor visa has a longer validity after its first renewal. The sequence is now 1 year-validity followed by 2 years and then periods of 5 years each. In the previous Law, the 5-year permit duration was only possible upon the second renewal.
- Now, investors can apply for the investor visa with a notarized earnest money agreement, without having completed the entire property purchase process. This choice did not exist in the previous Law and provides more guarantee to the investor who may now know about the outcome of his application before making the full investment.
The amended Spanish investor visa regime is now in line with the best European jurisdictions and combines with other advantages, such as:
- Sound economy, with the highest projected GDP growth rate for Spain in all Europe (+3% in 2015).
- Pleasant climate, free of typhoons, hurricanes, and earthquakes or high tides.
- Slowly recovering property market (+2% in 2014, after declining by 37% in 2008-13).
- Weak Euro currency.
- Wide variety of investment choices, from beachfront villas on Ibiza to city apartments in Barcelona.
REMINDER OF KEY FEATURES OF INVESTOR IN SPAIN
- Minimum investment is € 500,000 for real state, € 2 million for public debt and € 1 million for other asset classes (e.g. company shares, other tangible assets, intangible assets, etc.).
- The investment of € 500,000 may apply to one or several properties.
- The minimum investment must be in cash, but beyond € 500,000, the remainder may be funded with a mortgage loan. Banks are lending again in Spain with 50/50 loan to investment ratios and 3-4% annual interest rates.
- The residency permit shall be valid for all the 26 countries of the Schengen Area, namely Germany, Austria, Belgium, Denmark, Slovakia, Slovenia, Spain, Estonia, Finland, France, Greece, Netherlands, Hungary, Iceland, Italy, Latvia, Lithuania, Liechtenstein, Luxemburg, Malta, Norway, Poland, Portugal, Czech Republic, Sweden and Switzerland.
- The entirely family is eligible for a residency permit along with the investor.
- Properties may be rented out and only income generated in Spain will be taxed locally (civil residency, no tax residency in Spain).
- In 5 years, the investor may apply for and EU permanent residency permit, in accordance with the requirements of Directive 109/2003, which apply to all EU countries.
- No actual residency in Spain is required, so that the permit holder may still live outside Spain or EU.
- The investor may purchase directly by the investor as an individual or through a company vehicle.