Hungary Golden Visa

Transcript of “Hungary Golden Visa – Timeline and Cost vs. other Schengen Residency Programs”

LADISLAS MAURICE: Hello everyone, Ladislas Maurice of The Wandering Investor today in beautiful Budapest in Laszlo’s office. Laszlo, how are you?

LASZLO: Good, good, good. Thank you. Thank you. It’s a pleasure to see you again, especially here.

Hungarian Golden Visa cost

LADISLAS MAURICE: About 18 months ago, we started talking about the Hungarian Golden Visa when it was starting to launch. We were both really excited about this European access, and then when the fees were announced, I remember you calling me and cursing, and you were furious. Can you give us a bit of background?

LASZLO: Yes, definitely. At that time, the two investment funds which were approved thought that because only two of them are approved and they can get away with very high prices. And they never thought that there is an international aspect and there is a competition internationally, which means that there is a certain limit where people would just simply go to another country. And I think that we would go through other countries’ rules and regulations compared to Hungary, but then they decided that the professional fee in addition to the investment should be 60 or 65,000 euros, which compared to the investment of 250 is just simply too much.

LADISLAS MAURICE: I remember you calling me and being so furious. You’re like, yeah, we have all these all these potential clients and I just have to tell them that yeah, no.

LASZLO: It was a bit it was a bit really a bad point in my life that for my own country, I’m Hungarian by birth, then I have to suffer this because then people think that they can get away with it. No. And life showed by the way, and I think that’s the topic of today’s conversation that that yes, there are other solutions even in Hungary, even with the same system, but it took a bit of time unfortunately to develop them so that we would be able to give it to our client.

LADISLAS MAURICE: Okay, so now it’s an investment of 250,000. How much are the professional fees on top?

LASZLO: On the top then instead of 65, we are working for 25,000 euros.

LADISLAS MAURICE: For a family of?

LASZLO: For a family of four.

LADISLAS MAURICE: Okay. It could be a family of five, that is no no no government regulation which says that it has to be, so it’s up to negotiations, but if it’s four or five, it could be also 25,000.Okay, which is pretty much in line with other programs now.

LASZLO: I have to say that that is the case, yes.

LADISLAS MAURICE: Okay. So now we have the Hungarian Golden Visa 250,000 in a fund that invests in in Hungarian real estate. I’m not here to give financial advice on Hungarian property funds, um, but you know, just expect just average returns, don’t expect to be, you know, doubling your money in in 5-10 years. It’s it’s a random fund that invests in Hungarian commercial real estate, so just, you know, manage your expectations.

Hungary Golden Visa compared to Greece Golden Visa

LADISLAS MAURICE: So now in the landscape, we have Hungary at 250. How does it compare to the other European Golden Visa programs? So because Hungary gives you immediately a 10-year residency card, right?

LASZLO: That is correct, yes.

LADISLAS MAURICE: Okay. So let’s compare this with the Greek 250,000 euro option. Why would one choose the Hungarian Golden Visa versus the Greek?

LASZLO: I have to also add that there is a possibility to renew the Hungarian residency for another 10 years. Okay. So in essence, everything stands as it is, then we are talking about a 20-year result for the actual cash layout of 250,000. But you should get back later on. You should.

Yes, definitely. In Greece, you have to invest 250,000 in a newly developed flats and residential property which are developed from from commercial previously commercial properties, whether it’s an industrial building, whether it’s a hotel, whether it’s a warehouse, whatever. But you have to keep your money invested all the time to keep your permit. Even the government, when somebody’s selling the property is being informed immediately, and if the client doesn’t buy a new property in less than a month’s time, then they lose the residency permit. So all in all, it is easy to get away from it, but you just sell it and you do not need residency permit anymore. But when you are talking about the comparison of 20 years, and then you do not have to be invested full time. But Greece, you have to be invested all the time, all the time, and you cannot get out your investment. Because that’s the case, then I would say that the Hungarian solution is better financially.

LADISLAS MAURICE: And then also the processing times are faster for the Hungarian?

LASZLO: Definitely. In Greece it is more than a year usually on an average, while in Hungary it’s five months, four months depending on how quickly the documentation can be obtained and filed. So all in all, there is a big difference and the Greek system is quite overloaded now.

LADISLAS MAURICE: Yeah. That’s been a very successful program.

