What do you need to know about temporary residency permits in Latvia, and why should this be of interest to you right now?
Baltic Sotheby’s International Reality is the leading real estate company in Latvia and wants you to know that Latvia has been offering very advantageous transaction terms to foreign citizens, also making it easier for them to move around in the Schengen Zone. There will be changes in the rules as of September 1 of this year.
Temporary residency permits (TRP) as part of a programme of purchasing real estate have become a convenient and advantageous way for foreign citizens to invest their available resources while making it easier to travel in the Schengen Zone. Clearly Latvia has been offering the most advantageous terms for such deals, and statistics show that during the four years that the programme has been on offer, more than 10,000 foreigners and family members have asked for TRPs in relation to the purchase of real estate in Latvia.
Advantages for clients of the TRP real estate programme in Latvia (until September 1):
- The lowest purchase price in the EU;
- No major additional expenditures;
- No minimal residency term in Latvia;
- Permission to hold a salaried job;
- Availability of commercial bank financing for the purchase of the property;
- No limitations on the location, size or condition of real estate;
- Permission to rent out the home.
In France, the minimal investment to receive a TRP is EUR 10 million, while in other European countries, where the necessary investment is closer to Latvia’s requirement, buyers of real estate in the TRP programme face a series of other demands or limitations. Such investors in Greece are not allowed to join the labour market, in Cyprus no one is allowed to purchase more than two buildings, in Malta the property cannot be rented out, and in Spain financing for the transaction cannot come from commercial banks.
Changes that you must take into account
Latvian law will be amended on September 1, and first of all this will mean a higher investment. Investors will be required to spend at least EUR 250,000, and the cadastral value of the property must be at least EUR 80,000. If the cadastral value is lower, the property must be appraised to determine its market value, and the same sum is in place in the Rīga Planning Region, in Latvia’s larger towns, and throughout the country. The real estate purchase may not involve farmland or forestland, it must be a structure, though it must be noted that the word “structure” will also relate to foundations or buildings that are under construction as long as they have been registered in the Land Book. Also as of September 1, the investor will have to contribute 5% of the transaction cost toward the Latvian Economic Development Fund.
What can you do by September 1?
The truth is that you can still do a lot, because foreigners who purchase real estate and register it under their own name in the Land Book by August 31, 2014, will be able to receive the TRP later, but on the basis of the former rules. If the record in the Land Book is dated after September 1, then the new rules will be in place. Please be careful here and remember that purchasing additional real estate will not resolve the situation, as the new rules speak only to the purchase of a single property.
Several Sotheby’s Baltic Realty clients have said that purchases of properties in Latvia are a secure and long-term investment that makes it possible to diversify capital risks and receive temporary residency permits for the investors and their families. Furthermore, if the new owners cannot manage the property themselves, Sotheby’s Baltic Realty will be happy to do the job on their behalf.
For more information
What is TRP?
The TRP is issued for five years when the recipient has invested in real estate. The permit can be extended for a new period if the real estate continues to be owned by the relevant investor.
A TRP allows its recipient to travel freely in the countries of the Schengen Zone, to live in Latvia, and to work in Latvia and Schengen Zone countries up to 90 days in six months. Latvia, however, does not set a minimum term in terms of how long the recipient can live in Latvia. The investor does, however, need to register once a year to maintain the validity of the TRP.
The TRP does not necessarily mean that the investor becomes a tax resident in Latvia. This status can be granted if the investor spends more than 183 days a year in the country.
Personalised TRP cards are issued for one year, 45 to 90 days before the expiration of the term of the card, the investor and his or her family members must undergo an annual registration procedure to receive a new card for the next year.
The TRP can receive also the spouse of the investor and the the minor dependents of the owner.
From September 1, 2014 in receiving a TRP will be following changes
| Now | From September 1, 2014 | |
| A minimum sum of the real estate property deal in Rīga, the Rīga District, other larger cities in Latvia | 142 300 EUR | 250 000 EUR |
| The cadastral value of the real estate property on the date of purchase | 42 690 EUR | 80 000 EUR (remains in place the opportunity to ensure the appraisal of the market value of properties with a lower cadastral value) |
| The minimum sum of the real estate property deal in the regions of Latvia | 71 150 EUR | 250 000EUR |
| The cadastral value of the real estate property on the date of purchase | 14 230 EUR | 80 000 EUR |
| Number of the real estate properties | The total amount of the deal could be calculated for several real estate properties together | The investor can only buy one real estate property (or few functionally related) |
| The additional requirements | The contribution of 5% of the sum of the deal to the Latvian Economic Development Fund |