Hungary is a highly appealing destination for those seeking residency in the European Union. The Central European nation is part of the Schengen area, has an attractive real estate market, competitive investment thresholds, and a tax-friendly regime (Hungary has the EU's lowest corporate tax at just 9%).
As European residency programs evolve, Hungary's upcoming Golden Visa, which will officially be known as "The
Hungary Guest Investor Program" is rapidly gaining attention, and we believe that it could be the next big thing in the investment migration industry. Amidst regulatory adjustments and shifting investment landscapes in other EU countries, Hungary's Golden Visa program is emerging at a time where its upcoming competition looks set to weaken.
Hungary 's Golden Visa program is therefore poised to make a significant impact.
However, it's important to note that the program won't start accepting applicants until July, marking a pivotal moment for potential investors to prepare for this exciting opportunity. By this time the golden visa line-up could look very different. Below we will discuss why the Hungary Golden Visa makes such an attractive proposition and this stage in the game particularly from an industry professional standpoint and how the timing of current news could play into its hands.
Hungary's Real Estate Market: The Most Attractive Golden Visa Real Estate Option
In the context of tightening global residency program requirements, Hungary's real estate market stands as an exceptional beacon of opportunity for investors. Budapest, in particular, shines as a jewel for those eager to tap into a market at the brink of significant expansion, offering a blend of rich cultural heritage and promising economic prospects.
Hungary's minimum investment threshold for the real estate option is set at 500,000 EUR, aligning with Spain's criteria for similar investment ventures. However, Spain's investment climate is poised for potential upheaval, with
the government considering drastic changes to its "golden visa" program, including possibly doubling the real estate investment requirement to 1 million EUR or eliminating the program entirely. This uncertainty underscores the comparative stability and attractiveness of Hungary's investment environment.
While the present investment minimum in Greece and Latvia is 250,000 EUR, significantly lower than in Hungary, the scenario is set to change,
especially in Greece where the threshold is expected to increaseto 800,000 EUR in major cities and 500,000 EUR elsewhere. Such adjustments highlight a trend towards more stringent investment criteria across the Schengen Area, enhancing the appeal of Hungary's upcoming program.
Portugal's recent withdrawal of its real estate option for new applicants further illustrates the evolving landscape of European investment opportunities, casting Hungary as an enticing alternative amidst these changes. While the situation in Latvia provides a poignant example of how geopolitical dynamics can reshape investment landscapes. With Russians, who traditionally comprised the largest group of investors in the Latvia program, now facing prohibitions,
Latvia's ability to attract significant investments has been notably compromised. This development contrasts sharply with Hungary's stable and inviting investment environment, which not only maintains a competitive investment threshold but also offers a culturally rich and economically promising setting for investors looking to capitalise on the dynamic opportunities within Europe's real estate sector amid fluctuating regulatory and economic conditions.
Competitive Minimum Investment Threshold
Within the landscape of European golden visa programs, Hungary stands out for its accessible entry point to European residency, with a fund investment minimum of €250,000. Only Latvia offers a cheaper passive residency by investment option in a Schengen country through its €50,000 shareholder investment option. We therefore expect Hungary to be able to compete with other programs on price, especially given the potential increases likely to take place over the next year or so.
To qualify, foreign investors are required to make a €250,000 investment in a real estate fund registered by the Central Bank of Hungary. This comes with key conditions: the investment must be held for a minimum of five years, fund managers need to comply with strict principles and have necessary security clearances, and at least 40% of the fund's assets must be allocated to residential projects in Hungary.
Investor-Friendly Application Process
The government's ambition for the upcoming golden visa program is to create the most investor-friendly application process available. A pivotal aspect of this strategy is the remarkably swift processing timeline, targeted at 6-8 weeks, which if realized, would markedly elevate the program's desirability among potential investors.
Crucially, the program is expected to incorporate a unique feature where investors are allowed to proceed with their investment only after receiving approval. This innovative approach minimises risk, ensuring that applicants have confirmed their eligibility and have been officially accepted into the program before committing their funds.
If successfully implemented, this combination of rapid processing and the security of post-approval investment will position Hungary's golden visa program as an exceptionally attractive offering in the competitive landscape of residency-by-investment schemes.
Hungary as a Tax-Friendly Country
Amid the allure of Malta's and Greece's non-dom taxation systems, which may seem more enticing to certain investors, Hungary presents a well-calibrated tax regime that holds its own. With Portugal gearing up to abolish its Non-Habitual Resident (NHR) taxation system—a scheme that has significantly benefited high-net-worth individuals (HNWIs) and pensioners—and considering the tax intricacies in Greece, Hungary's fiscal policies emerge as particularly competitive. Boasting lower corporate and income tax rates, Hungary not only draws individuals seeking residency but also stands out as an economically vibrant and appealing investment locale within the EU. This strategic positioning renders Hungary an attractive destination for investors wishing to live in Hungary and become tax residents.
The counter-argument
Hungary's new Golden Visa program provides investors with a two-year guest visa residency that leads to a ten-year renewable residency permit which is renewable. However, this differs significantly from the offerings of the like of Cyprus, Malta, and Greece, particularly in terms of permanent residency. Unlike these countries, Hungary does not provide a direct path to permanent residency, especially for those not residing within its borders. This aspect could make the program less appealing to investors seeking long-term security and benefits associated with permanent residency. Mr. Charles Savva highlights these concerns
in his article on IMI Daily, where he argues that Hungary's program is inferior compared to other EU residency programs due to its lack of a permanent residency option and a clear pathway to PR for non-residents.
While this is a valid argument recent changes and announcements in global residency schemes and the evolving investment migration landscape suggest that that Hungary could successfully carve out a space for itself in the market.
Conclusion: The Rising Star of European Residency Programs
As the launch date for Hungary's Golden Visa program nears, the industry is witnessing a growing sense of anticipation. This upcoming program, with its accessible investment thresholds, protective application measures, and notable tax advantages, positions Hungary as a potentially significant player in the European residency arena. The program's introduction comes at a time when many are seeking reliable alternatives to existing options, which are either closing down or increasing their costs. Against this backdrop, Lincoln Global Partners has already begun to see interest from clients and agents, signalling that Hungary could be the next big thing in the investment migration field. With signs pointing towards a strong market entry from July, Hungary stands on the verge of offering new opportunities for global investors aiming for European residency, suggesting it could indeed reshape the landscape of investment migration.