As of 1 September 2014, amendments to the Immigration Law will impose new requirements on transactions that entitle foreigners to apply for temporary residence permits in Latvia. Many predict that the new requirements will significantly limit the number of transactions and residence permits.
Larger amounts to be allocated for purchase of real estate
To qualify to apply for a temporary residence permit, the value of real estate purchased must be at least EUR 250,000 and the cadastral value at least EUR 80,000 at the time of purchase. If the cadastral value is lower, then a certified real estate valuer will have to confirm that the property's market value is at least EUR 250,000.
Only those transactions involving purchase of functionally related real estate with buildings will enable an application for a temporary residence permit. This means that buying several properties registered with separate land registries will not qualify for the transaction threshold set in the law. At present it is not clear what “functionally related” means. In addition, the amendments state that transactions with agricultural or forest land do not qualify for grant of a temporary residence permit.
An applicant for a first temporary residence permit must also pay an additional 5% of the real estate purchase value to the state budget.
Market participants should take into account that as to present real estate transactions registered in the land registry by 31 August 2014 (in fact, on or before 29 August 2014, as the deadline is a Sunday) the previous requirements of the Immigration Law (set on 26 May 2011 and 5 December 2013) will continue to apply to applications for a first or a repeat temporary residence permit or registration of a temporary residence permit.
Requirements for other investment cases increased
Additionally, the amendments set requirements for investment in a Latvian credit institution: foreigners who have a subordinated liability loan of at least EUR 280,000 from a credit institution will be entitled to claim temporary residence permits on payment of a further EUR 25,000 to the state budget.
Those who have already invested in the shape of a subordinated loan before 1 September 2014 will not need to increase the loan amount. In addition, as from 1 January 2015 foreigners will be allowed to apply for a temporary residence permit if they buy certain interest-free state securities at a nominal value of EUR 250,000 for property purposes. This temporary residence permit will also involve payment of EUR 25,000 to the state budget.