Temporary residence permits are no longer a motivating tool for attracting foreign capital in Latvia / Article

Between July 1, 2010 and the end of last year, within the framework of the investment program, the Citizenship and Migration Affairs Administration (PMLP) issued around 19,800 TUAs. In recent years, this type of investment attraction has been used relatively rarely – in a couple of years, around 500 TUAs have been issued for investments, and specifically last year only 86 applications from potential investors were received.

Investments of non-residents in the national economy have decreased sharply

85% of TUA applicants in these almost 14 years were investors from the territory of the former USSR. Outside the territory of the former USSR, the greatest interest of investors came from Asian countries.

In this program, the most frequent types of investments were investments in the share capital of capital companies, investments in real estate, financial investments in credit institutions and purchase of government securities.

After Russia’s full-scale invasion of Ukraine, the opportunity for citizens of Russia and Belarus to receive TUA in connection with investments in Latvia’s national economy has been canceled, significantly reducing the scope of the program. In 2014, the investments of non-residents related to the receipt of TUA, compared to the total investments of non-residents in the Latvian economy, exceeded 11%. Last year they were already only 0.1%.

At the end of last year, 4412 investors and their family members with valid TUAs stayed in Latvia. Two years ago, their number was close to 6,800.

All the mentioned numbers indicate that, in general, the investment attraction program has lost its initial importance and TUA is not a motivating tool for attracting foreign capital in Latvia, concludes IeM.

Other ways of attracting investment should be sought

IeM parliamentary secretary Igors Rajev concluded that other ways of attracting investment should be sought.

“That thing gradually survived itself, because it is difficult to attract investments to Latvia in this way, so we have to think about other ways of attracting investments. Doing it with TUA was a temporary moment. I can only express my opinion about it. This is the trend, but we understand that Attracting investment is a difficult issue that needs to be worked on.”

In the reports of the Ministry of Internal Affairs, the conclusions regarding the issuance of TUA against investments have been similar in recent years. The conditions of the investment program became stricter as of September 1, 2014, when the number of applications received in the program significantly decreased. The restrictive measures of the covid pandemic also had a negative impact.

After Russia’s full-scale invasion of Ukraine, amendments to the Immigration Law canceled the possibility for citizens of Russia and Belarus to receive TUA in connection with investments in the national economy of the Republic of Latvia. Therefore, it can be observed that

Citizens of Russia and Belarus are more active in selling or renting out their own real estate, however, currently, the impact of non-resident property sales on the Latvian real estate market can be assessed as insignificant.

It is expected that the government will take note of the conclusions read in this report, but later IeM will also send the informative report to the Saeima. It is possible that discussions on how to act in connection with the issuance of temporary residence permits for investment attraction are expected in the parliament.