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Latvia offers foreigners the opportunity of becoming a temporary resident with a path to citizenship and access to the Schengen Area with minimal bureaucratic requirements.  Since 2010, foreign businessmen have been able to obtain a residence permit by investing in a Latvian company, purchasing real estate, or depositing funds into a bank account in amounts specified by statute.

I.  Introduction

Latvia’s business migration program was introduced in July 2010.  It allows foreigners to obtain temporary residence permits in Latvia if they have made certain equity investments in a Latvian company, made subordinated investments in a Latvian credit institution, or purchased real estate.  In each case, minimum amounts are established by law.[1]

The issuance of residence permits is regulated by the 2002 Immigration Law of Latvia.  It states that temporary residence permits can be issued for a period of up to five years and must be registered each year at the Latvian Migration Office.  These permits provide an opportunity to enter and leave the country, work, study, and use medical and other government and social services; invite relatives to Latvia; and enter any Schengen country without a visa.[2] The spouse, retired parents, and minor children of temporary residence permit holders are entitled to residency in Latvia also. 

After five years of holding a temporary residence permit, an individual may apply for a permanent residence permit.  After ten years of residency in Latvia, including periods of temporary residency, an investor may apply for citizenship.[3] The 2010 amendments to the Immigration Law removed the physical presence requirement for investors receiving a temporary residence permit; however, physical presence in the country is required for those who apply for permanent residency or citizenship.[4]

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II.  Investment Options

In July 2010 and June 2011, new amendments to the Latvian Immigration Law[5] came into effect, expanding the right of foreigners to obtain temporary residence permits for up to five years in exchange for their investment in the development of the Latvian economy.[6] The following investment options may be used to obtain temporary residence:

A.  Purchase of Real Estate

To qualify for a temporary residence permit through the purchase of real estate, an investor must purchase and own one or several properties in Latvia.  The minimum amount of required investments depends on the location of the property.  In the capitol city of Riga and surrounding areas, the total value of the acquired property must be no less than LVL 100,000 (approximately US$188,000).  In other parts of the country the total value of purchased real estate must be no less than LVL 50,000 (approximately US$94,000).  The real estate must be purchased only from a Latvian national or legal persons registered in Latvia, an EU citizen, or a person with a Latvian residence permit.  This form of investment does not require the actual physical presence of the residence permit applicant in Latvia.[7]

B.  Business Investment

A foreignindividual must invest at least LVL 100,000 (approximately US$188,000) in share capital or LVL 25,000 (approximately US$47,000) in a company in order to qualify for temporary residence on the basis of a business investment.  If an investor chooses to invest at least LVL 25,000 in a Latvian company, the company must pay at least LVL 20,000 (approximately US$37,600) in taxes within a financial year, have no more than fifty employees, and have an annual turnover that does not exceed LVL 7 million (approximately US$13 million).[8]

C.  Financial Investment

To obtain temporary residency on the basis of a financial investment, a person must deposit at least 200,000 LVL (approximately US$377,000) into an account of a Latvian credit institution for at least five years without the right to withdraw this investment earlier.[9]

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III.  Impact of Recent Legislative Changes on Immigration

As a result of the new legislation, Latvia appears to be more attractive to foreign investors.  After the amendments came into force in July 2010, residence permits in Latvia were requested by 5,171 investors and their family members within the next two and a half years.  These investors invested LVL 318.3 million (approximately US$600 million) in the Latvian economy.[10] 

In 2012, foreigners were mostly interested in the possibility of receiving residence permits by purchasing real estate in Latvia.  During that year, 2,435 foreigners requested a residence permit based on the fact that they or their family members had purchased real estate in Latvia for the required amount of money.  Between the time that the amendments to the Immigration Law came into force and January 1, 2013, a total of LVL 252.9 million (approximately US$475 million) was invested in real estate.[11]  Statistics show that the majority of investors who purchase real estate in Latvia are citizens of Russia and other former Soviet countries.[12]

Foreigners’ interest in the possibility of investing in the fixed capital of Latvian companies is relatively smaller.  For the same two-and-a-half-year period, only LVL 12.1 million (approximately US$22 million) was invested in the fixed capital of companies.  This type of investor came from different countries around the world, including China, Iran, Lebanon, Egypt, Nigeria, the Dominican Republic, the Philippines, Vietnam, Serbia, Afghanistan, the United States, Sri Lanka, Australia, and South Korea.[13]

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IV.  Update (September 26, 2013)

In 2010 Latvia introduced the Business Migration Program. Since liberalization of this program in 2011, foreign investors have been eligible to obtain residence permits after purchasing real estate in the country. Generally speaking, the acquisition of real estate valued at LVL 50,000 (approximately US$95,000) or more puts an investor on a path to permanent residency in Latvia and provides this person with an immediate right to freely move within the European Union.

