HUNGRY FOR GROWTH
In just three years, Hungary has become one of the most popular residency programs in Europe among wealthy foreign investors. GC finds out why
JULY / AUGUST 2016
and minor children, but also their parents and children over the age of 18. In addition to receiving their Hungarian Permanent Residency Permit in only four weeks, investors also enjoy one of the unique benefits of this permit – visa-free movement across the Schengen member states for all family members with a single application. The new features of the program have positively affected Hungary’s score in the Arton Index with a total of 73, now ranking second in the list of countries observed by the Index. In just three years, Hungary has become one of the most popular residency programs in Europe among wealthy foreign investors. A member of the European Union and the Schengen zone, Hungary is also among the 30 most-visited destinations on the planet. It boasts a rich and diverse culture – everything from music and film to food and literature, universal healthcare, and is perfectly located in the center of Europe. According to Arton Capital’s latest edition of the Passport Index – a ranking system to reveal the benefits of each passport from around the world – Hungary takes the 7th position as the most powerful passport in the world with a visa-free score of 150. So why has Hungary been so successful at attracting wealthy foreigners who are mainly from China and the Middle East? Security The investment terms are simple. Investment is guaranteed by the government, through special residency bonds issued by the Government Debt Management Agency. The lock-up period for the investment is five years after which period the securities are 100 per cent redeemable. In comparison, other programs are based on donation or investment real estate, which can be very inflated.
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egislation introduced by the Hungarian government back in 2012 granted residency and ultimately a Hungarian passport to any foreign investor who invested at least €300,000 in special government residency bonds, allowing the holder to live and work anywhere in the European Union. At the time, public debt in Hungary was equivalent to about 80 per cent of its annual economic output and households were also struggling with huge foreign-currency debt. However, shortly after the program was officially launched in January 2013, Hungary’s economy exited its second recession and showed growth for the first time since 2011. The residency program’s main purpose was to help the Hungarian government refinance its growing foreign currency and avoid bankruptcy. In just three years, the Eastern European country has managed to entice 3,429 applicants, in comparison to the UK program, which has been operational since 1994 but attracted only 2,398 in the following decade. With an investment of €300,000 per family – into 0-coupon government guaranteed bonds for five years – the program has already attracted over 1 billion euro to the Hungarian economy since its launch in 2013. The latest amendment to the legislation governing program, due to come into effect on July 1, 2016, now allows applicants to receive a Permanent Residence Permit in just four weeks, and in one single step. Previously, the procedure consisted of two stages with a processing time of over 180 days. This required investors to initially apply for temporary residence, and to hold this permit for a mandatory period of six months, before they could apply for permanent residence. The new regulation brings another benefit, which extends to qualifying family members. The investor may now include in their permanent residency application not only their spouse
Hungary ‘s capital city Budapest