Understanding the Portugal Golden Visa

The Portugal Golden Visa Program is a five-year residency by investment scheme that grants qualifying applicants with Portuguese residency, in exchange for first investing in the country. Portuguese citizenship (effectively EU citizenship) is attainable after five years of holding your legal residency.

Portugal, an alluring destination

Data provided by Portuguese Foreigners and Border Service (SEF) states, The investment through Portugal’s Golden Visa program amounted to over 77.9 million euros in June, or a total of 44 per cent increase compared to May figures and more than doubled the 36.4 million euros registered in the same month of 2021. 

It is no surprise that foreign investment interest in Portugal has increased as the country offers a beautiful setting, a long coastline, a pleasant climate, welcoming locals, and fine dining. Even better, it provides a remarkable standard of living at a relatively low cost. These features make Portugal a very alluring place for foreign investors to invest in and acquire the right to live, work, and study there.

What Is Portugal's Golden Visa?

The Portugal Golden Visa programme, also known as the residence permit for investing activity (ARI), is a residency by investment programme.

In Portugal, the program was initiated in October 2012. The main objective was to entice foreign investment because, in the wake of the 2008 financial crisis, the economy sorely needed it. The programme has generated more than €6 billion since then, demonstrating its exceptional success.

Additionally, the Portugal Golden Visa programme offers the chance to acquire Portuguese citizenship or permanent residency in just five years, one of the fastest residency programmes of any European country.

Although the Portugal Golden Visa Program offers a range of investment options, including investing a minimum of €500K in real estate in Portugal or €350K in renovation projects, including investing a minimum of €500K in residential or commercial property in Portugal or investing €350K in rehabilitation projects certain location restrictions apply. More significantly, prices differ depending on whether a property is located in a Portugal region with "low density."

Golden Visa Minimum Investment

In order to qualify for Portugal’s Golden Visa, a qualifying investment has to be made. In brief, here are the investment options available for the Portugal Golden Visa:

• Residential Real Estate: Purchase a home in one of Portugal's designated interior regions for at least €500,000, or €350,000 if you choose to invest in a rehabilitation project. A 20 % discount is given if the residential property is situated in a "low-density neighbourhood.
  

• Commercial Real Estate: Invest in commercial real estate worth at least €500,000, or €350,000 if you're investing in a restoration project, anywhere in the nation. A 20% reduction is offered if the commercial property is located in a recognized "low-density" region.

• Buying Real Estate on Madeira or Azores: Buy residential and commercial real estate anywhere in Portugal’s autonomous islands of Madeira and Azores, worth at least €500,000 or €350,000 if investing in a rehabilitation project.

• Capital Transfer: Capital transfer of a minimum of €1,5 million to Portugal.

• Fund Subscription: A minimum of €500,000 subscription in a qualifying Portuguese fund.

• Scientific Research:  A minimum €500,000 investment in science or technology research

• Job creation:  The incorporation of a company and the creation of ten jobs worth at least €500,000.

• Donation: Make a minimum €250,00 donation to support the arts or the restoration of national heritage.
  

What Are the Benefits of the Portugal Golden Visa?

You don't have to relocate to Portugal in order to maintain your residence visa; it has one of the lowest investment requirements in Europe starting at €280,000. You can apply for Portuguese citizenship after five years if you stay in the country for an average of seven days per year. One of the quickest in all of Europe, you can enter 188 nations without a visa after becoming a citizen of Portugal.

Portugal offers a wide range of benefits and privileges to investors, who are interested in purchasing a property in Portugal, including:

• Free education and health insurance for children.
• Ability to add dependent family members in one investment
• Ability to obtain Portuguese citizenship.
• Freedom of movement within the Schengen Treaty member states as a residency holder.
• Enjoying the public safety both Portugal and Europe provide.
• Minimal residency requirement to renew the residence permit.

Who Is Eligible for a Golden Visa in Portugal?

Nationalities

Any non-EU/EEA/Swiss national can apply for the Portugal Golden Visa.

Family Members

The programme includes family reunification, meaning that a spouse, minor children, children over 18, children over 18 who are studying, and parents who are financially dependent on the investor are all granted the same rights. They can all live and work in Portugal, travel freely within the Schengen area, and enjoy the benefits of visas.

Requirements for a Golden visa

To be eligible for a Golden Visa for Portugal, you have to fulfil the following requirements:

• You must be over the age of 18
• You must make a significant investment that is beneficial to the Portuguese economy
• You must have no history of criminal records
• You must own the money you seek to invest
• You must commit to maintaining the investment for at least another five years

Duration of the Portugal Golden Visa

When you apply for a Golden Visa, you will receive a residence permit which is initially valid for one year. After the first year, you can apply for renewal and you will get a two-year residence permit. You can keep renewing your residence permit every two years, then after five years, you can apply for a permanent residence permit.

Residency Requirements for the Portugal Golden Visa

You only have to be in the country for seven days per year in the first year to maintain the residence permit, then at least 14 days for every subsequent two-year period. That means that at the end of the five-year period which makes you eligible for citizenship, you only need to have spent 35 days in total in the country.

American Applicants to the Portugal Golden Visa

Interest in investing in international property grew sixfold among U.S. clientele in 2019 to 2021, according to a new report titled “The Great American Exodus”, which predicts 2022 to be “its busiest year yet.” The report found that politics, travel restrictions, a higher cost of living, and the desire to work remotely abroad have sent the ultrawealthy clamouring for second passports that range anywhere from €280,000 to €500,000.