LASZLO: That is true because it’s successful, yes, that that is true, but they didn’t put the immigration offices didn’t put the necessary manpower and and resources behind it so that it’s a it’s a fast processing taking into into money laundering and all these aspects also that to check properly the clients. And unfortunately, it’s at least one year till the residency permit is issued.

LADISLAS MAURICE: When we discuss with clients, some clients just prefer to have like property in their own name. For such clients, Greece would be better. They buy a it’s typically just a one bedroom apartment for 250,000. It’s like it’s far from cheap. Um, you’ll be typically looking at 4 to 6,000 a square meter for one bedroom property in a second tier city. So, you know, is it a good investment? I doubt it. Or some people just say, I don’t want to deal with property, I hate property, I just want my money in a fund and not think about it. And then you just have the this fund um in in Hungary. So really depends what you’re into. So this is Greece.

Hungary Golden Visa compared to Italy Golden Visa

LADISLAS MAURICE: Let’s compare it to Italy as well, which is which now has some variants at 250,000 euros.

LASZLO: 250,000 you need to invest in a in a company. And as we know, um hopefully the company will be full profitable, but unfortunately there is no guarantee for that. So there is a kind of risk for the clients of how the actual economic situation would influence the activity of the company which would be positive or negative, we do not know. Also, my previous partner in business said that he never trusts the promises of an Italian government.

LADISLAS MAURICE: We’re to bless them.

LASZLO: And and there is in Italy there is a special tax system for foreigners which we could call as a kind of a non-domicile system if anybody has heard the word, which means that clients pay a fixed amount of tax and all the foreign earned income, not the Italian, but the foreign earned income is completely tax-free then in Italy. The starting point was 100,000, I think six years ago, and it became three years ago 200,000 the effect annual tax, and now they are increasing into 300,000. So in six or seven years time, they just simply tripled the necessary requirement. And that doesn’t look good, and I do not like it because at the end, okay, there is inflation and so on and so on, but I think that this is definitely but didn’t keep their promises, and again, they tripled the necessary amount for taxation.

LADISLAS MAURICE: All right. So Italy, if you find a good company, probably better, but certainly riskier, more volatile, and there’s the Italian government risk. Whilst on the Hungarian side, you just invest in a let’s say, you know, in a mediocre fund.

Hungary Golden Visa compared to Portugal Golden Visa

LADISLAS MAURICE: So again, different. Let’s talk about Portugal.

LASZLO: I think that Portugal nearly always want to get citizenship and not residency, although they are saying that legally you get residency and later on it is convertible into citizenship. Now, with the change which I expect to be accepted soon, then it would be seven years waiting time till the citizenship is granted. All of them, 500,000 is the actual amount which needs to be put into investment funds, or is it double by the way, twice?

LADISLAS MAURICE: Also like very mediocre funds, and a lot of funds are actually quite dangerous.

LASZLO: Dangerous, and I also A lot of dangerous funds in Portugal. I give you an example. One of the investment funds approached us, and they said, okay, fair enough, I’m interested to market. Now we have 10 or 15 Portuguese funds to market, so all in all, I’m not really interested, but tell me why you are good. And we are good because then after investing half a million euros into the investment fund, in one week, we would be able to give back 100,000, which is called as dividend. Accounting fraud. You could put many, many things that okay, come on, this is totally unacceptable, but they think they can get away with it. I do not simply like it when clients are cheated, and then the government is also cheated, and the risk is there that the government wakes up and said, no, no, no, no more. You could lose your residency permit and so on. So that those solutions for me really where the clients are giving rebates and so on, they are just unfortunately for me, they are untouchable because then I think it’s too too risky for the clients.

LADISLAS MAURICE: Personally, I had a few funds approach me from Portugal, and then when I asked them for their audited reports, they would just disappear into thin air. So essentially, Portugal fine, you know, fine, but it’s twice the price now. The path to citizenship that was mostly promised by agents is turning out to probably not going to materialize for most people. And there is a lot of dodgy things happening in many funds, not all obviously, but in a lot of funds. So there’s there’s an element of risk there as well.

LASZLO: Also, there is something which obviously they are not advertising. Processing of the first application, residency permit application takes more than three years. Yeah. It is a total nonsense.

Hungary Golden Visa compared to Latvia Golden Visa

LADISLAS MAURICE: So that’s Portugal. What about Latvia? Very few people discuss Latvia. There are two options. You can invest 250,000 in in local real estate in a single property in a country that has seen its population decline from I think 2.4 million in 2004 to 1.8 million now, and it’s still declining. Or invest in a local business. A smaller amount like?

