Latvia’s Cash-for-Residency scheme has sparked controversies since the country became part of the eurozone back in 2014.
For bankers and property agents, the law is bringing to the country a large number of foreign investments; however, according to critics, the program is being used by shady businessmen from the former Soviet Union in order to reach the EU, calling on the country’s authorities to put it to an end as soon as possible.
Wealthy internationals are eligible to benefit from Latvia’s Residence by Investment scheme in three of the following ways:
- Investing in funds in a Latvian company’s equal capital (at least €50,000 and a one-time payment of €10,000)
- Depositing in a Latvian bank (at least €280,000 and one-time payment of a total of €25,000)
- Purchasing special-purpose interest-free bonds (at least €250,000 and a one-time payment of €38,000)
About 7,000 internationals have acquired five-year EU residence permits through this scheme, while the figures from the government of Latvia revealed last week indicated that a total of €600 million of investment was brought to the country through this program.
In spite of the economic contribution it makes to the economy, it is often considered as an open door to many unlawful affairs. According to a member of the European Parliament (MEP), Roberts Zile, the program is open to abuse.
They are not buying houses; they are buying access to the Schengen area.
In contrast, the chairman of Latvia’s largest real estate agency, Latio, Edgars Sins, said the system saved the country’s businesses as well as families caught by a huge property bubble bursting in 2008-2009 during the global financial crisis.
The popular opinion is that it has been supporting the real estate market, but I would argue this scheme has supported those families and businesses that are heavily indebted. If they did not have the opportunity to sell their real estate to foreign investors, their only alternative would be bankruptcy,”
At present, a large number of European countries offer Residency and Citizenship Programs for wealthy foreign nationals, in spite of the fact they are often urged to terminate such schemes after being related to unlawful affairs such as money laundering and corruption.
For the same reasons, authorities in Latvia decided to terminate the Golden Visa Program last year. Such a decision was confirmed by the Prime Minister of Latvia, Krišjānis Kariņš while emphasising that the Ministry of the Interior is drafting necessary legislative amendments.
