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The Hungarian government has announced that it will be suspending its Investor Immigration Program on March 31, 2017. Although I’ve not filed for this program myself, I did spend a little bit of time looking into it and briefly considered doing it when I was last in Budapest.
I think Budapest is a fantastic city to visit and as somewhere to base yourself as a nomad, but, personally, I’ve always had concerns about doing anything more than that. On the news for example, it’s clear that the Hungarian government is not open to refugees and they’ve pursued banks who have made loans to willing borrowers. As I say, there are certainly some challenges there which need to be considered.
What is an Immigrant Investor Program?
Investor Visa Programs in the European Union are set up and run by a country’s government to allow non-EU citizens the ability to reside and work there through the investment of a certain amount of money into government bonds. In Hungary, this has been possible in return for a deposit of 300,000 euros. After eight years (having earned no interest on their investment), the investor can then apply for citizenship, which would allow them to live and work anywhere in the European Union.
For many non-EU citizens, using investor bonds or residency programs like this are a good way of securing entry into the European Union. They are particularly popular with the Chinese and other nationalities who cannot easily gain entry into Europe and want to work and travel there, but can’t afford to get a second passport.
There have always been risks associated with this type of scheme and I don’t believe that the Hungarian government has ever truly liked having it. Two years ago, for example, I was talking to someone about investor bonds and I asked them what would happen if the government decided to keep the money. They responded that there was always a possibility that would happen, but that the government would probably make indications that such a thing was going to happen. For example, they’d they’d make it up to people by speeding up the process by a few years to allow citizenship after five years rather than eight.
Fortunately, this scenario is no longer a concern because, as I’ve mentioned already, Hungary is closing the door and will no longer be offering immigrant investor bonds, effective March 31, 2017.
Why are they closing the scheme?
Primarily, it’s because the economy is doing better and they are more prosperous than they’ve been previously. Because of this they are able to close the door on the Chinese and others wanting to enter their country.
If your application is not already in the queue, once the scheme closes on March 31, the opportunity will be gone forever. Although the scheme is officially only in moratorium (a delay or suspension of a law), as far as I’m aware, none of these programs that I’ve seen go into moratorium have ever come back.
As a westerner, this probably doesn’t affect you and there is not too much you need to do. However, I do like the idea of having European residency for two reasons:
- For people from the USA, Australia and soon to be UK etc. who want to spend more time than they are allowed on a tourist visa in Europe. For most of us who are moving around frequently this is not an issue, as six months a year in Europe and the Schengen area is fine.
- For people looking at Plan B passports. Plan B passports are usually very mediocre passports for people who are considering renouncing their citizenship from another country. The risk for these individuals in renouncing is that their new passport would not allow access into Europe. A Hungarian passport, in this case, would resolve that issue.
However, a Hungarian passport is not the only way to resolve these issues. People in this situation may compare their second passport without European access against European residency schemes. I’ve met people in this situation over the last few years and I’ve suggested to them that they set up a second passport as well as European residency to protect themselves as their Plan B.
Overall, for the average non-EU westerner, this program being cancelled is not a huge deal. However, it does show that some of the countries in Europe are becoming increasingly nationalistic and are likely to begin closing down these options. Aside from investor bonds, there are still other ways to gain EU residency. including schemes in Latvia and Ireland — although these programs are dwindling and I am always surprised that more people don’t take them up. For entrepreneurs there are also ways in through Portugal, Spain and other European countries.
Will these options get more expensive now? No. But don’t rely on some government pay back your bonds as a way to get a residency. I definitely feel your money is safer in real estate or in the bank.
The Hungarian Investor Visa Program was never one that stood out to me and I do not think that it’s closure is a huge loss. Budapest as I’ve said, is a lovely place to visit but having studied both the bond and entrepreneur residency programs, neither stood out to me.
Nevertheless, do be aware that doors are starting to close. We recently spoke about newly cancelled residency programs and a lot of them are starting to fall by the wayside. I’m confident that new ones will crop up but my advice is that if you are interested in a particular program, it’s best to get on with it now because, over the next 3-5 years, many of these countries could either dramatically increase their eligibility guidelines or change their minds and cancel their programs all together.
Finally, if Hungary is somewhere you’re keen to gain residency, my advice would be to get your application in before March 31, 2017 before they close the door.