Real Estate in the EU and Sanctions

Real estate abroad is an excellent option when it comes to investing your capital in a liquid asset. Purchasing a property, whether residential or commercial, allows you not only to preserve your investment by protecting it from inflation but also to generate profit. In Europe, Cyprus, Turkey, the UAE, the Caribbean, and other regions, real estate prices are steadily rising by 2-10% annually. Another important factor is that some countries offer residency status in exchange for property purchases—such as temporary residence permits (TRP), permanent residence permits (PRP), or even citizenship.

In this overview, experts from the international agency GARANT.in will cover important topics such as obtaining residency abroad, who can purchase real estate, step-by-step instructions for buying property, and what obligations await the buyer in Russia.

Why buy real estate abroad

Every buyer has their own reasons for purchasing a property in another country. We have identified three main goals:

1. The opportunity to become a resident of another country. Many countries offer residency in exchange for real estate investments, which we will discuss in more detail later. Residency status allows you to spend unlimited time in the country, travel visa-free to certain destinations, optimize taxes, conduct business, study, and access healthcare.

2. Profitable investment of capital. With thorough market analysis, you can find properties that not only generate good passive income from rental (up to 5% annually) but also appreciate in value for future resale. In-demand properties can be sold at a profit after a few years.

3. Housing for personal use. Many investors buy property not to rent out but for their own use. This can be a permanent home or a temporary one, for example, for summer vacations.

It’s important to understand that purchasing real estate doesn’t always guarantee automatic residency. Buying property without the ability to use it due to a rejected visa is an irrational decision. Next, we will discuss which countries offer residency or citizenship in exchange for purchasing real estate.

Residency through real estate investment

Residency or citizenship can be obtained through special programs offered by various countries. Let’s briefly review some of the most popular ones:

• Cyprus offers PRP for purchasing real estate worth at least €300,000.
• In Spain, you can obtain residency by purchasing real estate worth €500,000 or more.
• Portugal’s TRP is available for investments starting at €280,000 if the property is over 30 years old and is renovated.
• In Greece, a TRP can be obtained for a minimum investment of €250,000, but if you include family members in the application, the investment amount doubles.
• Citizenship in Turkey can be obtained by purchasing property worth at least $400,000.
• The UAE offers a two- or ten-year residency visa for purchasing real estate worth $204,000 and $545,000, respectively.
• Caribbean countries offer citizenship for investments starting at $200,000 in approved properties.

Who can purchase foreign real estate

Both individuals and legal entities can purchase property abroad, whether it is residential or commercial. It is important that individuals are legally competent and companies have the legal capacity to make such purchases.

Legal competence of individuals

To complete a transaction, the buyer must be of legal age, mentally sound, a legally capable resident, and free from drug or alcohol dependency.

Legal capacity of companies

Depending on a company’s internal policies, legal structure, founding documents, or applicable laws, companies may face certain restrictions on purchasing real estate. For example, if the selected property is too expensive or if the transaction is driven by personal interests, the board of directors may block it.

It’s crucial that transactions entered into by a company align with its foundational objectives as outlined in its statutory documents. If a future transaction does not meet these criteria, it may be annulled and deemed invalid.

Step-by-step instructions on purchasing foreign real estate

The steps may vary depending on the legislation of the country in question. Below is a typical scheme that applies to 75-80% of all transactions.

1. Property selection and inspection
   At this stage, market analysis is conducted. The buyer needs to determine the type of property and its intended purpose. Properties matching the buyer’s criteria and budget are then selected. It’s essential to visit the property in person to visually assess its condition and location (often, advertised photos are outdated or not representative).

2. Legal verification by qualified lawyers
   It’s important to involve an experienced lawyer to verify the real value of the property and identify any issues. Checking all relevant documents, permits, property history, information about the owner, and other crucial details is essential.

3. Obtaining a tax identification number (TIN) and opening a bank account
   This step is not always mandatory, but in most countries, you will need a local tax number and a bank account to complete the transaction. Usually, a tax number can be issued within 1-2 days, after which the bank account can be opened.

4. Booking the property and signing a preliminary contract
   The preliminary contract outlines the parties' obligations, payment terms, the property’s condition at the time of the agreement, and its estimated value. Upon signing the contract, the buyer pays a deposit—typically up to 30%—to secure the property. If the buyer backs out, the deposit is non-refundable; if the seller cancels, the buyer gets double the deposit back.

5. Taxation during the purchase process
   Before signing the full contract, municipal taxes for property ownership transfer and a stamp duty must often be paid.

6. Finalizing the sale and signing the contract
   The final contract is signed at the notary’s office, confirming full payment for the property and associated taxes. The contract is drafted in the official language of the country.

7. Payment methods
   Payment can be made by transferring funds to an intermediary company, which hands over the check to the seller, or by paying the seller directly before signing the full contract.

8. Transfer of property rights
   After signing the contract, it is sent to the property registry, where ownership is transferred to the buyer. The relevant certificate is typically ready within a few days.

Notification requirements for Russian citizens regarding foreign real estate

Russian citizens are not required to notify government agencies about foreign real estate purchases, except for public officials, government members, their spouses, and children under 18. They must reflect such purchases in their annual tax declaration.

Tax service notification

If an individual or company opens a foreign bank account to pay for property or related expenses, they must notify the Russian tax authorities. This also applies if there are changes in account details or if the account is closed.

How Russian citizens can buy foreign real estate

Some countries currently restrict property sales to Russian citizens, and there may be difficulties in transferring funds from Russian banks. One solution is obtaining second citizenship or residency in another country. This allows additional privileges, simplifying the property purchase process.

One of the fastest ways to obtain another passport is through the island nation of Vanuatu. This country offers two investment options: a charitable contribution or investment in a cocoa production fund, with the first being non-refundable and the second partially refundable. Investment starts at $130,000, and obtaining a passport takes 1-2 months. With a Vanuatu passport, you can register a business in an offshore jurisdiction, travel visa-free to over 100 countries, optimize taxes, and participate in investment programs in countries that currently do not accept applications from Russians.

If you want to learn more about opportunities that come with purchasing real estate abroad or need help with choosing and processing a property, legal consultations, or full transaction support, specialists from the licensed agency GARANT.in are available to assist you.