|Latvian Economy Benefits from Non-resident Investment|
Foreigners have invested 1.17 billion euros (about 1.5 billion U.S. dollars) in Latvia in order to obtain temporary residence permits in the Baltic country,
citing a report drawn up by the Latvian Interior Ministry.
The Office of Citizenship and Migration Affairs, the Latvian immigration authority, received 12,427 requests for temporary residence permits from 2010 to 2014, including 5,267 applications from investors and 7,160 from their family members. The Latvian immigration authority took positive decisions in 94.7 percent of cases and issued 11,754 residence permits in the four-year period, the Interior Ministry said.
Of the investments made by foreigners in the Latvian economy to obtain residence permits, 82 percent, or 837.5 million euros, have been invested in real estate. Investments in credit institutions' subordinated debt make 12 percent, and investments in companies' equity capital make up 6 percent of total investments. Direct taxes and duties charged on these investments have brought over 111 million euros into the Latvian budget.
Although the foreigners seeking Latvian residence permits come from 41 countries and regions, the lion's share, or 90 percent of them are from former Soviet republics.
Statistics show that requests for temporary residence permits from Chinese investors have also been growing steeply since last year. Their number surged from a total of 136 applications received from 2010-2012 to 789 applications in 2013 and the first half of 2014, making China the second biggest supplier of investors of this kind after Russia.
Applications have also been received from investors from Israel and the United States, among other countries and regions.
It follows from the report that the amendments to the Latvian Immigration Law passed in 2010 and allowing foreigners to obtain temporary residence permits in exchange for investments have been fuelling the inflow of investment through property transactions in Latvia, as well as the Latvian financial market.
The Latvian Security Police has warned, however, that notwithstanding the economic benefits from the trade in residency permits, the growing demand for the permits from Russian citizens may pose risks to Latvia's national security.
During a meeting with members of the Latvian parliament defence, interior and corruption prevention committee on Wednesday, Security Police deputy head Ints Ulmanis told lawmakers that the Russian investors applying for residence permits in Latvia do not cause security risks as individuals.
Latvia's seaside resort town Jurmala and the capital city Riga have been attracting the highest number of foreign investors, with nonresidents currently making up 70 percent of all property buyers in Jurmala. Foreigners are also the main buyers of expensive luxury properties in Riga and Jurmala.
On Sept. 1, 2014, amendments to the Latvian Immigration Law came into effect, raising the minimum price foreigners must pay for properties to obtain temporary residence permits to 250,000 euros from 150,000 euros.
Under the amended law, investors seeking residence permits in Latvia are also required to pay 5 percent of the value of the purchased property into the Latvian budget.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Sep.25, 2014