By József Németh, Partner and Attorney-at-law and Sándor Békés, Attorney-at-law, Visegrad+ Legal Hungary

Introduction

Hungary, located in the heart of Europe, is an exciting destination for foreigners offering excellent opportunities for spending time due to its rich cultural heritage. With a dynamic economy and a strategic location as an integral part of the EEA, the country has already attracted foreign investors. Now, the new act on immigration[1] offers even more favorable conditions for third-country nationals. To facilitate foreign investment, Hungary offers the Guest Investor Residence Permit, commonly known as the Hungarian Golden Visa. This permit allows international investors to reside and work in Hungary, contributing to the country’s economic growth.

Overview of the Hungarian Guest Investor Residence Permit

The Hungarian Guest Investor Residence Permit grants non-EU nationals the right to reside in Hungary for ten years, with the possibility of extension. This residence permit allows investors to work without the need for any further permit in Hungary. Holders of this kind of residence permit may engage in business activities and manage businesses within Hungary as well. Unlike other residence permits, it does not impose an obligation to stay in Hungary for certain uninterrupted periods[2]. Investors have multiple ways to invest between EUR 250,000 to EUR 1,000,000 as described below.

Validity period

Golden Visa is granted for a long-term period of ten years. This validity period may be extended for another term of ten years, only for the same purpose. The actual length of stay is not considered by the relevant authority when assessing the extension request, so the most important requirement for extension is that the applicant shall keep the investment. The validity period of the residence permit is not aligned with the passport’s validity period; it will be granted for ten years even if the validity period of the applicant’s travel document is shorter.

Doing business in Hungary

Generally, any third-country  national may establish a business association under Hungarian law without any restriction. However, being a member or an officer of a company does not grant the right to reside in Hungary automatically. Furthermore, this may qualify as a purpose of a residence permit with a shorter validity period only.[3]

Working with Golden Visa

Third-country nationals holding a Golden Visa will be entitled to work based on an employment relationship without any restrictions. No additional work permit is required, and no limitations apply to available jobs.[4]

Family reunification

Generally, the new Hungarian immigration laws significantly narrow the list of third-country nationals eligible for family reunification. This does not apply, however to Golden Visa, which allows family members, i.e. spouses and minor children[5] to join. These residence permits connecting to a Guest Investor Residence Permit are valid for ten years as well.

It is important to note that the validity period of these residence permits for family reunification cannot exceed the validity period of the applicant’s travel document. So, in most cases, it is recommended that family members get new passports before applying for a residence permit to use the full potential of the program.

Residence permits for family reunification connecting to a guest investor residence permit qualify as a work permit for family members of the guest investor. They are entitled to engage in an employment relationship without further permission.

Permanent residence and citizenship

The Immigration Act includes two types of permanent residence permits:  national residence card and EU residence card.

A national residence card for permanent residence in Hungary may be issued to third-country nationals who hold an appropriate residence permit and who have stayed legally and uninterruptedly[6] in Hungary for at least 3 years (directly) before the submission of the application. Third-country nationals with residence permits for the purpose of employment or guest self-employment[7] may not obtain a national residence card.

The second option is the EU residence card, which may be obtained by a third-country national who has stayed legally and uninterruptedly in Hungary for at least 5 years (directly) before the submission of the application.

Generally, Hungarian citizenship may be granted to foreigners after 8 years of consecutive residence. As third-country nationals, during the validity of the residence permit, do not get an official residence but an accommodation address, only the time of permanent residence may count into this period.

Investment Options

Prospective applicants shall make one of the following investments to qualify for the Golden Visa:

  1. Real Estate Fund Investment: Invest a minimum of EUR 250,000 in a real estate fund registered by the Hungarian National Bank.
  2. Residential Property Acquisition: Purchase a residential property in Hungary worth at least EUR 500,000, free from any claims and encumbrances.
  3. Donation to Science or Arts: Donate at least EUR 1,000,000 to a higher education institution supporting educational, scientific, or artistic endeavors.

Real Estate Fund Investment

Investment tickets must be issued by funds with significant residential real estate investments and registered with the appropriate Hungarian authorities. Those who choose this form of investment must hold an investment fund certificate issued by a real estate fund which

  1. Has at least 40% of its net asset value represented by investments in residential real estate in Hungary; and
  2. Has a real estate fund manager that is on the list of qualified market operators under Act XXX of 2016 on Defense and Security Procurement.

If the investment is done in a currency other than EUR, the value of the investment in EUR shall be determined by applying the official exchange rates published by the Central Bank of Hungary (Magyar Nemzeti Bank) on the day of the investment. The investments must be held for at least five years and shall be kept for the full validity period for renewal.

Residential Property Acquisition

The legislation requires the purchase of a single residential property, the purchase of non-residential property would not qualify as an appropriate investment. A prohibition of alienation and encumbrance of the residential property shall be registered in the Land Registry for a period of five years from the date of conclusion of the sale and purchase agreement. Investment can be made by acquiring ownership ratio of a residential property, but the property must be owned jointly only by the applicant and one or more family members for five years. Due to the mandatory prohibition of alienation and encumbrance, the property may not be sold for five years. After this period, the property may be sold but keeping the investment is necessary for permit renewal.

