Spain's Golden Visa Immigration Put in Perspective

Another European Socialist leader believes they have a solution to their housing crisis. This time it’s in Spain where prime minister Pedro Sánchez wants to stop the Golden Visa.

Wealth Influx

The Golden Visa brings in around 500 foreign investors to Spain each year according to Reuters. They each have to purchase a property worth a minimum €500,000. This is not the price level of any housing crisis in Spain. The average house price in Spain based on sqm is around €2000/m2. So 100 sqm would cost an average €200,000. Way below the €500,000 required of Golden Visa investors.

Spanish Immigration

Total immigration to Spain each year is 1.3 million people. Equating to around 260 times that of the Golden Visa “influx”. Immigration from Morocco alone is more than 20 times that of the Golden Visa.

There are around 600,000 homes sold in Spain each year. Around 500 of these are for foreign investors for the GV. That’s less than 0.1% of all property sales in Spain. For every Golden Visa purchase there are more than one thousand property purchases elsewhere.

Each one of those Golden Visa investors immediately pays tax of up to 10% on the property purchase price. That’s a minimum €50,000 on a purchase to qualify for the Golden Visa. The average wage in Spain is €29,000 p.a and the average tax on that is €4,500 p.a. Each Golden Visa investor pays around 11 years of the tax bill of the average Spanish resident before they even take possession of the property or move to Spain. Then they pay more annual taxes going forward every year. Not to mention bringing in foreign currency for all their spending and investment each year creating jobs and industry. Meanwhile these Golden Visa immigrants take little from the state. They have to have their own private health policies. They tend to be entrepreneurs and business people. They spend in the local economy and create wealth for all.

For every one Golden Visa immigrant paying 11 years average tax up front, Spain welcomes a further 260 other immigrants.

Smart Move?

So Pedro Sánchez, is this a smart move? Are you being advised correctly or is this just your typical ideological leftist policy that creates headlines and makes it look like you are doing something? The real housing problem in Spain is immigration at minimum or zero income levels. Better to deal with this than to blame it on investors that bring wealth and growth into the Spanish economy, taking little in return.

Reform or Abolish?

Hopefully we see reform of the Spanish Golden Visa rather than abolition. We saw these changes in Portugal last year where real estate related investment was removed while still retaining the programme. Either way gaining a Golden Visa through property purchase looks set to end and investors who favour this route may need to act quickly.