Golden Visa Portugal through Investments

Reasons for the Popularity of Portugal "Golden Visa" Program.

The Portuguese "Golden Visa" program has become very popular, leading to a situation where the authorities sometimes struggle to handle the large influx of applications. There have been instances where investors in Lisbon had to wait up to 12 weeks for a personal interview! Such extreme delays occurred in 2017. However, the situation has improved, and deadlines are now being met. So what exactly attracts investors from around the world to invest in this country? Let’s find out.

What are the Benefits of the Golden Visa?

• Once you have obtained Portuguese residency, there is no need to reside in the country continuously. It is sufficient to stay 7 days in the first year and 14 days in the following two years.
• Obtaining residency in Portugal grants the right to apply for permanent residency and even citizenship after just 6 years.
• Portugal allows dual citizenship.
• After receiving residency and living in Portugal for 6 months, you gain tax resident status and are exempt from taxes for 10 years, as Portugal has signed a treaty with Russia to avoid double taxation.
• Real estate prices are within the average European range, and in some cities, they are even lower.
• Portugal is one of the top ten safest countries in Europe, on par with Switzerland and Hong Kong.
• Storing your savings in Portuguese banks is quite safe, reflecting the country's economic stability in recent years.
• The country offers all the conditions for a comfortable lifestyle: a mild climate, clean beaches, and a pleasant environment.

How do you invest to obtain a residence permit in Portugal?

Investors have various options for obtaining a residence permit in Portugal. These include purchasing real estate, investing in business and the country's economy, buying shares, and participating in funds. Let's discuss each method separately.

Investment in Real Estate

Despite the wide variety of options, real estate acquisition always wins. Data from 2017 shows that more than a quarter of sales under the residence permit program were in residential real estate.

The President of the Portuguese Association of Real Estate Professionals and Brokers (APEMIP), Luís Lima, noted that this figure exceeded all expectations, and now growth in the real estate market can be expected this year. He added that for many wealthy foreigners, the price per square meter (which was 36.9% higher than the previous year, reaching €2,796 in Lisbon) remains acceptable compared to prices in competing markets. Prices also increased by 24% in Porto and 18% in Faro. Overall, real estate became 25% more expensive.

Investments Starting from €500,000

To obtain a residence permit, according to the program's conditions, you need to purchase one or more real estate properties with a total value of at least €500,000. If you don't plan to live in your property, you can rent out the homes and apartments and make a good income. After five years, the property can be sold.

When an investor buys property in Portugal, the entire family receives a residence permit: the spouse, children (if they are under 26), and in some cases, the parents.

So, what properties are eligible? There's a wide range—from several apartments priced between €40,000 and €70,000 to luxury villas in resorts costing several million euros. The main requirement is to meet the minimum threshold of €500,000.

Note: Before submitting your application for consideration, the property you chose must already be in your possession. The residence permit application must be submitted no later than three months after you enter the country.

Investments Starting from €350,000

If the first option doesn't suit you, the law provides the opportunity to obtain a Golden Visa by purchasing real estate worth €350,000 if the property is located in a cultural and historical heritage area, was built at least 30 years ago, and requires renovation.

The Golden Visa under these conditions was first issued in July 2016. In just a month, over 100 applicants received it.

Of course, it's not as simple as it seems, and for each investor who chooses this path, the government provides a whole list of property renovation standards. It's not easy to meet every requirement, and for some, it's a real challenge. But despite this, this type of investment is gaining popularity among applicants each year. But why?

Investors often manage to buy abandoned buildings in the best areas of Portugal. They then restore them to the highest standards, completely replacing old electrical systems, plumbing, installing windows, laying flooring, etc. The secret lies in the facade: its architecture is preserved, and it aesthetically highlights the "cultural and historical heritage." The location and style of the property ensure that its price will skyrocket.

Note: The €350,000 includes both the cost of the property and its renovation.

Obtaining a Residence Permit in Portugal through Business Investment

To be granted a Portuguese residence permit, you must meet the following criteria:

• Open a business and provide at least ten jobs for residents;
• Contribute to the creation or increase of the share capital of an existing company with an investment of €350,000;
• All employees working for you must be registered with the state social service and be tax residents;
• If a third-country citizen wants to obtain a Golden Visa, they must invest at least €350,000 in the creation of a commercial company (this law was adopted on November 26, 2017).

Usually, a private limited company (LDA) is established. This type of enterprise is most attractive to foreign investors because it offers more freedom: the state barely interferes in business matters.

Note: Both local and foreign entrepreneurs in Portugal are offered various types and sizes of tax incentives. The size depends on the form, activity, and direction of the enterprise.

Three Main Requirements for the Company:

1. The headquarters must be located in Portugal.
2. The company must have at least five permanent positions.
3. Investment can be made in expanding the share capital of an existing company with a main office on a national territory, with at least five jobs and a contract for at least three years.

Residence Permit in Portugal through Direct Investment

Another way to obtain a Portuguese residence permit is to make a direct investment of €1 million in the country's economy. You can invest in any company or enterprise that has a representative office in Portugal.

You can also purchase a partner's share in an existing business—this option is also possible. However, in this case, it's better to consult professionals who can analyze the company's activities chosen by the investor. This will help determine how solvent it is and assess its economic standing.

The requirements for investors are always the same:

• Spend at least 35 days in the country over five years;
• Have at least a basic knowledge of the local language;
• Have no criminal records.

