Latvia golden visa

Quick introduction to Latvia investors residence scheme

The investors’ residence scheme in Latvia was introduced by amending the Immigration Law in 2010. This step was taken as a reaction to the financial crisis that hit Latvia in 2008. The main idea behind this scheme was to attract foreign investors in order to facilitate Latvia’s economic recovery and growth by activating the real estate market and creating new jobs.

The amendments to the Immigration Law allowed third-country national investors to obtain temporary residence permits after purchasing real estate in Latvia, investing into the equity capital of a capital company (i.e. limited liability or joint stock company), establishing a new capital company or investing in subordinate obligations with a Latvian credit institution (i.e. lending money to a bank). Since then, it is also possible to obtain a residence permit to invest in State securities2 and innovative products

 

Figure 1 Overview of the main conditions (main investment and other charges) under the Latvian investors’ residence scheme

Type of investment Minimum investment

Residence permit

  1. Real estate

At least EUR 250,000

+ 5% payment to the State budget

Up to 5 years

  1. Business

At least EUR 50,000 or EUR 100,000 investment into capital companies depending on the company’s size (i.e. turnover and the number of persons employed)

+ EUR 10 000 payment to the State budget

Up to 5 years

  1. Subordinate liabilities of credit institutions

At least EUR 280,000

+ EUR 25,000 payment to the State budget

Up to 5 years

  1. State securities

At least EUR 250,000

+ EUR 38,000 payment to the State budget

Up to 5 years

  1. Innovations

At least EUR 30,000 within the first 6 months

At least EUR 60,000 within 18 months

Up to 3 years

Renewal of a residence permit for investors in points a, b and c – EUR 5000

 

Before the scheme was reviewed in March 2014, the rules for foreign investors to obtain a residence permit in Latvia were more lenient. The required investment levels were relatively low and there were few other conditions attached. For instance, the required investment in real estate in high-price locations (i.e. in Riga, the capital of Latvia) was LVL 100 000 (approx. EUR 140 000). There were no one-time payments to the State budged in addition to the investment (now ranging from EUR 10 000 to EUR 38 000) and no charges for renewing the residence permit (now set at EUR 5 000).

 

The competent Latvian authority for the granting of residence permits is the Office of Citizenship and Migration Affairs (OCMA), which is a State institution operating under the supervision of the Latvian Ministry of Interior.

The website of the Office of Citizenship and Migration Affairs, available at: http://www.pmlp.gov.lv/.

 

Investment in business

 

Pursuant to Point 28 of Article 23(1) of the Immigration Law, enacted on 1 July 2010, third-country nationals may obtain a temporary residence permit for up to five years if the person has invested in the equity capital of a capital company (limited liability or joint stock company) or has established a new capital company. The required minimum investment is the following:

 

< EUR 50 000 to a capital company employing no more than 50 employees with the annual turnover/ annual balance not exceeding EUR 10 million; or

 

< EUR 100 000 to a capital company employing more than 50 employees with the annual turnover/ annual balance exceeding EUR 10 million, or

 

< EUR 100 000 to a capital company which together with one or more subsidiaries registered in Latvia employ more than 50 employees with annual turnover/ annual balance exceeding EUR 10 million;

 

Besides the investment, foreign investors must pay a one-time fee of EUR 10 000 to the State budget.

The rules that regulate increasing of equity capital or establishing a new capital company are set out in the Commercial Law1.

In essence, foreign investors must either conclude an investment contract with an existing company and then transfer the funds to the company’s bank account, or open a bank account to deposit the equity capital to establish a new company2. In both cases, the proof of the transaction is provided to the State Enterprise Register, which verifies and registers this information in a public register. The OCMA, based on this information, verifies whether the applicant has made the required minimum investment and, if all the general conditions are also met, issues the investor with a temporary residence permit.

Acquisition of real estate

Pursuant to Point 29 of Article 23(1) of the Immigration Law, enacted on 1 July 2010, foreign investors may obtain a temporary residence permit for the duration of up to five years if they have acquired for a value of at least EUR 250 000:

  • one immovable property in a high-price location  specified by law; OR
  • one or two immovable properties in any other location.

Besides the investment, foreign investors must pay five percent of the property value to the State budget.

 

The following additional requirements must be fulfilled by investors:

  • The third-country national does not have any property tax debt;
  • The total value of the real estate is paid by a non-cash means of payment;
  • The real estate is acquired from:
  • a legal entity registered in Latvia or another EU or EEA Member State or the Swiss Confederation considered a resident for tax purposes;
  • a natural person who is a Latvian citizen or Latvian non-citizen4, EU citizen or a third-country national residing in Latvia with a valid residence permit issued by Latvia;

 

The cadastral value of the property in high-price locations, calculated by the State Land Service and registered in the State Land Register, at the time of its acquisition is at least EUR 80 000; in other locations at least EUR 40 000. If the cadastral value is less than the specified, the estate’s market value, determined by a certified real estate appraiser, cannot be less than EUR 250 000; if the person purchased two properties, the market value of a single property cannot be less than EUR 125 000;

The property does not include agricultural land or forest land.

