News: Residence permit in Latvia: facts and results
The opportunity to receive a temporary residence permit in return for investments in the Latvian economy has been used by 4744 foreigners by investing a total of LVL 318.3 million within two and a half years, shows statistics summarised by the Office of Citizenship and Migration Affairs (OCMA).
Most popular types of investments
In 2012 foreigners were mostly interested in the possibility to receive a residence permit by purchasing real estate (apartment) in Latvia. During the last year as of 2012, 2,435 foreigners requested a residence permit based on the fact that they themselves or their family members had purchased real estate in Latvia for at least LVL 100,000 or LVL 50,000.
Latvian migration law - family
Frequently the apartment is bought as a joint purchase, especially in cases of family with over 18 year-old children. Latvian Migration Law provides that spouse and juvenile children (children under 18 years) are entitled to residence permit along with the main investor and they do not have to make any additional investment.
Foreigners showed the greatest interest in apartments located in Riga and Jūrmala where respectively 487 and 303 properties have been bought. The most marketable and popular option chosen by foreigners is apartment in pre-war building in Riga city center or newly constructed projects in micro living districts in Riga city with living plot 60-100 sq.m., The practice shows, that foreigners trend to buy an apartment in good order with carried repair or decoration, preferably with furniture. The real estate consisting of house with garden is relatively seldom. Foreigners usually choose cities nearby Riga such as Babīte, Mārupe, Garkalne, Carnikava, Saulkrasti. Ādaži, the other cities outside Riga planning regions are: Ozolnieki, Amata, Cēsis, Iecava, Madona, etc.
In 2012, foreigners invested LVL 145.2 million by purchasing real estate. Since the amendments to the Immigration Law came into force, overall LVL 252.9 million had been invested in real estate by 1 January of this year.
During the last year, a much smaller sum, namely, LVL 19.8 million were invested in the subordinated capital of banks which also grants foreigners the right to request a residence permit in Latvia. In 2012, this opportunity was used by 208 investors and their family members. Within the period from 2010 to 1 January of this year, LVL 53.3 million were invested in the subordinate capital of banks.
The statistics of OCMA demonstrate that the foreigners' interest in the possibility to invest in the fixed capital of companies is relatively smaller. Within the last year, 268 people requested residence permits based on the investments in the amount of LVL 9.4 million. Since the amendments to the Immigration Law came into force LVL 12.1 million has been invested in the fixed capital of companies. The investors came from different countries around the world: China, Iran, Lebanon, Egypt, Nigeria, Dominican Republic, Philippines, Vietnam, Serbia, Afghanistan, Dagestan, USA, Sri Lanka, Australia, and Korea.
Immigration law - contribution in equity capital
The Immigration Law prescribe rights to apply for residence permit if the foreigner has invested 25 000 LVL or 100 000 LVL in the equity capital of the company. If the foreigner makes a contribution in the equity capital in the amount of 100 000 LVL the law does not imply any additional requirements such as paid taxes, employed employees or other benefits for Latvian economy. Though, it is admitted that the so called “sleeping investors” should be verified and examined in the same way as other investors. It is recommended to analyse the financial and economic indicators of the pursued activities and if it is clear that the company runs business and provides other benefits for Latvian economy. Failure to establish the afore-said circumstances might be basis to consider an annulment of granted residence permit.
Results of amendments to the Immigration Law
On 1 July 2010, amendments to the Immigration Law entered into force envisaging inter alia the possibility for foreigners to obtain a temporary residence permit if they have purchased real estate in Latvia for a certain sum of money, invested in the subordinated capital of banks or invested to increase the fixed capital of a company.
Since the amendments to the Immigration Law came into force on July 2010, within two and a half years residence permits in Latvia have been requested by 5,171 investors and their family members who invested LVL 318.3 million in the Latvian economy.
Immigration Law suitable for attracting foreign funds
The Ministry of Interior Affairs admitted the amendments in the Immigration Law successful and suitable for attracting foreign funds. The State Treasury collected significant financial sources in the form of state duties paid by foreigners at Migration Office, State Land Book for registration services. Also, in some cases value added tax (VAT) is collected, for example, in the cases if the real estate is bought from legal entity which operates as the real estate developer.
Comparing with previous years, the scale of real estate transactions has been increased from 68,2% up to 81,5%. The Ministry concludes the option of investing in real estate as the most efficient for foreigner investors. It gives advantages also for local real estate developers because they are able to return a loan and close a credit line in banks. Thus the stability in the commercial business environment can be improved.