A new law will be implemented gradually in 2023 by the Portuguese gouvernement that will terminate the advantage of the golden visas for foreign investments.

So hurry, before it is too late !

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Portugal’s Golden Visa – A New Landscape

The year 2022 marked the beginning of the new rules for the Golden Visa status, set by the Portuguese government and which came into effect on the 1st of January 2022. If you filed your application in 2021, these new rules are not applicable to you. However, those who started the process in 2022, face a much different landscape.

By Portugal news

The Golden Visa

The Golden Visa was first implemented in 2012. Prior to this, the world was facing the aftermath of the Global Financial Crisis (GFC) that hit us all hard and, particularly, Portugal. The country was already in the grip of a recession that began in 2003 and the impact of the GFC only made this worse. As a response, alongside monetary stimulus from the European Central Bank (ECB), the government took measures to encourage foreign investment into the country to stimulate the economy.

One of the most successful methods implemented has been without a doubt, the “Golden Visa”, which offers residence in Portugal through investment. The scheme has been responsible for collecting almost 6 billion Euros since its inception.

Who Qualifies?

Anybody who lives outside of the EU/EEA/Switzerland can apply, provided they have no criminal record. They will be required to invest in one of the following: real estate or a venture capital fund, transfer a large amount of capital, form a company and create at least 5 new jobs or donate money to the state for research or national heritage.

Of all the qualification methods, investment in real estate has been by far the most popular.

The New Rules

Of the changes that have occurred since January 1^st, the most significant one is precisely related to the real estate market in Portugal. Up until the end of 2021 this required applicants to buy property anywhere in Portugal for €500,000.

Even though the minimum investment amount of €500,000 remains unaltered, applicants can no longer purchase properties located in Lisbon, Porto or across large parts of the Algarve, with most of the coastline becoming non-qualifying. The islands of Madeira or Azores are still fully eligible for this, as well as most of the interior of Portugal.

Aside from this, other requirements also came into effect, such as:

– the minimum acquisition of units in certain compliant investment funds rose from €350,000 to €500,000;

– the minimum capital transfer of €1,000,000 is now €1,500,000;

– the minimum investment in activities of R&D (Research & Development) is also now €500,000 from the previous €350,000,

– a lower limit that is also applicable in case you want to open a company in Portugal and create a minimum of 5 jobs.

The Benefits

The Golden Visa scheme is formally known as the residence permit for investment activity (ARI). This gives individuals outside of the EU the ability to apply for Portuguese citizenship after 5 years of their investment without having had to reside in Portugal permanently. During the intervening years, their residence permit will allow them visa-free access to other Schengen states and the right to live and work in Portugal, although there is no obligation to do so. Applicants are also eligible to include members of their immediate family on the same visa application, which makes it a great opportunity for giving the whole family a new start in such a beautiful part of the world.

There are no tax implications for applicants to the scheme, unless you chose to spend more than 183 days of the year in the country, in which case you would then be classed as a tax resident. If that is the case there are benefits to be had through the Non-Habitual Residency (NHR) programme, which can offer tax exemption for your first 10 years of residence.

The Benefits of Non-Habitual Resident Status

Over the past few years Portugal has developed a reputation as the new tax haven for affluent and high net worth individuals

By Portugal news

All of these people wish to achieve tax optimisation by relocating to a friendly, discreet and safe EU country. They are able to do so through a special tax regime, for non-habitual residents (NHR), that presents many attractive fiscal benefits.

The programme offers tax relief on some foreign income sources. For example, you may receive your pension income paying only 10% tax; be exempt from tax on earnings from dividends and royalties; be entitled to a 20% flat rate on certain foreign sourced incomes, this to mention just the main benefits. It is also worth bearing in mind that there is no wealth or inheritance tax under the Portuguese system.

In order to apply for the NHR scheme, an individual needs to become a Portuguese resident, therefore a Portuguese taxpayer – having not already been so in the five years prior to the application and another requirement is that they are able to spend at least 183 days per fiscal year in Portugal. Having fulfilled these and a couple other requirements, they are then free to enjoy the benefits of this taxation for a consecutive 10-year period – true fiscal stability.

Besides the benefits under the NHR regime, Portugal as a jurisdiction has a very favourable tax regime, here are some highlights:

No gift and inheritance tax for assets outside of Portugal. Inheritances or gifts of Portuguese assets to spouse, descendants or ascendants are tax exempt.

Gifts to other individuals are subject to a flat 10% stamp tax rate.

No wealth tax and free remittance of funds either to Portugal or abroad.

Beneficial treatment for pensions and other life insurance products may also significantly reduce the effective tax burden on capital invested.

Portuguese companies may take advantage of EU non-discrimination rules and EU directives on mergers, dividends, interest and royalties, as well as Double Taxation Treaties (DTT) signed by Portugal.

Dividends and capital gains obtained by Portuguese companies can benefit from a participation exemption regime, thus making Portugal an interesting location for investments abroad.

The D7 Visa – Allowing Non-EU citizens Temporary Residence in Portugal

In the past two years both The Golden Visa and the Non-Habitual Residency accords suffered some limiting changes, which impacted applications of clients who wished to invest in Portugal. As a way to guarantee residence and ease of travel within the Schengen Area, Portugal has always been seen as a leading destination for investors and families.

By Portugal resident

The D7 Visa, most commonly known as the Retirement Visa or Passive Income Visa was introduced in 2007 by the Portuguese Government. This Visa allows non-EU/EEA/Swiss citizens to apply for temporary residency in Portugal, conditioned on the applicant being in receipt of a reasonable and regular passive income.

What Benefits Can Applicants Expect From The D7 Visa

1 – Permission to live, work and/or study in Portugal

2 – Applicant can extend process for children and parents

3 – Non Visa dependant travel in the Schengen Area

4 – The opportunity to either establish a business or accept an employment in Portugal

5 – Eventually take advantage of the tax benefits when applying for either the Non-Habitual Residency Scheme

6 – After a period of 5 years in which a renewal of visa applications has been followed, the applicant is eligible to qualify for a permanent residency or Portuguese citizenship

7 – Resident rights in Portugal, which include healthcare and education

What Are The Requirements For The D7 Visa Eligibility?

1 – Are a Non-Eu/EEA/Swiss Citizen

2 – Proof of funds to be financially self sustaining during stay in Portugal

3 – A clean criminal record

4 – Proof of a residency address in Portugal

5 – Spend a minimum of 16 months in Portugal within the first 2 year period of application

What Are The Passive Income Requirements For The D7 Visa Eligibility?

1 – Proof of a regular passive income, derived from either a pension, rentals, dividend or financial investments

2 – There are minimum income requirements. However these are dependant on the number of dependents included in the application. The applicant must show proof of a minimum passive income of €8,460 per year (+50% for a spouse and +30% for a child)

3 – It is advisable that the applicant hold an amount equal to as 12 months income in a Portuguese bank account

Could The D7 Passive Income Visa Be The Answer For UK Nationals After Brexit?
Given the latest investment alterations for the application of a Golden Visa, the D7 Visa could be the answer for British nationals who either cannot afford the property investment or do not find their home in the right location.

The D7 Visa allows for UK nationals to gain back EU rights that were lost after Brexit, where after the 6 years either a permanent residency or possible citizenship can be obtained. Not only does this offer freedom when travelling to Portugal, but also for an travels throughout the Schengen area, alongside being given the right to work, study and live in any EU country.