Some further restrictions are set out in Article 29 of the Law on Land Privatisation in Rural Areas1. Third-country nationals are also not allowed to acquire land in the border zone of Latvia, land in nature reserves and other protected nature areas; land in the protected zones of coastal dunes of the Baltic Sea and the Gulf of Riga; land in the protected zones of public reservoirs and water sources; land in the mineral deposits of national significance.

The basic rules governing purchase and sale are set out in the Civil Law2. Article 1477 of the Civil Law and Article 2 of the Law on Recording of Immovable Property in Land Registers require that each real estate transaction involving a change in ownership is registered in the State Land Register. The State Land Register is a public register accessible to the OCMA, which verifies the acquisition of property by a foreign investor against the data stored in this register.

In addition to the above, the investor must submit evidence to the OCMA that all the other investment specific criteria are met. This applies to the proof of non-cash payment, absence of tax property debt, and, if the cadastral value is less than the minimum set out in law, a statement by a certified real estate appraiser confirming the estate’s market value over EUR 250 000.

 

Subordinated liabilities of credit institutions

Pursuant to Point 30 of Article 23(1) of the Immigration Law, enacted on 1 July 2010, foreign investors may be granted a temporary residence permit for up to five years if:

  • they have invested at least EUR 280 000 in subordinated liabilities of a Latvian credit institution;
  • the duration of the contract with the credit institution is not less than five years.
  • Besides the investment, foreign investors must pay a one-time fee of EUR 25 000 to the State budget.

 

The Law on Credit Institutions4 in Point 59 of Article 1 defines the term ‘subordinate liabilities’ as liabilities stemming from a loan agreement between the credit institution and a customer (e.g. foreign investor) where the customer is the lender and the credit institution is the borrower. The customer does not have the right to withdraw the loan before the term specified in the agreement.

Investors must submit to the OCMA a document issued by the credit institution confirming the required level of investment in subordinate liabilities.

 

Investment in interest-free State bonds

Pursuant to Point 31 of Article 23(1) of the Immigration Law, enacted on 1 January 2015, foreign investors may be granted a temporary residence permit for up to five years if they commit to invest:

EUR 250 000 in interest-free State securities dedicated to a specific purpose.

 

See OCMA website: http://www.pmlp.gov.lv/en/home/services/residence-permits/doc1/a-credit-institution.html.

 

Besides the investment, foreign investors must pay a one-time fee of EUR 38 000 to the State budget.

 

The procedure that applies to investment in State securities is set out in Regulation No 237 of 6 May 2014 on the Issuance of State Securities1. Investors have to submit the OCMA a signed request to acquire State securities. According to Point 73.4 of Regulation No 564 this request is final and may not be withdrawn.

 

The OCMA cooperates with the Latvian central securities depository (Nasdaq CSD, SE) and the Treasury, authorising the issuance of securities, in verification of the request. Once verified, the payment terms (the bank account details and the deadline for the transfer) are specified in the OCMA’s decision on granting the permit. When the investor collects the permit at the OCMA, it is double checked that the payment has been made.

 

Investment in start-ups

Pursuant to Point 33 of Article 23(1) of the Immigration Law, enacted on 2 March 2017, foreign investors may be granted a temporary residence permit for up to three years if they commit to invest in the development of an innovative product (start-up) as a qualified venture capital investor (an experienced investor providing risk capital to businesses) at least:

  • EUR 30,000 within the first six months from granting of the initial residence permit;
  • EUR 60,000 within 18 months from granting of the initial residence permit.

 

The term ‘innovative product’ is defined in the Law on the Support for Start-up Companies as a product or service with a high added value, which ensures development of a specific new product or service, or significantly improves the existing product or service3.

Access to venture capital is of particular importance to start-ups as they often find it difficult to get the funding they need to start and grow their business (e.g. bank loans are not available to most due to the requirement to provide a collateral).

To be listed as a qualified venture capital investor one must meet one of the following requirements:

Be registered as an alternative investment fund in Latvia in accordance with the Law on Alternative Investment Funds and their Managers or in another country in accordance with equivalent legislation on the registration of alternative investment funds, and having made an early stage venture capital investment in at least three capital companies in the last three years of at least EUR 30 000 in each, not acquiring more than 30 per cent of the company’s equity, or

 

Be a legal entity specialised in attracting investment for start-ups, having been involved in three such short term (less than 12 months) projects, and having made an early stage venture capital investment in at least 10 companies in the last three years of at least EUR 15 000 in each, not acquiring more than 15 per cent of the company’s equity; or a natural person with experience in business having made an early stage venture capital investment

 

in at least two companies in the last five years < EUR 15 000 in each, but in total not less than EUR 60 000, not acquiring more than 30 per cent of the company’s equity;

a legal person whose equity, more than 50 per cent, is owned by persons each of whom have made an early stage venture capital investment in at least two companies in the last five years of at least EUR 15 000 in each, but in total not less than EUR 60 000, not acquiring more than 30 per cent of the company’s equity.

