To strengthen the Hungarian economy and to diversify its external funding sources at the end of 2012 Hungary enacted a new legislation, which introduced the concept of “Residency Bonds”.
As a general rule an applicant, who as an individual or via his/her majority-owned company purchases a specially issued bond with a value of minimum EUR 250,000 and with a maturity of minimum 5 years could receive a residency permit in Hungary. This permit can be changed to a permanent residency after six months.
The residency permit enables the applicant to live in Hungary, and spend a maximum of 90 days from any 180 days in any Schengen counties. In addition to the advantages Hungary can provide to its citizens and residents (favourable personal and corporate tax rates, zero inheritance and gift tax in certain circumstances) the Schengen travel possibility is considered as one of the major advantages in this system.
The above bond can be issued by a finance company which obtained permission to do so from the Economics Committee of the Hungarian Parliament, and this finance company is legally required to immediately buy a specially-issued government bond from the investment proceeds. The finance company is not permitted to have any other activity, which strengthens the repayment of funds to the investor. The finance company is required to provide a list of subscribers every month to the Hungarian Immigration Office to prove the investment by the person who applied for residency.
The new Residency Bond system is considered as one of the best residency programs in the world, as other countries offering Residency Investment Programs either require a substantial real estate purchase or a much higher financial contribution.