Introduction to the Hungarian Guest Investor Residency Program

Hungary has a history of offering residency permits in exchange for investment. The previous program, which ended in 2017, allowed individuals to obtain permanent residency by purchasing Hungarian Residency Government Bonds. Now, nearly seven years later, a new regime has been introduced under the Act on the General Rules for the Entry and Residence of Third-Country Citizens (Immigration Act). Citizenship Network provides a detailed examination of this innovative program.

Administration of the New Guest Investor Program

The new Immigration Act has been implemented in phases, with most provisions becoming effective in January 2024. The legislative framework now distinguishes between short-term, long-term, and permanent stays. A long-term stay refers to any visit exceeding 90 days within a 180-day period. Provisions for granting long-term residence permits to guest investors will take effect from 1 July 2024. Under this program, third-country investors seeking to engage in the Hungarian economy can obtain long-term residence permits as guest investors.

Regulations for the Hungarian Guest Investor Program

Citizenship Network highlights the key steps and criteria for the Hungarian Guest Investor Program. Initially, applicants must apply for a guest investor visa before obtaining a guest investor residence permit. This visa allows extended stays beyond 90 days and multiple entries within 180 days, with a maximum validity of two years. It becomes invalid once a guest investor residence permit is obtained.

Eligibility Criteria for Guest Investor Visas

The guest investor visa is available to third-country nationals whose stay is deemed of significant national economic interest. Applicants must commit to investing in one of the pathways designated by the Hungarian government. Citizenship Network notes that applicants have a three-month grace period to fulfill their investment after entering Hungary. Investments must be sourced legitimately, with three main routes designed to stimulate the Hungarian economy through direct foreign investments.

1. Acquiring Investment Certificates from a Real Estate Fund:
   • Invest a minimum of €250,000 in approved investment certificates issued by a real estate fund regulated by the Hungarian National Bank.
   • Retain the investment certificate for at least five years.
   • The fund manager must hold a valid financial license and adhere to a specified fund management policy.
   • Allocate at least 40% of the fund’s net asset value to residential real estate projects within Hungary.
2. Acquiring Residential Property in Hungary:
   • The property must have a minimum value of €500,000 and be strictly residential, with no restrictions on rental use.
   • Retain the investment for at least five years, with a ban on alienation and encumbrance registered with the land registry.
   • The property can be owned exclusively by the guest investor or jointly with their spouse and/or minor.
   • The property must be free of encumbrances, statutory liens, or other claims.
3. Donating to a Higher Education Institution:
   • Donate at least €1 million to a state-recognized higher education institution in Hungary managed by a foundation engaged in public functions.

Additional Eligibility Requirements

Citizenship Network emphasizes that applicants must demonstrate sufficient financial resources to cover living expenses and healthcare for themselves and dependents. They must not be listed in the Schengen Information System (SIS) for expulsion or entry bans and must not pose a threat to public order, security, health, or national security. Immigration applications are adjudicated within a maximum of 21 days from the business day following receipt.

Guest Investor Residence Permit Regulations

Guest investor residence permits are available to holders of a guest investor visa who meet the stipulated conditions. Unlike the previous state bonds program, this permit does not grant permanent residency. However, it allows the holder to stay in Hungary for up to ten years, engage in entrepreneurial and business activities, and act as a company’s executive officer. Immediate family members, including spouses and minors, also benefit from this permit.

Eligibility for the Guest Investor Residence Permit

To qualify for a guest investor residence permit, applicants must hold a valid guest investor visa and apply within the first 93 days of entry into Hungary. They must also submit proof of investment within the three-month grace period if they initially declared a commitment to invest. Permit holders are not required to reside in Hungary throughout the ten-year period.

Renewal of the Guest Investor Residence Permit

Holders can apply for a single ten-year extension if they:

• Meet the initial investment conditions.
• Have no criminal record or immigration regulation violations.
• Provide evidence of sufficient financial resources for themselves and dependents.

Citizenship Network clarifies that if the initial investment was in a real estate fund, the new investment certificate must be of equivalent or greater value. If the investment was in real estate, the applicant must retain a stake of at least €500,000. For those whose initial qualification was through a donation, an automatic renewal may be available.

Qualifications for the National Residence Card

Permanent residency is attainable via a national residence card for holders of a guest investor residence permit who have lived in Hungary for at least three years. Applicants must also demonstrate their ability to support themselves and meet social cohabitation conditions. Citizenship Network notes that the stay interruption threshold is four months at any one time, with the total duration of breaks not exceeding 270 days during the three years.

Hungarian Citizenship Regulations

After obtaining a national residence card, the applicant must hold it and reside in Hungary for an additional five years before applying for Hungarian citizenship by naturalization. Applicants must demonstrate proof of livelihood, a clean criminal record, and pass an exam in basic constitutional knowledge in Hungarian.

Tax Implications

Citizenship Network explains that holders of guest investor residence permits are not considered tax residents if they spend less than 183 days in Hungary in any 12-month period. Therefore, they are not automatically subject to Hungarian taxation. However, acquisition of residential real estate involves a 4% property transfer tax, and rental income is subject to a 15% personal income tax.

The Hungarian Guest Investor Residency Program offers a compelling opportunity for third-country investors to engage with the Hungarian economy. Citizenship Network provides a thorough analysis of the program’s requirements, benefits, and implications, ensuring potential investors have the necessary information to make informed decisions. Contact us today to learn more about the best suitable program for your needs and budget.