It's important to note that the tax authorities will expect regular submission of certified financial reports, so this must be done on time.

Investment in Shares and Funds

If you invest €350,000 or more in shares of investment or venture capital, you also have the opportunity to obtain a Golden Visa in Portugal.

These investments go towards capitalizing companies created under Portuguese law. The term in which the shares are redeemed must be at least five years, and more than 60% of the investments must be made in Portuguese commercial companies.

Investment in Scientific Research

The same law allows an investor to contribute €350,000 or more to private or public scientific and technical institutions that are part of the national scientific and technical system.

Investment in Cultural Heritage Restoration

Another way to obtain a Golden Visa is to donate €250,000 or more to support national cultural heritage. Types of heritage include:

• Artistic industry;
• Public institutions and funds, private funds with state municipal status, inter-municipal entities;
• Companies engaged in the restoration or maintenance of national cultural heritage;
• Organizations that bring together local business sectors, district associations, and public cultural associations that carry out assignments in the field of artistic production.

Budget Options for Obtaining a Residence Permit in Portugal

In addition to the methods mentioned above, there are other options. These are usually suitable for those who do not have large financial resources and want to obtain a residence permit with minimal costs.

Startup Visa in Portugal

Through the new startup program "Visa," which started on March 15 this year, you can contribute your intellectual capital to Portugal. According to the program's official website, you can apply for the right to hold such a visa if:

• You are over 18 years old;
• You are an entrepreneur and want to develop your startup in Portugal (even if you don't yet have a personal business when applying);
• You are an entrepreneur with an existing startup in your home country, but you want to continue its development in Portugal;
• You do not reside in the Schengen zone;
• You have tax obligations related to social security and tax administration;
• You have no criminal record;
• You have enough funds in your bank account for 12 months of living in the country. No less than €5,146.08 per person.

You must also demonstrate that:

• Your project uses the most advanced technologies;
• Your startup will create new jobs beyond those already specified in the application;
• Your project has a future and will increase turnover to €325,000 per year and/or has the potential to increase the total value of assets by €325,000 per year over five years from the start of the contract.

Participants in this program have the same rights as Portuguese citizens to financial support from the EU budget, which gives it an advantage over similar programs in other countries.

This condition allows entrepreneurs to count on full government support in starting their startup and to open it completely free of charge. However, in practice, the requirement to be present at least physically remains unchanged. This is necessary to manage and develop your company.

Employment Contract as an Option for Permanent Residence

To obtain this status (which can take three years or more), you need to receive an official job offer from an employer. Before that, you must have signed an employment contract with them. This permit lasts only a year, after which it can be extended, but only if income tax is paid and the relationship with the employer continues. After four years, you can apply for a residence permit.

If you choose this method, you need to find knowledgeable and reliable people you trust, as it involves complex procedures that are often exploited by scammers.

Residence Permit in Portugal for Students

This type of residence permit is available to students studying at private and public institutions in Portugal. You will need a document confirming that you have been enrolled, and the residence permit will need to be renewed every year.

Residence Permit in Portugal for Family Reunification

Marriage to a Portuguese citizen allows the spouse to apply for a residence permit after a year. You can also apply for residence permit status for the applicant's children and parents who are dependent on them.

Residence Permit for Merits to Portugal

A residence permit is also granted to people who have made significant contributions to the country. For example, for uncovering an organized criminal group. In such cases, the official status is facilitated by the High Commissioner for Immigration and Ethnic Minorities.

The Portuguese government is backtracking: the reform of the “Golden Visa” program will not come into force until 2021

The Portuguese Parliament approved the budget for 2020, which included provisions to limit the number of regions in which the purchase of a real estate in which will be considered as an investment under the program “Golden Visa”. However, the approval did not mean that the changes would necessarily take effect. Today, we understand why this is the case. After a “flurry of complaints”, the Portuguese government said that the changes would not come into force until 2021 at the earliest.

“For the innovations not to have an undue impact on applications processed now, it is wise to postpone these measures until next year,” Tiago Antunes, secretary to the Portuguese Prime Minister, explained on TSF Radio.

Immediately after the news of the parliamentary approval of the budget, brokers, lawyers, and representatives of associations from the real estate sector began to report that investors began to cancel their acquisitions en masse.

Luiz Lima, president of the Portuguese Association of Real Estate Professionals and Companies (APEMIP), commented on the proposed changes: “absolutely disagree with ending the possibility to invest [in Lisbon and Porto] under the program. This would be extremely unfavorable for the market. What would it signal to investors? Who's to say for sure that it won't stop being possible in other regions? Changing the rules in the middle of the game is always a bad thing, and the consequences of this signaling will outweigh the possible benefits of the innovation.”

Lima appears to be one of those who have been calling government officials to reverse the decision and not make the changes whose presidential unveiling was originally scheduled to take place soon.

The Undersecretary of State, apparently trying to reassure foreign investors and the real estate sector, stressed that there was no need for a cancellation.

“We need to spread the word and explain to market representatives that there is no reason to interrupt current business. The adjustment period during which the rules will come into force will last until the end of the year,” he said.

Portugal's immigration service reports that the program passed the historic milestone of 5 billion euros in January.

The positive trend of investors choosing alternative assets is likely to continue in 2020. In the first month, as many as 26% of investors chose an option other than real estate investments worth €500,000 (subpar 3), a new record.

On the revenue side, the program got off to a sluggish start in 2020 with just €41 million, the lowest since July 2018.