Latvia’s planned changes to its investment immigration system have been delayed after President Edgars Rinkēvičs returned the newly passed Immigration Law to parliament for further review. The law had been approved by the Saeima on June 11 by a vote of 65-17, but the president declined to promulgate it on June 19 because of concerns about investment-based residence permit provisions.
The bill would replace immigration legislation that has governed foreign residence permits since 2002. Its main investment immigration changes are:
- Ending the real estate residence route
- Ending the bank investment residence route
- Keeping the company investment route, but with shorter permit validity
- Creating a new state-created investment fund route
Because the Saeima’s spring session ended on June 18, lawmakers are expected to revisit the legislation during the autumn session.
Real estate and bank investment routes would be removed
The proposed law would eliminate Latvia’s real estate and bank investment residence permit pathways.
Under the current law, foreign nationals can qualify through:
- A real estate purchase worth at least €250,000
- A €280,000 subordinated investment in a Latvian credit institution
Neither route appears in the version passed by parliament.
Applications submitted and accepted before the new law takes effect would continue to be processed under existing rules. Existing residence permits would remain valid until expiration, with renewals handled under the law’s transitional provisions.
During the legislative process, Economy Minister Viktors Valainis proposed restoring the real estate investment route with revised eligibility requirements, but the responsible parliamentary committee rejected the proposal.
New €150,000 state investment fund route
The bill would create a new residence-by-investment route based on investment in a state-created alternative investment fund.
Under the proposed route, a foreign national could obtain a residence permit by:
- Investing at least €150,000 in a state-created alternative investment fund
- Keeping the investment for at least five years
- Paying an additional €10,000 to the state budget
The residence permit could be issued for up to five years.
However, this route cannot operate until the government creates the fund through separate legislation. The permit would remain valid only if the investment contract stays in force and the investor maintains a minimum balance of €150,000 in the fund throughout the required investment period.
Company investment route would stay, but permits would be shorter
The proposed law would retain Latvia’s company investment residence route, but with revised permit terms.
Under Article 27(1)(10), a foreign national could qualify by investing at least €50,000 in the share capital of a Latvian company that has:
- No more than 50 employees
- Annual turnover or balance sheet under €10 million
Applicants would also have to pay €10,000 to the state budget.
A second tier would require an investment of at least €100,000 in a company that, together with subsidiaries:
- Employs more than 50 people
- Has annual turnover above €10 million
Under both tiers, no more than 10 foreign nationals could obtain residence permits through the same company.
The main proposed change is permit validity. The company investment route currently provides residence permits valid for up to five years, with annual registration through identity cards. Under the proposed law, the maximum permit period would be reduced to two years.
The existing annual tax requirements would remain:
- At least €40,000 annually for the lower investment tier
- At least €100,000 annually for the higher investment tier
Rejected investment proposals
Several investment-related proposals were considered during the legislative process but did not make it into the final bill approved by the Saeima.
Rejected proposals included:
- Andris Kulbergs’ proposal for a separate €150,000 residence route linked to companies established by Latvia’s special economic zones and freeport authorities
- A proposal to revive the former government bond investment route
- Amendments by Kulbergs and Economy Minister Viktors Valainis to keep company investment residence permits valid for up to five years
- Kulbergs’ proposal allowing qualifying investors to become Latvian taxpayers through a flat annual payment of €60,000
President’s concerns
President Rinkēvičs asked parliament to reconsider several investment-related provisions before the law takes effect.
One issue was whether citizens of NATO, OECD, and European Economic Area countries, and potentially other countries considered friendly to Latvia, should be eligible for residence permits through real estate purchases.
He also questioned whether the proposed rules for the new €150,000 investment fund route are sufficiently complete without additional regulations, especially on:
- Verification of investment funds
- How the invested money may be used
The president also noted an issue identified shortly after parliament passed the law: the original version of the new investment fund route did not exclude Russian and Belarusian citizens. Parliament passed a separate amendment on June 18 to address this before the law reached the president.
The legislation separately states that discretionary residence permits for Russian and Belarusian citizens may only be granted in limited circumstances involving international legal obligations or humanitarian considerations.
Background to Latvia’s investment immigration changes
Latvia launched its golden visa program in 2010. Russian nationals made up a large share of applicants until they were barred from the program in 2022. Demand had already declined after 2016.
After a 2018 Moneyval review, Latvia strengthened oversight of its residence-by-investment framework and increased scrutiny of investors. More recently, investigators examined more than 20 companies over suspected misuse of the company investment route.
The next step is with the Saeima. Parliament can:
- Re-adopt the law without changes
- Amend it to address the president’s concerns
- Leave the matter unresolved until a later session
Until parliament acts, Latvia’s existing company investment route remains the country’s only active investment-based residence pathway. The proposed €150,000 state investment fund route cannot begin until the required fund is established through separate legislation.
Source article: outboundinvestment.com
