Greek Amendments to Reduce Golden Visa Investment Risk
This article was published on the Investment Migration Insider, on May 15th, 2020. The editor of the article is Christian Nesheim.
The Greek Parliament this week voted to pass Law 4686/2020 which, among other changes, enables the investor to pay in full for the property directly from abroad, rather than by first opening a Greek bank account.
Technically, Golden Visa investors in the country have always been permitted to pay for the property through wire transfers from foreign bank accounts but, in practice, paying from abroad meant that either the buyer or the seller had to assume payment risks related to the transaction:
“The seller could sign over the property before the buyer’s wire transfer arrived, in which case the seller assumed the risk,” explains Panos Rozakis, CEO of Prime Synergy Greek Residency. “Alternatively, the buyer could assume the risk, by paying for the property before it had been signed over to his or her name. Either way, someone had to take on risks we considered unnecessary and which resulted from a technicality.”
Who assumes the risk?
With a Greek bank account, however, the buyer could obtain a cashier’s check from their Greek bank, which they could hand to the seller during the transaction as witnessed by a notary. In other words, a “live” transaction in which the money and the property change hands at the same time.
Since neither side in the transaction wished to assume such risk, the practical solution has generally been for the applicant to open a Greek bank account prior to the transaction, so as to enable the use of a cashier’s check.
One way around this hurdle would have been for the seller to include an annulment clause in the contract, stating that, if the buyer’s money had not arrived in the seller’s account within a pre-defined time frame, the sale could be declared null and void. This solution, however, has not been a viable one until now, because sellers could not include such annulment clauses in their contracts.
The reason for that was that Greek immigration authorities could only approve a residence by investment application on the basis of properties already bought and paid for in full, for which a purchase and sales agreement with an annulment clause would be deemed insufficient as proof. After all, the property transaction might have been declared null and void after the “investor” had already obtained their residence permit, allowing applicants to obtain golden visas without actually going through with their investments.
“With this week’s legal amendments,” says Rozakis, “we can include a clause stating the agreement is voided if no money arrives. This enables us to transfer the property to the buyer before the money arrives, all the while protecting us from risk.”
Greek residence permits starting at €48,000.
A separate amendment included in the same bill introduces a physical residence requirement for those obtaining a Temporary Residence for Financially Independent Persons (FIP-visa) in Greece, a category of immigration unrelated to the Golden Visa but one which, nonetheless, may influence it.
To understand how amendments to rules for the FIP, an attractive proposition in its own right, might have a bearing on the Golden Visa, consider the terms under which FIP-visas are issued:
The FIP applies to citizens of non-EU countries who have enough resources at a fixed annual income level to cover their living expenses in Greece. “Enough resources”, in this case, is defined as monthly incomes in excess of €2,000, a figure that increases by 20% if a spouse is included and by 15% for each accompanying child.
Crucially, the main applicant must deposit in advance two years’ worth of living expenses in a Greek bank account to qualify, which amounts to an initial outlay of €48,000. For a family of four, it would mean depositing €72,000. Since the funds may not be invested, and because deposit rates are practically zero, the capital produces no inflation-adjusted returns.
A main applicant for the FIP-visa may also include a spouse and any minor children in the application, all of whom must demonstrate sufficient health insurance coverage from a private institution.
The residence permit is initially valid for two years and, thereupon, renewable indefinitely at three-year intervals. This residency permit, like the golden visa (and, indeed, any other category of residence permit in an EU country) enables visa-free travel within Schengen.
The mobility benefits afforded by the FIP-visa, coupled with the absence of a physical presence requirement on its holders, has placed the FIP in direct competition with the Golden Visa program, which offers essentially the same product but in exchange for capital investments of €250,000 with a chance of returns.
Industry stakeholders, therefore, had lobbied the government to introduce physical presence requirements on FIP-visa holders. The government listened, and the bill that passed this week includes rules mandating the FIP-visa holders be present in Greece for at least six months each year to qualify for renewal.
Find the original article here.
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