Purchasing real estate is the most popular option offered by the Spain residence permit by investment program: 44% of investors buy property in Barcelona, and 16%, in Madrid. We discuss the process, terms, and other features of this method.
The Spain residence permit by investment program was launched in 2013 by the government. The program was supported by law no. 14/2013 “On supporting entrepreneurs and their internationalization”, which introduced tax incentives, reduced administrative pressure on businesses and regulated the issuance of residence permits to investors.
In 2015, several important changes were made to the law to simplify the conditions for participation in the program and expand the rights of investors:
- Parents and adult children could be included in the application.
- The investor was permitted to work and conduct business in Spain.
- A temporary residence permit for up to 6 months could be obtained upon concluding a preliminary contract for the purchase of real estate.
Investors are attracted by the opportunity to include family members in their residence permit application. On average, there are two additional participants per applicant.
The Spanish government is interested in attracting foreign investment, especially against the backdrop of the difficult economic situation. The closure of borders has struck a significant blow to the tourism industry. Before the Covid-19 pandemic, Spain was ranked second in popularity among tourists after France. However, after receiving 83 million tourists in 2019, the number of visitors dropped to just 19 million in 2020. The attractiveness of Spain for investors is now again growing. According to the Ministry of Labor, from 2013 to 2017, investors invested about 2.3 billion euros in real estate in the country.
How to get a Spain residence permit by investment in real estate
To participate in the program, the investor needs to buy real estate for at least €500,000 by purchasing one or more properties in any region of the country.
Although there are no restrictions in the law on purchasing commercial real estate or land, most investors buy residential property. A registered residence address is a prerequisite for obtaining a residence permit.
minimum investment in real estate
The standard package of documents has to be attached to the application. If the property has been purchased and registered, a notarized purchase and sale agreement and a certificate of registration of ownership are required. If only the deposit has been paid, a preliminary agreement and a bank statement showing the required amount must be attached.
The application can include a husband or wife and children under 18, as well as adult children and parents, as long as they are financially dependent on the main applicant. Partners in a civil marriage can also obtain a residence permit upon confirmation of family relations. Other family members can also be added to the program later.
The documents are submitted to the Spanish Migration Service in person. This can be done in one visit to the country. Entry is allowed with a special investor visa.
An application for a residence permit is considered over a period ranging from twenty days to one-and-a-half months. A temporary residence permit for six months can be obtained after the conclusion of a preliminary contract for the purchase of real estate.
Basic requirements and documents:
- Age over 18 years old.
- Completed and signed applications.
- Two 3.5 × 4.5-cm color photographs on a white background.
- Existing passport valid for at least 1 year.
- Photocopies of all passport pages.
- No criminal record in Spain or in any country where the applicant has lived for more than 5 years.
- The absence of a ban on entry to other countries with which Spain has signed visa-free agreements.
- Legal presence in the country.
- Public or private health insurance valid for at least a year.
- Payment of visa processing fee.
- Proof of investment: extract from the cadastral register of the property and purchase and sale agreement.
- Proof of financial independence. The amount required is calculated case-by-case based on the IPREM indicator, which in 2021 is €564.9. For example, for a family of three, the applicant’s bank account must have a balance of at least €41,000.
Residence permit without the right to work
If the property does not meet the conditions of the program in terms of price or was acquired many years ago, a foreigner may be issued a residence permit without the right to work, Residencia Temporal No Lucrativa.
Requirements for obtaining a residence permit without the right to work:
- Own or rent residential property in Spain.
- Sufficient finances for living on: the applicant needs to confirm an account balance exceeding IPREM multiplied by 400% for each month of their stay in the country as a residence permit holder.
Each case is considered individually. For example, an applicant may be rejected if they are not in a position to integrate into the local community: they do not know Spanish at the basic level, do not understand local customs and traditions, and cannot form a relationship with their neighbors. Applications for a residence permit by investment are not subject to this requirement.
In which properties should applicants invest
After five years of moderate growth from 2015 to 2020, the property market cooled off rapidly in the economic recession caused by the Covid-19 pandemic. However, Spain appears to be a viable investment destination again as yields are rising.
Prices have still not recovered to pre-crisis levels: in the period from 2007 to 2015, prices fell by 40% and since then have grown only 2-3% per annum.
Many properties are being built specifically for investors. Resort real estate, which usually belongs to the elite class, is in demand. Villas are available for sale in the Balearic Islands, Costa Brava, Costa Dorada, Costa Blanca, Alicante, Benidorm and other cities on the coast.
