New regulation on the entry and residence of third-country nationals in Hungary: New visa and residence permit for guest investors (Also available in Russian)

Introduction

The Hungarian Parliament adopted a new act on the entry and residence of third-country nationals in Hungary on 12 December 2023. According to the explanatory notes, the new provisions tighten and clarify the legal titles and conditions of residence and employment of foreign nationals in Hungary. The new regulation fully replaces the provisions on the entry and residence of third-country nationals in Hungary. The new act enters into force in several stages; the most of the provisions will be applicable from 1 March 2024, but the provisions for guest investors will enter into force from 1 July 2024. There is also a transitional period between 1 January and 29 February 2024, during which it is not possible to submit any application for residence permit to the Immigration Authority.

The new regulation introduces various new residence permits and visa categories. The new rules significantly alter the current regulation in two aspects: (i) a new type of residence permit is available for third-country national entrepreneurs (guest investor residence permit) and (ii) the conditions under which the third-country national employees may stay and work in Hungary are tightened.

Residence permits for entrepreneurs

For entrepreneurs two types of residence permits are defined in the new act: guest self-employed and guest investor residence permit.

Guest self-employed residence permit

This residence permit is designed for third-country nationals who would like to pursue a gainful activity in Hungary as a self-employed person or as a managing director of a company or other for-profit legal entity. It is similar to the current residence permit for the purpose of gainful activity. However, its validity is limited to 1 year and renewable for a further period of up to 2 years, with the provision that the residence permit may not be renewed for a period exceeding 3 years from the date of its initial issue.

Guest investor residence permit / visa

This new type of visa is designed for third-country national investors whose stay in Hungary is in the interests of the Hungarian economy. The guest investor visas will be available to third-country nationals who hold or plan to hold and undertake one of the following investments:

(a) acquisition of investment units issued by a real estate fund registered by the National Bank of Hungary in the amount of at least EUR 250,000,

(b) acquiring ownership of a residential property of a value of at least EUR 500,000 situated in Hungary

(c) making a financial donation of at least EUR 1,000,000 to a higher education institution maintained by a public trust with a public-service mission for the purpose of supporting educational, scientific research or artistic creation.

In order to protect public order, public security and national security in Hungary, the immigration authority shall seek the opinion of the law enforcement and national security authorities on the application for a guest investor visa. The guest investor visa entitles the holder to stay for more than 90 days within any 180 days and to make multiple entries to Hungary. The validity period of the guest investor visa is 2 years.

The holder of the guest investor visa (subject to other conditions), may apply for a guest investor residence permit. In order to apply for such residence permit, the applicant shall also fulfill the general conditions (e.g. having a valid travel document and the necessary permission for return or onward travel; having accommodation or residence in Hungary; not being subject to expulsion or a ban on entry and stay, or not being a threat to public order, public security, national security or public health in Hungary, and not being subject to an SIS alert). In order to obtain the residence permit, the applicant shall prove that he/she has performed (one of the above-mentioned) investments (which is considered to be in the interest of the Hungarian economy).

In addition, if the investor undertakes to acquire investment units issued by a real estate fund, he must have held units issued by a real estate fund for at least 5 years, at least 40% of the net asset value of which is invested in residential real estate in Hungary, and the real estate fund manager must have at least a simplified site security certificate or it is listed under Act XXX of 2016 on Defence and Security Procurement.

In case of real estate investment, the real estate may be owned for a period of 5 years only by the third-country national or a family member of the third-country national who has submitted the application for a residence permit for a visiting investor.

Compared to the other residence permits, the guest investor residence might be beneficial for third-country national investors in many aspects. In particular, its validity period is significantly longer, as it is valid for 10 years and renewable for the same purpose only, with a maximum of 10 years. This type of residence permit allows the family members of the permit holder to enter and reside in the territory of Hungary with a residence permit for the purpose of family reunification. Furthermore, for other residence permits the precondition of renewal is that the third-country national shall stay in Hungary for more than 90 days in any 180 days period. In contrast, the holder of the guest investor residence permit is not obliged to fulfill this requirement for the renewal (i.e. minimum stay in Hungary is not required).

Other transitional provisions

The procedural provisions in relation to guest investor visa / residence permit (such as procedural fees and processing time) are not yet available. The permits that have been granted before the entry into force of the new provisions – such as visas, residence permits and other temporary residence certificates – remain valid and entitle their holders to stay in Hungary as provided for in the documents.