Investors whose investments have been recognised as proceeds of crime within the meaning of the Law on the Prevention of Money Laundering and Terrorism Financing1 may not be qualified venture capital investors.

Once investors have proven that they meet all the requirements to the Committee assessing activities of start-up companies2, they are listed as qualified venture capital investors in a list kept by the Latvian Investment and Development Agency according to Regulation No 74 of 7 February 2017 on the Application and Administration of the Programme Supporting Activities of Start-up Companies3. This confirms the status of the investor as a qualified venture capital investor and is thus a precondition to be granted a residence permit.

To the OCMA these investors should only submit a description of the intended activities. Whether the minimum investment criteria are fulfilled is verified in the residence phase as any residence permit allowing a stay of more than one year must be annually registered at the OCMA4. Failure to comply with this registration requirement is a reason to annul the residence permit

Grounds for refusing applications

 

The Immigration Law contains both general and specific grounds to refuse applications for residence permits. General grounds can be applied to refuse any application. Specific grounds can be used to refuse an application when related to the reason for which the application is made (employment, family, investment, etc.).

According to Article 34(1) of the Immigration Law the issue (or the annual registration of a residence permit1) must be refused if:

General grounds for refusal

  • all the required documents have not been submitted, or the person refuses to cooperate and provide explanation in relation to the request for permit;
  • the person has provided false information or the submitted documents which are obtained unlawfully or have been forged, or have been tampered with;
  • the foreigner does not have the necessary financial means to stay in Latvia;
  • the foreigner has does not have a valid travel document;
  • the foreigner has such a health disorder or disease that endangers the safety of the public;
  • the foreigner has been illegally residing in Latvia or another Schengen State during the last year or has helped another foreigner to enter Latvia or another Schengen illegally;
  • the foreigner has been included in the list of those who are prohibited to enter Latvia or the Schengen territory;
  • the foreigner has been found guilty of committing a criminal offence;
  • the foreigner has received compensation to leave Latvia;
  • the foreigner has joined a foreign military service;
  • competent State institutions (e.g. Security Police) have provided information constituting grounds for prohibiting the foreigner from entering and residing in Latvia;
  • there are grounds to believe that the real reason of the foreigner applying for a residence permit is not what has been indicated in the submitted documents;
  • the foreigner has been employed during the last year, but had no right to employment (in particular, investors contributing to start-ups have limited rights to employment);
  • it has been established that the issuance of a residence permit does not conform to the conditions referred to in the Immigration Law;

Specific grounds for refusal

 

  • the foreigner has received a temporary residence permit in accordance with Point 33 of Article 23(1) (investment in start-ups) and the capital company has not fulfilled the conditions referred to in this Law;
  • the foreigner has received a temporary residence permit in accordance with Point 33 of Article 23(1) (investment in start-ups) and the provisions laid down in Point 12 of Article 23(1) have not been complied with (only five interrelated investors have the right to request a permit to invest in one company);
  • a foreigner has requested or received a temporary residence permit in accordance with Points 2, 3, 6, 28 or 33 of Article 23(1) (investment in business and start-ups) and the company has a registered tax debt exceeding EUR 150.

 

Any residence permit allowing a stay of more than one year should be annually registered (Article 22(2) of the Immigration Law). Failure to comply with this requirement is a reason to annul the residence permit (Point 21 of Article 35(1) of the Immigration Law). In relation to investors, those investing in State securities are exempt from the registration requirement.

 

Figure 2 Statistical overview of requests, successful and turned down applications for temporary residence permits by investors and their family members against the total of all temporary residence permits issued in Latvia

 

Year

Total no. of all issued residence permits

No. of requests for residence by investors (family members)

No. of successful applications

investors and family members

No. of turned down applications

investors and family members

Sources

2012

6365

1 226 (2918)

2890

18

OCMA

2013

8170

1 922 (4508)

4438

29

OCMA

2014

10504

2 532 (5944)

5822

54

OCMA

2015

7210

398 (1209)

1101

30

OCMA

2016

6581

262 (763)

692

13

OCMA

2017

71913

644 (225)

1615

06

OCMA

1 See Annex 1 of the OCMA 2017 Report on progress and results of implementing Article 23(1), points 3, 28, 29, 30 un 31 of the Immigration Law, available at http://tap.mk.gov.lv/lv/mk/tap/?pid=40441522, on the number of requests, successful applications and turned down applications for temporary residence permits for investors and their family members.

2 Data on the total number of issued temporary residence permits is available on the website of the OCMA: http://www.pmlp.gov.lv/lv/assets/documents/vizuāļi/VISI__ES__01.01.17.pdf.

3 Data for the whole year of 2017.

4 Data available only for the first half of the year.

5 Data available only for the first half of the year.

6 Data available only for the first half of the year.