By EB5 Investors Magazine Staff
Immigration investment professionals believe Hungary could be mulling a relaunch of its country’s residency bonds program, which offered immigration investors a popular, low-cost entry-point to Europe before its suspension in March.
Government officials haven't made any official pronouncements regarding the program, but neither have they revoked the legislation upon which the program was based, points out Mo Shaban, head of sales with Hungarian immigration investment firm New Residency. Instead, the government simply stopped issuing the bonds required for the program — and it would be very easy, Shaban says, for the government to resurrect the program simply by releasing more bonds to the marketplace.
“There are rumors they’re going to do it again next year,” Shaban says. “They’re going to restart next year, with a new format. Most probably it’s going to be more expensive, and the processing fee is going to be higher — it’s not yet approved by the government, but these are the rumors.”
The bonds program, which offered permanent residency for a one-time refundable investment of 300,000 euros, had been used by 6,211 investors since its launch in mid-2013, attracting well over 1 billion euros in foreign investment.
The program was especially popular with Chinese investors, but drew heated criticism from Hungary’s opposition leaders amidst claims that the program was prone to corruption, and provided little direct benefit to Hungary’s economy. Immigration has been a politically charged issue in Hungary in recent years, with the government losing popular support during the European migration crisis, and building a wall along its southern border to divert migrants to neighboring countries.
The government announced the suspension of the residency bond program in 2016, in an apparent bid to deflect domestic and international criticism, sparking a flurry of last-minute applications before the program’s suspension in March 2017. Some government officials spoke out against the suspension, with Minister for National Economy Mihály Varga arguing that the bonds program was “worthwhile keeping it in our armory, to keep it among those instruments that could play a role in financing.”
Such comments have fueled speculation that Prime Minister Viktor Orbán could move to restore the program if voters return him to power in next spring’s elections. So far, however, the government has remained reticent about the program’s future. “There will be an election, and it’ll depend on the result of the election,” says Mihály Gacsi of Astoria Assistance Immigration Law Office in Budapest. “For now, nobody’s speaking about it.”
In the meantime, investors can still gain Hungarian residency through other means. “There are still ways of doing this,” Shaban says. “It’s not as simple as it used to be with the government bonds, but we’re now offering solutions for clients — mostly business investment possibilities that can lead to residency.”
To obtain Hungarian residency under the current system, investors must either own an active business with at least three Hungarian employees, or must present a credible business plan mapping out a viable startup strategy, explains István Dobos of Dobos Legal.
There isn’t much in the way of formal guidance about what constitutes sufficient business activity to justify a residency application, or about what kind of business plans are acceptable, Dobos says. Generally, however, immigration officials will scrutinize applicants’ prior business experience, and will expect to see evidence that applicants are capable of independently supporting themselves for at least a year.
Applicants should plan on having at least a few tens of thousands of dollars in savings before applying, and should also acquire health insurance and rent or buy a Hungarian place of residence, Dobos says. “Unfortunately, there’s no guidelines,” Dobos says. “But of course, if you have a high amount of money in your bank account, you’ll seem more reliable.”
Successful applicants receive a one-year residency permit, which can subsequently be renewed for two-year periods. After five years of temporary residency, investors qualify for permanent residency, as long as they have spent three quarters of the intervening three years in the Schengen zone. After eight years investors can apply for Hungarian citizenship, but must first show they’ve learned Hungarian and assimilated into the local culture.
That’s markedly more restrictive than under the old residency bonds program, which had no significant physical-presence requirement, let alone linguistic or cultural requirements, and was frequently used either as a Plan B or as a gateway to the other Schengen nations, notes Gacsi.
“For residency bonds, they got permanent residence, but most of the people immediately went out of the country to live somewhere else,” Gacsi says. Now, he says, Hungary’s immigration options are chiefly of interest to people who want to put down roots and integrate into the Hungarian society.
That means many immigration investors and entrepreneurs are looking elsewhere, Dobs says. “For a foreigner, other destinations in Europe, like Berlin, would be more popular than Budapest for startups,” Dobos says. “People don’t come to Hungary to start a startup.”
Still, there’s plenty of pent-up demand for Hungary’s original residency bonds. Shaban still regularly receives inquiries from investors who haven’t heard the Hungarian program has been canceled, in a sign that the program would quickly become popular again if it were reintroduced.
“People are still interested — not everyone knows about the suspension of the program,” Shaban says. “They contact us, and we have to tell them no, sorry, it’s not available any more.”