Sale and purchase agreements shall be countersigned by a Hungarian attorney or public notary, so the involvement of a lawyer cannot be avoided during a real estate transaction. A third-country national may acquire ownership of real estate only with the permission of the competent authority. During the 45-day procedure, the relevant government office inspects that

  1. The transaction is not contrary to the public interest or the interests of the municipality;
  2. The identity of the applicant can be established with reasonable certainty; and
  3. The intention to transfer ownership of the real estate can be established.

According to the most recent modification of the Immigration Act, real estate acquisition will be available only after 1st January 2025 in this program. Therefore, sale and purchase contracts should not be filed to the relevant land registry before 1st January 2025, but it is still possible to sign any preliminary agreement and initiate the process for the permission of the acquisition.

In course of the permit procedure, the Immigration Office appoints a forensic real estate expert to determine whether there is a noticeable discrepancy between the actual market value of the purchased property and the purchase price designated in the application.

Other requirements

Likely to other residence permit types, applicants must prove to meet several requirements, such as having proper accommodation, a valid travel document, and health insurance or sufficient funds to cover health-related expenses. Also, criminal record and status in the Schengen Information System are checked by the Immigration Office.

Application Process

Applications must be submitted in Hungary, either in person to the competent immigration authority or via an electronic platform. Personal attendance is required in both cases for retrieval of biometric data.

The pre-submission procedure depends on whether the applicant is entitled to enter the external borders of the EU without a visa. Those who are citizens of countries whose nationals are exempt from visa requirements[8] may simply enter Hungary, make the investment, and apply for Golden Visa. Those who are required to be in possession of a visa when crossing the external borders[9] need a Guest Investor Visa to enter Hungary and file an application for a Guest Investor Residence Permit. Guest Investor Visa may be granted to a third-country national who makes a declaration of having or intending to hold at least one of the investments listed in the Immigration Act and described above. In case of a planned investment, applicants shall verify that they have an amount corresponding to at least one of the investments of lawful origin. Funds must be transferable, or available within the territory of Hungary. Applicants also shall provide a written commitment to make at least one of the investments within three months of their first entry into the territory of Hungary with the Guest Investor Visa. Guest Investor Visa has a maximum validity period of 6 months enables multiple entries in the territory of Hungary and entitles its holder for a stay exceeding 90 days within a period of 180 days.

The application for Golden Visa shall be submitted by the third-country national within 93 days of the first entry into the territory of Hungary and the fulfillment of the investment obligation.

The procedural time limit is 21 days not including the time needed for certain procedural steps (e.g. completion of deficiencies, summoning).

Additional Considerations

The Golden Visa Program starts on 1st July 2024 but real estate purchases shall be

[1] Act XC of 2023 on the general rules for the entry and residence of third-country nationals (’Immigration Act’).  The present article is drafted according to the Immigration Act and Government Decree No 35/2024 (29.II.) on the implementation of the ’Immigration Act as of 27th May 2024.

[2] Uninterrupted stay is not required for the extension of the Guest Investor Residence permit but required for gaining permanent residence and citizenship.

[3] For the purpose of guest self-employment, a third-country national can obtain a residence permit whose purpose of residence is a) to carry out an activity that can be carried out independently in return for consideration according to the law, or b) in cases not covered by point a), a business company, cooperative or carry out your activities as a senior official of another legal entity created for the purpose of earning income. The validity period of the guest-self-employed residence permit has a maximum of 1 year, which may be extended by 2 years for the same purpose only, with the provision that the residence permit may not be extended for a period exceeding 3 years from its first issue.

[4] The Minister responsible for employment policy may issue a declaration to specify the occupations for which a residence permit for employment purposes cannot be issued.

[5] Family members are defined as

  1. a) the spouse of a third-country national or a Hungarian citizen,
  2. b) minor children (including adopted and foster children) of the third-country national and his/her spouse,
  3. c) the dependent minor child (including adopted and fostered children) of the third-country national over whom the third-country national has parental custody,
  4. d) the dependent minor child (including adopted and fostered children) of the spouse of a third-country national or a Hungarian citizen over whom the spouse has parental authority,
  5. e) a person with parental custody over a minor Hungarian citizen who exercises parental custody and lives in the same household as the Hungarian citizen.

[6] According to the Immigration Act, leaving the territory of Hungary for a period of less than four months at a time is not considered an interruption in Hungarian stay if the total duration of the foreign stay does not exceed two hundred and seventy days in the 3 years preceding the submission of the application.

[7] Temporary workers, guest workers, students, volunteers are also excluded.

[8] Listed in annex II of REGULATION (EU) 2018/1806 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 14 November 2018 listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement.

[9] Listed in annex I of the same regulation available at

https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32018R1806#d1e32-51-1