Boris Tsilevich: Latvia opens the gate to Europe for foreign investors

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Excert from The Baltic-Course

.E. Tell me, Boris, amendments to the Act came into force?

B.Ts. Yes, it came from the time of publication. This happened in early May.

V.E.  Why did the need for amendments to the Immigration Act?

B.Ts. In general, it must be said that the Latvian legislation on immigration is one of the most stringent in Europe – and the grounds for obtaining a visa and, especially, a residence permit. There is a very limited set of grounds on which people can obtain a residence permit. In particular, the acquisition of real estate in Latvia so far considered the reason (and it is not automatic) only to obtain a visa for a certain number of visits, but not a basis for obtaining a residence permit. The meaning of the amendments is to encourage investment in Latvia, to attract investors. We wanted to make sure that people who in one form or another contribute to the economic development of our country have more opportunities to obtain a residence permit.

V.E. What’s new now in the law?

B.Ts. The key ones are two articles of the Law: 23 article, which provides an opportunity to obtain temporary residence permit, and art. 24, which provides for the possibility of obtaining the permanent residence. Before the amendments, the foreigner could actually get a temporary residence permit in 3 cases: if he learns in Latvia, running (in which case the employer had to justify why he needs a foreign worker), and for family reunification purposes. What is new here? First of all, there were adopted 3 new parts – 28, 29 and 30 – of the Article 23. There were the main debates around these parts. So, part 28 of article 23 stipulates that a foreigner can obtain a residence permit in Latvia for up to 5 years if he invested in the share capital of an entrepreneurial society not less than 25 000 LVL (about U.S. $ 50 000) and during the financial year the society has paid to the state budget and the budget of the local government taxes on the consolidated sum of 20 000 LVL ($ 40 000). Part 29 of Article 23 provides for the possibility of obtaining a residence permit for a foreigner for a period of 5 years if he has acquired in the territory of the Republic of Latvia is one or several properties, totaling more than 100 000 LVL

in Riga, Riga district and the cities of republican status, or outside of Riga, Riga district and city Republican values totaling $ 50 000 LVL, and continues to own them. In this case there are 2 additional conditions: – the seller of real estate should be no debt on the real estate tax and the payment of real estate must be made by wire transfer.

V.E. What is the meaning of the last condition?

B.Ts. This is due to measures against money laundering and complies with international obligations of Latvia in this respect. But let’s go further. Part 30 of the same Article 23 provides that a foreigner can obtain a residence permit as a period of 5 years if he had committed financial investments in Latvian credit institutions (investment in subordinated equity lender in the form of loans or bonds) in amounts not less 200 000 LVL, if the term of the transaction is not less than 5 years and if under the terms of his contribution this agreement can not be interrupted until the time of return contribution due to the contract.

V.E. Are there some changes in the article 24 of the Immigration Act?

B.Ts. I understand that the greatest interest for the investors has the Article 24 of Chapter 7, which states that a foreigner receives the right to permanent residence if he lived having a temporary residence permit on the territory of the European Union (except UK) for 5 years without a break. In addition there is another important but unpleasant moment with which we are fighting, but so far nothing we can do – to obtain the permanent residence a foreigner must pass an examination on Latvian language. That enshrined in the Act as a principle. Actually it is the exam to the lowest category, i.e. candidate for permanent residence must speak the language to a bare minimum. But without that to get the permanent resident status in Latvia is impossible today.

V.E. May the investor who got the permanent residence permit after five years of temporary residence in Schengen area, apply for citizenship, i.e. for naturalization?


B.Ts. Yes, he can, but for this he must live on EU territory with a permanent residence permit 5 years. I.e. a total of naturalization is possible after 10 years of residence in Europe.

V.E. What does mean the term “permanent residence”? Is it possible for a foreigner who has received a temporary residence permit, and applying for permanent residence, to leave temporary from the Schengen zone?

B.Ts. Yes, but for a limited period, by legislation, i.e. he should not allow the interruption in his residence in the territory of the Schengen area for more than 3 consecutive months, as well as a whole, in the European Union he must be at least 6 months per year.

V.E. Assume that the investor has no desire or opportunity to reside in the Schengen zone all the time. What happens to a man in five years?

B.Ts. This is an interesting question. Prior to the adoption of amendments such person must be deprived of a residence permit, including interim (paragraph 13 of Part 1 of Article 35 of the Act in the old edition). In the new edition this paragraph is deleted. Now the temporary permit gives to the holder the right to live, but not a duty to live within a certain period of time. In other words, if you want to live you have to live, if you do not want to live – you do not live. When 5-year term ends, the investor must make an extension of his temporary residence in a specially authorized bodies on the territory of the Republic of Latvia – the Office of Citizenship and Migration Affairs.

V.E.  What would happen if a foreigner will sell his property in Latvia?


B.Ts. He will be deprived of the right to residence. The law clearly defines who is entitled to receive it – a foreigner who has acquired and owns real estate. If he sold his property, then he does not own it.

V.E.  The law determines the amount of real estate investments – 100 000 LVL (about $ 200,000) in Riga, Riga district and major cities and 50 000LVL (about $ 100,000) in other regions of Latvia. What about are we speaking – about the cadastre cost or about the market cost?

B.Ts. Initially it was about cadastre value, but as a result of discussion of the amendments defeated the point of view, more favorable to investors – in the signed amendments to the Act it comes to market value.

V.E. Will be taken into account whether the property that was acquired before the entry of new amendments to the Immigration Act in force?

B.Ts. Unfortunately, no. There are so-called Transitional rules, paragraph 16 which states that under the new amendments, only the property, which is purchased after July 1, 2010 can be take into account.

V.E. It’s a pity of course, that those people who came to the Latvian market sooner and not in the best years are “punished”.

B.Ts. Yes, this is so, but one of the purposes of amendments – to intensify the housing market. And it can only be done by the involvement of the new customers. But those investors who purchased their property before…, I do not think they will lose: after the first of July 2010 the market, we hope, will go up, and quite rapidly. Consequently, those people who acquired or will acquire the property before this time, though they will not be covered by the new amendments to the Immigration Act, but, in my opinion, they will make good money.