Portugal is seen as being one of the market leaders in the highly controversial so-called ‘Golden Passport’ business, writes Colin Stevens.
This is a lucrative scheme started by several countries as a relatively easy way to attract foreign money after the 2008 financial crisis but criticized by many for attracting criminals and money laundering to the EU.
It is believed that Portugal has so far issued golden visas to more than 25,000 people, earning more than €5.5 billion, with Henley Partners as the agency mandated by the Portuguese government to handle passport applications.
Now, however, fresh pressure is growing on the EU and its member states to put an end to golden visa programmes that give applicants European residency and/ or citizenship.
The European Parliament says that EU citizenship “cannot be marketed as a commodity” while German MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group, told this website: “Civil rights come to depend on one’s wallet if they can be bought.”
Since its recovery from the financial crisis and the EU bail-out, Portugal has been promoting an image of “EU´s good student” and “poster boy” of economic reform but the reality of Portuguese politics is often a good deal more convoluted than its shiny “poster boy” image suggests.
Some argue that the golden visa programme is a good case in point.
Portugal’s Golden Residence Permit Programme is a five year investment-based residence process for non-EU nationals which allows visa-free travel in the Schengen Zone of 26 European countries. It requires an average of seven days per year stay in Portugal and, after five years as a resident, an applicant is eligible for citizenship if desired.
Portugal does not currently provide golden visa applicants with citizenship but, rather, gives them residency and the ability to travel unimpeded throughout Europe. But, even so, many have questioned the calibre of people afforded the
Portuguese golden visas. These are people – the vast majority of them Chinese – who have, in turn, invested billions of euros into the country.
Even during the health pandemic, it is estimated that such people invested some €43.5 million in Portugal, the vast bulk of it in property. It is believed that Portugal issued a total of 993 golden visas between January and September last year alone, with most going to investors from China, followed by Brazil and the U.S.
Critics, however, say the scheme has forced up property prices and totally changed the face of local communities in Portugal.
One example is a new 55-apartment luxury residential project in downtown Lisbon, where around 40% of the acquisitions were made by golden visa buyers.”
To secure residency, an investor has to invest €500,000 in the Portuguese property market, or €1m in the wider economy, or create a business that employs 10 or more people. Portugal introduced the initiative when mired in a financial crisis and desperate to boost inward investment.
The scheme has brought more than €5 billion of foreign investment into the country, according to latest estimates. And this has led to a property boom in both Lisbon and Porto.
But critics of the scheme, such as Giegold, say applicants are not sufficiently vetted, leading to some foreign criminals getting visas.
It is also argued that not enough jobs have been created as a result of the investment, pointing out that out of all 6,416 wealthy foreigners who were granted a golden visa, only 11 individuals (0.2%) went for the option where they create a business that employs more than 10 people.
Ana Santos, of the University of Coimbra, cautions that the golden visa scheme has led to sky-high prices in the Portuguese residential property market.
The European Commission has opened infringement proceedings against Cyprus and Malta for their golden citizenship programmes.
Giegold is among those who want the commission to take similar action against Portugal. He said, “EU citizenship cannot be marketed as a commodity.Visas are not a commodity. Civil rights come to depend on one’s wallet if they can be bought. The sale of visas violates the values and spirit of European cooperation. Individual countries make money selling visas, but the rights apply to the entire Schengen area.”
He added: “Portugal alone has so far issued golden visas to more than 25,000 people, earning more than €5.5 billion.It is a mistake that Ursula von der Leyen does not want to initiate infringement proceedings against member states who sell visas. Von der Leyen does not do justice to her role as guardian of the EU treaties. Doing nothing is an open invitation to criminals.
“Portugal makes profits from rights which are valid throughout Europe. It is a sign of hope that France and Germany do not participate in this questionable source of income. But all member states are exposed to the security risks that golden visas entail throughout the EU. Golden visas open the door for criminals. They can easily launder their dirty money in the EU and avoid taxes. The EU Commission should immediately initiate infringement proceedings against EU member states with visa sales programmes.”