US citizens are eligible to apply for the Portuguese Golden Visa. Foreign-owned real estate has many advantages for tax residents of the United States, making the real estate investment option of the program especially appealing.

UK Applicants to the Portugal Golden Visa

British investors have been bracing for the effects of Brexit on their ability to travel in the UK and throughout the world. UK passport holders no longer have access to the Schengen Area since 2021, without a visa.

UK citizens have been able to apply for Portugal's Golden Visa programme since January 1st, 2021. They now have the ability to move around the Schengen Area, visa-free, as a result

Three factors that may draw UK individuals to Portugal are freedom of movement throughout Europe, an attractive lifestyle, and eventually, citizenship in the European Union through investment.

Tax Benefits of the Portugal Golden Visa

You won't be subject to taxation under the Portugal Golden Visa Program until you stay there for more than 183 days in a calendar year. If you do, you subsequently become a resident for tax purposes in Portugal.

For foreigner ex-pats, who are thinking about moving to Portugal and becoming tax residents, Portugal has an advantageous tax system. The nation provides certain income tax deductions for the first 10 years of residence through the non-habitual residency (NHR) scheme.

A step-by-step guide to obtaining the Portugal Golden visa

Although applying for a golden visa is rather simple, there are a number of procedures to follow for a successful application.

1 - Onboarding: After selecting your investment, you must gather the required documentation for both yourself and any dependents you plan to list on the application. Our partner’s in law will submit the appropriate papers for inspection after making sure it is in order.

2 - Bank account & NIF:  Our Legal partners will designate a fiscal representative to help you obtain the tax identification number (NIF) in Portugal. They can also assist you with opening a bank account in Portugal after you have your NIF. We can handle this remotely.

3. Make the investment: We can start securing your investment and our partners will guide you through the paperwork required to ensure a successful transaction.

4 - Online application: Submit an online application.

5 - Pre-approval: Provided you meet the standards, your application will be pre-approved.

6 - Biometrics visit: It typically takes two months from the time you schedule your interview for you to physically attend a biometrics collecting session.

7 - Golden Visa issuance: After your biometrics, it typically takes 4 months for SEF to issue your Golden Visa. Once you Pay the cost of obtaining a government permit. The residence cards will subsequently be gathered on your behalf by our partners and sent to you.  

Changes to the Golden Visa Program in Portugal (2022)

Real estate purchases in Lisbon, Porto, the Algarve, Setubal, or other well-known coastal destinations will no longer qualify you for a Golden Visa as of 2022. The modifications are part of an initiative to boost investment in less densely populated regions.

The majority of investments have been made in larger, high-density cities since the Portuguese Golden Visa programme went into effect in 2012, neglecting other regions of the nation. Additionally, this resulted in a spike in the price of real estate in Lisbon and other well-known cities.

The following are some areas where the Portuguese government intends to promote investment:

• Low-density regions
• Urban requalification
• Cultural heritage
• Activities of high environmental or social value
• Productivity and job production

As a result, the Portuguese government amended the pathways for obtaining residency through real estate investment, establishing a classification system for the regions of Portugal that are eligible for real estate investment. These locations are referred to as "low-density and “interior" places. But these are two separate terms, just be clear about that.

Below, we clarify which regions in Portugal are acceptable for real estate investment and explain the fine differences between "interior areas" and "low-density." Hopefully, by the end of this blog, you'll be able to identify which regions of Portugal are favourable for real estate investment.

What are interior areas?

The term "interior areas" simply refers to regions where you can invest in residential real estate and be eligible for a golden visa residence permit. There are no regional limits on commercial real estate, in contrast.

This means that as long as the property in question is categorized as "commercial," you can invest anywhere in the nation (licensed for business-related activities).

Note, properties that belong to ‘interior’ parts of Portugal are eligible for a residential AND commercial real estate investment. However, only commercial properties can be purchased outside of the ‘interior’ parameters.

Low density

A 20% discount on your investment is only applicable in low-density areas. Low-density regions are defined as territorial units (NUTS III) and have less than 100 inhabitants per square km or a per capita GDP of less than 75% of the national average. Low-density housing refers to buildings with a small number of units or residential areas primarily occupied by single-family homes.

High density 

 High-density housing, in contrast, typically refers to urban areas that have a high number of units. 

Note, that an area can be interior and high-density. In this case, you can purchase a residential property but no discount applies.

Advantages of investing in low-density areas with the Portugal Golden Visa 280k option

Investing in low-density areas and obtaining a golden visa as compensation has several advantages.

These include:

• Lower investment threshold and high rental return yields
• Low-density areas have far more cheaper property prices.
• healthy real estate market, with rentals being especially profitable

Summary of the Golden visa program

To summarize the programme, The Portugal Golden Visa Program is a five-year residency by investment scheme that grants qualifying applicants with Portuguese residency, in exchange for first investing in the country. Portuguese citizenship (effectively EU citizenship) is attainable after five years of holding your legal residency.

It’s important to note that the Edison Fraser in-house sales progression team will be with you every step of the way to ease you through the buying process and make it as seamless as possible. The team will coordinate between you as a buyer, the seller, the developer, Lawyers and the banks involved. Your sales progressor will make sure you have a full and complete understanding of any and all costs involved before any investment purchase.

For more information on the Portugal property market, or to take a look at our latest listings please get in touch with us directly at +44 20 8064 2261 or contact us here.

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