According to the Latvian Office of Citizenship and Migration, during the last two months, a record number of applications for temporary residence permits were submitted by foreign investors who purchased real estate in the country. These numbers reached 178 applications in July and 159 in August, while the average number of monthly requests for residence permits was about 131 during the first eight month of 2013. (A Record Number of Applications for Residence Permits Submitted in Latvia, NEWSRU.COM (Sept. 24, 2013), http://realty.newsru.com/article/24sep2013/vidlatvia (in  Russian).)  In 2012, foreign investors filed around 102 applications per month. (Id.) Since the program was introduced, around 7,000 people, 75% of whom are Russian citizens, received investor visas and residency in Latvia. Other buyers of Latvian real estate usually come from Ukraine, Kazakhstan, and China. (Juris Kaza, Latvia’s Offer of Residency Lures Investors, THE WALL STREET JOURNAL (Aug. 26, 2013),  http://online.wsj.com/article/SB10001424127887323608504579024710866871416.html#
articleTabs%3Darticle.

The international auditing and consulting firm Deloitte estimates that since 2010, more than LVL 500 million (almost US$1 billion) was invested in the Latvian economy by non-EU nationals through the purchase of real estate in exchange for temporary residence permits. (Residence Permit in Exchange for Investments Brought Over Half a Billion Lat in Latvia, DELFI (Sept. 9, 2013),  http://www.delfi.lv/biznes/bnews/vid-na-zhitelstvo-v-obmen-na-investicii-prines-latvii-svyshe-polumilliarda-latov.d?id=43637431 (in Russian).) Deloitte reports that budget revenues from the Business Migration Program have reached LVL 145 million (about US$280 million), which is an amount equal to the annual budget of the Latvian Ministry of Defense. A total investment of LVL 1.24 billion (about US$2.3 billion) is expected by 2015. (Id.)

The influx of migrants is a matter of concern to the Latvian authorities, who are debating whether to continue implementation of this program on the same terms. The popular opinion is that foreign investors often use the Latvian Business Migration Program in order to get access to the EU and that the system is open to abuse due to only minor background checks on applicants. (Cash-for-Residency Scheme in Latvia is Drawing Fire for Eurozone, THE BALTIC COURSE (Sept. 24, 2013), http://www.baltic-course.com/eng/analytics/?doc=81048.)  According to one member of the EU Parliament, “[t]hey are not buying houses, they are buying access to the Schengen area.” (Id.)

Latvian politicians are calling for stricter rules for the issuance of residency permits, for an increase in the minimum amount of the investment required to obtain such permits, and even for abolishing the program. (NEWSRU.COM, supra.) Some have suggested that the program should be limited to investments in businesses, not real estate, and that the purchase of forest land by foreigners should be banned. (Juris Kaza, supra.)

Also, the program is a source for growing social tensions among the native Latvian population who compare the mass migration of citizens from post-Soviet countries to Latvia with the state- sponsored resettlement of the Russians to Latvia during the Soviet era. (Id.)

While all political parties represented in the legislature appear to support restrictions on the program, the government is reportedly going to decide before the end of this year, when Latvia is scheduled to enter the eurozone, whether to stop the issuance of temporary residence permits in exchange for real estate investments in Latvia.  (NEWSRU.COM, supra.)

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Prepared by Peter Roudik
Director of Legal Research
September 2013
 


[1] 2011 Investment Climate Statement – Latvia, US Department of State, Bureau of Economic, Energy and Business Affairs (Mar. 2011), http://www.state.gov/e/eb/rls/othr/ics/2011/157308.htm.

[2] Immigration Law of the Republic of Latvia (Oct. 31, 2002), http://www.vvc.gov.lv/export/sites/default/docs/ LRTA/Likumi/Immigration_Law.doc (government prepared and published English translation).

[3] Id. secs. 22–31.

[4] Id.

[5] Id.

[6] Investors in Latvia Granted Residence Permits for up to Five Years, Live Rīga (July 26, 2010), http://www.liveriga .com/en/2449-investors-in-latvia-granted-resi.

[7] Immigration Law of the Republic of Latvia sec. 23(1), para. 29.

[8] Id. sec. 23(1), para. 28.

[9] Id. sec. 23(1), para. 30.

[10] Residence Permit in Latvia: Facts and Results, Baltic Legal, http://www.baltic-legal.com/news-residence-permit-latvia-facts-results-eng.htm (last visited Aug. 1, 2013).

[11] Id.

[12] Damien McGuinness, Latvian Property Scheme Brings Investors and Protests, BBC (Jan. 3, 2011), http://www.bbc.co.uk/news/world-europe-12108423.

[13] Baltic Legal, supra note 10.