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Golden Visa: New Criteria on Real Estate Investment

Golden Visa: New Criteria on Real Estate Investment

As we know, one of the suppositions for obtaining residence for investors in Spain is to make an acquisition of real estate with an investment value equal to or greater than 500,000 euros. Until now, the administrative practice related to investments in real estate held that the so-called Golden Visa could only be granted to those who buy real estate or a house already built, and that a deed for new construction did not constitute an acquisition. A recent ruling by the Supreme Court modifies this interpretation.

Specific case: purchase of a plot and subsequent new construction

In the specific case, resolved on February 12, 2018, a residence permit was denied according to Law 14/2013, of September 27, on Support for Entrepreneurs and Their Internationalization, to a Russian investor who acquired a plot in Caldes de Maravella (Girona) for 447,700 euros and subsequently built a new construction on the same plot for a total investment value of 1,040,200 euros. The reason for the denial was that the acquisition did not come to 500,000 euros, which is the established legal minimum and the work carried out on the property cannot be considered as a new acquisition. The refusal was appealed by the investor in the Contentious-Administrative Chamber of the Superior Court of Justice of Madrid and, after they had rejected the appeal, in the Supreme Court.  

The main argument of the State Attorney was that the acquisition of property by accession distorts the meaning of the Support for Entrepreneurs Law and that the aim of this law was to reduce existing real estate stock through foreign real estate investment, to boost the real estate market and, finally, to contribute to the recovery from the economic recession, pointing out that this was not achieved if the investment was intended to “build” a new property. The main argument of the investor was that “the declaration of new construction” is a way of acquiring the property of the house that he built on the plot, showing his disagreement with the interpretation that limits the concept of acquisition only to that carried out by sale.

Clarification of the concept “significant investment”

Through its ruling, the Supreme Court established as jurisprudential doctrine that the significant investment required for the granting of the residence permit as an investor provided for in Law 14/2013, of September 27, on Support to Entrepreneurs and Their Internationalization, can be carried out through the construction or promotion of a property on a plot or land previously acquired through sale. In summary, the reasons why the highest Court upheld the appeal are that the concept of “acquisition” cannot be reduced to that of “acquisition by sale” because the acquisition of the property can be carried out, for valuable consideration, in different ways. That in the event of promoting or building a property on a plot previously acquired through sale, we are not dealing with an improvement, reform or extension of a building—new or old—but rather a new building. This event is also a way of acquiring the property. For this reason, the registration certification describes the two modes of acquisition of the property of the single plot: sale and constitution of new construction, formalized in two different deeds, but on the same plot. The Supreme Court concludes that it is on this single plot in which the appellant has made a “significant investment” far exceeding what is required by law, first buying and then building, though everything has been an investment.

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Golden Visa: New Criteria on Real Estate Investment

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