Not only Portugal is ideal for investors looking for stable returns on investment at a range of property price points, but the tax regime is very attractive. It offers a low effective tax burden, combined with a special Non-Habitual Residents tax regime, the free remittance of funds, the absence of inheritance and gift tax and no wealth tax.
Moreover, the residence permit scheme (granting travels within the Schengen area) and the possibility to apply for Portuguese nationality and, consequently, a EU passport, make Portugal a very attractive location.
The most popular Golden Visa program in Europe
In 2012, Portugal approved special legislation designed to attract foreign investment, by offering a fast way for property investors (non-EU citizens) to receive a residence permit, making it a privileged entry into Europe and allowing such permit holders free circulation in Schengen countries.
The Portugal Golden Visa program has proven to be the most popular scheme in Europe with investors attracted to its flexibility and benefits. Since its inception in 2012, thousands of families have successfully relocated to Portugal. An investment of €500,000 (or €350,000 reduced option) in real estate in Portugal will gain a residency permit for a family including dependent children.
In 2019, more than half of all real estate transactions in Portugal were purchased by foreigners and Portuguese real estate agencies have been actively wooing Chinese and Asian buyers.
According to a South China Morning Post article, Hong Kong is tipped to become one of the top sources of foreign investment in Portuguese property as residents seek a European haven from the civil unrest that has rocked the city since May 2019.
What are the main advantages of the Portugal Golden Visa?
The holders of a Portuguese Golden Visa have many advantages:
- You do not need a visa to enter Portugal or travel through Europe (Schengen Area).
- You can live and work in Portugal, even with residency in a different country.
- Portuguese residency can be extended to family members.
- It has extremely low minimum stay periods compared to other residency / citizenship programmes.
- You can attain permanent residency after five years.
- You can attain citizenship after six years.
The residence permit is granted for a period of one year, renewable for two successive periods of two years, and requires the maintenance of the investment for a minimum period of five years and the presence in Portuguese territory for 7 days (consecutive or not) in the first year and 14 days (consecutive or not) in the subsequent periods of two years. The authorization may be extended to the investor’s family members and the residence permit may be granted on a permanent basis after the initial period of five years.
This type of investment includes:
- Commercial or residential properties.
- Real estate acquired in co-ownership, as long as the investor’s share is at least the minimum indicated value.
- Properties that are acquired individually or through sole proprietorship companies in which the investor is a partner.
- Leased properties.
- Properties encumbered, by the amount that exceeds the minimum amount of the investment.
Portugal Golden Visa Changes in 2021
Source: Cruz Roque Semiao Advogados (CRS Lawyers)
Only this month, the XXII Portuguese Constitutional Government has finally established the revisions and changes on the Residence Permit for Investment Regime (Golden Visa), by means of the Law-Decree no. 14/2021 of 12th February, which represents the 8º alteration to the Law no. 23/2007 of 4th July (widely known as “Foreigners Law”).
The main goal, according to said alterations, is to make this regime more and more directed preferentially to the investment in the interior territories, to investment in job creation and to the urban and cultural heritage requalification.
With that in mind, the first essential and most relevant decision that was made was that these changes will only come into force/into effect on 1st January 2022, meaning that foreign investors have until 31st December 2021 to invest in the exact same terms and conditions, all over the country, towards their Golden Visa Applications.
As of 1st January 2022, the following changes, which will represent an increase in the minimum investment amounts, as well as affect the geographical area of application in the real estate investment for habitation purposes, will apply:
1. Real Estate Investment:
a. In the amount of € 500.000,00, for habitation Purposes, will only be allowed in the interior of Portugal, Azores, and Madeira.
b. In the amount of € .350.000,00, with rehabilitation investment, for habitation Purposes, will only be allowed in the interior of Portugal, Azores, and Madeira.
2. Capital Transfers:
a. The amount of investment for the Capital transfer with a value equal to or above 1 million Euros, changes to a minimum of 1.5 million euros.
b. The amount of investment for the Capital transfer for investing in research activities conducted by public or private scientific research institutions involved in the national scientific or technologic system changes from €350.000,00 to a minimum value of € 500.000,00.
c. The minimum amount on the Private Equity Funds investments, changes from € 350.000,00 to a minimum value of € 500.000,00.
d. The minimum amount on the capital transfer for incorporation of a Company in Portugal, combined with the creation of five (5) permanent working jobs, OR for the reinforcement of the share capital of an existing company in Portugal, with the creation or maintenance of said jobs, changes from € 350.000,00 to a minimum value of € 500.000,00.
In view of the above, and according to the remaining legal diploma that was published, it is essential to highlight that:
- Foreign Investors will have until 31st December 2021 – almost a whole year – to submit their Golden Visa application, taking advantage of the current Law as it is and was from the past years (with the same minimum amounts, on the same locations, and with the same requirements).
- As long as these applications, by the Investors, are submitted before the 1st January 2022, client(s) can benefit for the same rules and have their residence permits granted, even if the actual approval of the process happens after that date.
- The geographical limitations that will happen on the real estate investments, by “pushing” the investment for habitation purposes to the interior and the Islands, will still give a lot of interesting and potential possibilities in terms places to invest in Portugal, which will help on the development of those areas.
- On the real estate investments, only the ones for habitation purposes will be affected, meaning that for commercial/services or other purposes foreign investors will still be able to invest in the whole country, namely in Lisbon and Porto, just like before, after the 1st January 2022.
- Family members can still benefit from the Family Reunification applications and benefits, even after 1st January 2022, as long as their Main Applicant/Investor has submitted his/her application before that (under the same law).
Gustavo Machado Dias associate lawyer of CRS Lawyers
The new regime comes into force on January 1, 2022 and is applicable to all applications for Residence Permits trough an Investment Activity (ARI) presented from this date forward.
But until the regulation takes off, there is still a window of opportunity to utilise the popular Golden Visa programme via property investment.
This new regime does not affect the processes in progress and which have been approved under the law currently in force. Meaning, existing renewal processes and granting /renewal processes for family reunification which associated investment has been made until the end of this year (still in the period of the current law).
For more information, please contact:
Christine Wong (REN06667)
M: +6012 908 6318
To find out more about the Portugal Golden Visa program, join our live webinar ‘Let’s Talk Property. Portugal’s Golden Visa – Residency Through Investment’ on Thursday, 22 April 2021 at 6pm.