Spanish Case Law on Golden Visa: A Broadened Perspective by the Supreme Court in its STS 1134/2020

The Golden Visa in Spain has been a subject of attention and debate in the courts, marking a significant milestone in the interpretation of “significant investment.” Both the Supreme Court and the Higher Court of Justice of Madrid have played a crucial role in this evolving scenario.

Recently, the Supreme Court and the Higher Court of Justice of Madrid have taken a significant step by accepting that investment in self-promotion of housing can also count towards obtaining the Golden Visa, thus expanding the interpretation of “significant investment” and paving the way for accepting bank certifications as evidence of partial repayments with the aim of accrediting the investment.

Specific Case and Discrepancy in Interpretation: STS 1134/2020

Law 14/2013 of September 27, supporting entrepreneurs and their internalization, establishes the requirements to obtain the Golden Visa in Spain. Among these, the acquisition of real estate for a value equal to or greater than 500,000 euros per applicant is a common route.

However, Supreme Court ruling 1134/2020 shed light on the interpretation of this “significant investment.” In a particular case, a Russian citizen acquired a plot of land for 477,000 euros, with a total investment exceeding one million euros when considering the construction of a home.

Surprisingly, the Higher Court of Justice of Madrid determined that only the amount of the land purchase should be considered, arguing that the 500,000 euro threshold was not exceeded. This discrepancy sparked debates on the interpretation of the law.

The Supreme Court took a broad perspective by considering that the term “acquisition” should not be limited to the sale of real estate. It acknowledges that there are different ways of acquiring property, including the construction of a new property. Consequently, it establishes that, in the case of an investment involving the construction or promotion of a new home on previously acquired land, the total amount of acquisition and construction must be taken into account to determine if it exceeds the 500,000 euro threshold.

Limited Scope of the Supreme Court Ruling

Despite the new interpretation conceived by the Supreme Court, it is crucial to note that the ruling does not extend this joint assessment to other scenarios, such as modifying, rehabilitating or improving ancillary spaces in existing properties. Previous decisions had established that such investments should not be considered as part of a “significant investment.”

Construction of a property is considered significant if its amount exceeds the 500,000 euros threshold, but the rehabilitation of historic buildings or the expansion of existing properties by more than 100% do not meet this criterion.

Partial Mortgage Loan Amortization as a Challenge: STS 442/2021 from the TSM

As mentioned earlier, obtaining a Golden Visa requires a significant investment, and the acquisition of real estate for a minimum value of 50,000€ is common.

However, interpreting article 64.b) of Law 14/2013 presents a challenge when it comes to proving such investment through partial repayments of a mortgage loan. Let’s remember the content of this article:

“b) In the case provided for in letter b) of paragraph 2 of article 63, the applicant must prove that they have acquired ownership of the real estate by means of certification of ownership and encumbrances from the Land Registry corresponding to the real estate or real estates. The certification may incorporate an electronic verification code for online consultation. This certification will include the amount of the acquisition; otherwise, it must be proven by providing the corresponding public deed.”

The historical rigidity of immigration authorities in accepting bank certifications as evidence of partial repayments highlights a dilemma. However, ruling 442/2021 from the Madrid Court of Justice, dated July 2, 2021, offers a different perspective: it emphasizes that it is the financial institution that certifies the actual amount of the debt.

This decision seeks to prevent the Administration from using the burden recorded in the Land Registry as a basis for denying the Golden Visa, instead of considering the updated certification issued by the banking institution.

Flexibility and Fairness in Interpretation of Requirements

Flexibility proposed by case law is essential to address unjust situations. Investors seeking to meet requirements and make partial repayments are limited by the lack of acceptance of certain documents as valid proof.

The need for fairness in the interpretation of the law is evident, and judicial decisions such as ruling 442/2021 mark a significant step.

Ruling 442/2021 acknowledges that the financial institution is the most reliable source to certify the actual amount of debt, thereby preventing the Administration from clinging to old records that do not reflect the investor’s current financial situation.

Constant Evolution of Case Law on Golden Visa

Spanish case law on the Golden Visa is constantly evolving, and the recent decision of the Supreme Court marks a significant milestone in broadening the interpretation of “significant investment.” As Spain seeks to revitalize its economy, future cases are expected to bring additional developments to the law, adapting it to the changing needs of the global economic landscape. The Golden Visa remains an attractive tool, and its interpretation in Spanish courts will continue to be a topic of interest for investors and legal experts alike.