The total transaction costs for buying real estate in Spain range from 10 to 15% of the purchase price. This includes the property transfer tax, ranging from 6 to 10%, depending on the region and the commission charged by the real estate agent. In addition, value-added tax and stamp duty are charged for a new property. For example, for real estate costing €500,000, the additional cost is between €50,000 and €75,000.
Living in Spain with a residence permit
One of the main advantages of the investment program is that the investor is not required to live in the country permanently. In order to maintain and extend a residence permit, the investor needs to spend 183 days a year in Spain. They are free to spend the rest of the time in any one-year period abroad or in their country of origin.
After 5 years of living in Spain, the investor and his family can apply for permanent residence. To do this, they need to spend at least 183 days a year in Spain. Permanent residence is almost indistinguishable from citizenship and offers greater freedom than a residence permit. Even during the pandemic, Spain permanent residence holders could travel to 132 countries around the world without a visa.
a year must be spent in Spain in order to apply for permanent residence
After another 5 years (in total after 10 years), investors can apply for Spanish citizenship. For citizenship, they will need to prove continuous residency, pass a basic language test and show their link with the country.
Under the terms of the program, real estate must be kept in ownership for 5 years after obtaining a residence permit. After that, it can be rented out or sold and the initial investment returned to the investor. As long as the investor continues to own the property, they will be able to renew their residence permit an unlimited number of times.
The advantage of a Spain residence permit by investment in real estate
Investing in real estate is one of the best ways to obtain a Spanish residence permit. We have listed its main advantages below:
- the application is considered quickly: it takes from 20 days to 1.5 months;
- a residence permit in Europe can be obtained for the whole family immediately;
- it is sufficient to live in the country for 183 days a year;
- visa-free entry and travel in the Schengen countries;
- the right to work or conduct business in Spain;
- pleasant warm climate and popular resorts;
- the standard of living is higher than the European average;
- access to a high-quality medical system;
- opportunity to open accounts in Spanish banks.
For example, in Portugal there is a lower minimum investment amount and more investment options, and citizenship can be obtained after 5 years. In Greece, applicants have the choice of purchasing a property or signing a long-term rental agreement.
For those who need to get an EU passport faster, we recommend taking a closer look at Malta. Obtaining a passport requires a substantial investment, but an application for citizenship can be submitted a year or three years after obtaining a residence permit.
Frequently asked questions
The Spain residence permit by investment program does not limit the choice of real estate: applicants can buy residential or commercial real estate. Moreover, the property does not have to be new. The program allows buying real estate in both the primary and the secondary markets.
The main investment condition is that applicants must buy one or more properties for a total cost of €500,000 and the property must be kept in their ownership for at least 5 years. However, the property can be rented out during this period, and then sold after completion of this five-year period.
A Spain residence permit can be obtained by using any of the permitted five investment options. In addition to buying real estate, applicants can make the following investments:
- Deposit 1 million euros in a Spanish bank account for 5 years.
- Buy shares of Spanish companies for 1 million euros and hold them for 5 years.
- Launch a business project in Spain and invest 1 million euros to develop it. The project must be approved by the Spanish government and the implementation period is not limited.
- Buy government bonds for 2 million euros and hold them for 5 years.
Property prices in Spain depend on the region, year of construction, proximity to the sea and the availability of the necessary infrastructure.
The average cost per square meter is about €1,700. At the same time, in resort areas, prices are higher. In Catalonia, the cost per square meter is at least €2,000; in Mallorca, €3,000; in Madrid, about €3,700; and in Barcelona, 4000 €.
Apartments in new buildings usually cost at least €200,000. A villa by the sea with a private pool costs 1 million euros. A foreigner can participate in the Spain residence permit by investment program by buying real estate for €500,000.
A Spanish residence permit by investment can be obtained for the whole family. A single application by an investor allows the following family members to be included:
- the investor's children under the age of 26.
The investor must fully financially support any children over 18 years of age. An adult child cannot work or receive any independent income. Adult children who are not fully financially dependent on the investor cannot be included in the application.
Wealthy foreigners want to obtain a residence permit in Spain mainly for the following reasons:
- ensure their freedom of movement in the 26 Schengen countries;
- invest money in liquid assets in Europe: real estate, securities, business;
- open accounts in European banks in order to keep savings and make foreign currency payments;
- move to live in Western Europe and change their tax residence;
- send their children to study in European schools and universities;
- be in a position to leave their country of origin at short notice in case of an emergency.