In its recommendation issued at the end of March 2022, the European Commission urges Member States to immediately end their investor citizenship schemes and ensure strict controls to address the security, money laundering, tax evasion and corruption risks of investor residence programs.
Investor citizenship schemes, under which nationality is granted in exchange for a pre-determined payment or investment and without a genuine link with the Member State concerned, have implications for the European Union as a whole, as every person holding the nationality of a Member State is at the same time a citizen of the Union. Similarly, obtaining a valid residence permit via an investor residence scheme grants certain rights to third-country nationals, including to travel freely in the Schengen area.
As the current Russian aggression against Ukraine highlights these risks once again, the recommendation is part of the Commission’s wider policy to take decisive action on investor citizenship and residence. Currently there are 9 Member States (Spain, Portugal, Greece, Italy, Austria, Belgium, Germany, Bulgaria, Ireland) offering investor residence programs and there is only one Member State that has an investor citizenship program (Malta).
The Commission also ordered the Member States concerned to report by the end of May 2022 on the implementation of the recommendation presented and to keep the Commission regularly informed thereafter.
Previously, between 2013 and 2017 Hungary also had an investor residence program, under which almost 20 thousand foreigners obtained residence permits. The 6500 and investors and their 13000 family members came from 59 countries, most of them (81%) coming from China, Russia (7%) and Iran (2%). Currently Hungary does not have any investor citizenship or an investor residence scheme, and in light of the above it will likely remain so in the foreseeable future.
By Gabriella Galik, Partner, KCG Partners Law Firm