With effect from the 29-09-2013, the Spanish
Government finally fully approved the 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 property
located in Spain.
The law was published on the Spanish Official
Gazzete (BOE) and one of the most crucial aspects 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 several), 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 Permit will 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. - Have
medical insurance. - Have
sufficient money or financial means to support the applicant (and family)
during the period of stay in Spain. The law however does not say how much this
is and so, if we are guided by the income criteria of the Non-Lucrative
Residency Permit, the applicant will need to prove earnings of at least
€2,128/month, plus an additional €532/month per family member whereas, if we
are guided by the EU-citizen Residency Permit financial criteria, the applicant
will have to prove having a bank balance of at least €5,058, plus an additional
€3,540 per family member.
Who can apply together with the main Applicant?
The Act states that the spouse and children
under 18 years of age or those over this age who, due to health issues, are not
objectively capable of looking after themselves.
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 (which implies going back to the country of
origin).
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.
Do I have to be in Spain for more than 6 months during any year period?
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, 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 (and 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.
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 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.