LASZLO: 50,000. 50,000 is the investment and 10,000 corporate tax must be paid to the country to the to the company and and indirectly to the government. So it’s 60,000 total cash layout. The biggest problem with Latvia that yes, it looks very good because of its a much cheaper price than 250, but every single year in the same month when the residency permit was filed, clients have to go back every single year with their own family members, which for example, for children to gather them, let’s say, they file the application in October, how the children would be taken away from the school, from the university, they might be studying somewhere else, it is very, very hard to organize.

LADISLAS MAURICE: And then doing these things is let’s say your your residency expires August 15th, and then you come the next year, and then the year after that, it will expire August 6th, and then every year it changes a little bit, and then eventually you you end up in a school year for sure.

LASZLO: Prices are cheaper, but it’s not convenient and that is why the numbers I think last year Latvia had 54 or 64 applications, which is just half of nothing if I could say.

LADISLAS MAURICE: Nothing wrong with Latvia, but people don’t get golden visas to go spend two weeks every year in Latvia, especially if it’s winter. But that’s not an improvement for in terms of your lifestyle, to put it mildly.

Hungary Golden Visa compared to Malta Golden Visa

LADISLAS MAURICE: And Laszlo, what about the Malta option, which is a donation, but which gives permanent residency immediately?

LASZLO: In a sense, for people who just simply want to have the residency permit without any additional burden of utilization, yields, or whatever, they just consider it as a financial type of investment. It’s not an investment but a donation, but they treat it as a financial matter. I pay the necessary donation, clean my hand, and I can keep it, and it’s valid for a lifetime, meaning that all the Greece, Hungary, Portugal, Latvia, all the other countries do not give you a lifetime immediate residency, permanent residency. So it is good. But there are many people who love properties. And when I try to tell them that there is one option which is this pure donation, money the government gets, 100,000 for a four-member family or a five-member family, all in all, which is cost-wise is much less than the 250,000. Many of them say, no, no, I want to buy a property, and I had to learn my lesson that to sell the service or to provide the service, I have to accept that, okay, then property, we are talking about. Then it’s a property option in Europe, not a donation based option. Financially, I think it’s better off to put down the cash, giving it to the government, and end of story, lifetime permanent residency.

LADISLAS MAURICE: Like when I look at these Greek properties um at 5,000 a square meter in a in a suburb of a second tier city in Greece, I see this.

LASZLO: Industrial location for example.

LADISLAS MAURICE: Yeah, because it’s repurposed in industrial buildings. It doesn’t sound that crazy to rather make a donation of 100,000 to Malta and and move on and then have it for life and not have to come back once in a while to do paperwork and this, because there’s also a cost to going back, renewing paperwork. So

LASZLO: There is a very important thing. In Greece, and I there are good projects in Greece and so on so. I just do not want to bad mouth any of the jurisdictions, but there are positives and negatives. True. And usually it’s only the positives which are produced to the world of show to the world and the negatives which also influence the decision, they are just simply quietly forgotten.

LADISLAS MAURICE: The positives are usually a lot more expensive, to be fair in Greece.

LASZLO: Yeah, of course, that it has to be. So all in all, we are not bad mouthing anybody. Yeah.

How to contact Laszlo

LADISLAS MAURICE: If you’re interested in finding out more about the Hungarian Golden Visa, the whole process, the paperwork, etc., there’s a link below. You can get in touch with Laszlo, he has his whole team here in Budapest, so you can come to Budapest, come to this gorgeous building, meet the team in person, process your paperwork and get to have access to the Schengen area this way or even to live here. It’s one of the lowest tax jurisdictions in Europe, super safe, great for families. Personally, I lived for a few years in Hungary and absolutely loved it. And then Laszlo is also an agent for most of these other programs, and you even have offices in Malta as well. So if you’re interested in that PR option, there’s a link below as well.

LADISLAS MAURICE: Laszlo, thank you very much. Always a pleasure.

LASZLO: Pleasure, all the time. Thank you.

LADISLAS MAURICE: Make sure to download my free ebook, 12 mistakes to avoid when investing in international real estate, which you can find on my website link below, and feel free to follow me on Instagram @thewanderinginvestor. I look forward to hearing from you.