Prime Minister of Portugal Antonio Costa announced the end of the national ‘golden visa’ program at the beginning of the year. Applications from foreign investors into real property have not been accepted since March 16, 2023. Originally, the Government planned to change the requirements to the present golden visa holders too. The socialist party in the Parliament suggested canceling golden visas of those foreigners who did not live in their property nor let it on a long-term lease.
By September, a shaky compromise had been found. The program was not closed but the conditions were changed. Foreigners presently holding golden visas don’t need to worry: their visas are safe. However, acquiring a golden visa to Portugal by investing into real property in the country is not possible any longer. Let us explain why the golden visa program has had to be altered.
Foreign investments provoked a housing crisis in Portugal
According to the old rules that had been in place since 2012, a foreigner could qualify for a golden visa if he/ she did one of the following:
- Purchased a piece of real property at a certain price;
- Created 10 jobs in Portugal;
- Made a large deposit in a local bank.
There were other financial routes to legal residence in Portugal but most foreigners chose to invest into property because such investments were easily returnable. While the program was functional, Portugal earned almost €7 billion. 90% of the sum was investments into houses, apartments, and hotels. The Government had hoped that many jobs would be created but these hopes did not come true. Over the years, 22 foreign investors created only 280 new jobs in Portugal.
Not only wealthy foreigners were attracted by real property in Portugal. The following groups of people were also happy to relocate to a warm sunny coast:
- Digital nomads and startup business people who can qualify for long-term visas to Portugal;
- Retirees from Great Britain: life is much less expensive in Portugal in comparison to the UK, the climate is better, and the British did not need visas before Brexit.
Portugal was regularly listed among the top 10 countries for retirees and remote workers. The fact already made the real estate prices grow. Airbnb service accelerated the inflation. It became more profitable for property owners to rent it out to wealthy tourists on a daily basis rather than sign long-term lease agreements with local renters.
By the end of 2022, Lisbon became one of the most expensive cities in Europe for property renters. Apartment rental was more expensive only in Milan and in Paris. However, the average salary in these cities is €3,400 per month while 50% of the Portuguese earn €1,000 per month or less. Some people in the country have to spend up to 90% of their oncome on paying rent or mortgage.
Obviously, the locals were unhappy about the situation and they repeatedly went on protest rallies. Cancelation of the golden visa program was only one of the measures taken against the housing crisis in Portugal. No new permits to rent property via Airbnb are issued and some existing permits are annulled. Besides, residential complexes with affordable apartments are erected by the municipal authorities.
Opinion of golden visa program supporters
The opponents of the program claimed that foreign investors drove up property prices and local people reaped no fruit. The program supporters, however, pointed out some following positive effects that the program had brought about:
- Increase in the number of jobs in the construction and building repair sectors;
- Additional income for the poorest country in Western Europe;
- Construction of new houses by modern standards;
- More income from tourists as many foreign investors put money into hotels and rental apartments for tourists.
The program also had a long-term economic effect. According to estimations, golden visa holders left 6 times as much money in Portugal over 5 years as they had invested when applying for visas. Thus, the program was economically justifiable but it also caused social unrest. Consequently, the Government has decided not to cancel the program completely but the Portugal golden visa eligibility criteria have now been changed.
What has not changed?
- The residence permit validity term is the same. The permit is initially issued for 2 years and it can be extended to 5 years if the holder preserves the investment. The main applicant’s spouse and underage children are also eligible for legal residence in Portugal.
- Golden visa holders do not have to live in Portugal all the time. The requirement is the same: stay in the country for 14 days in any 2-year period. After five years, the visa holder can apply for a permanent residence permit in Portugal. When it is obtained, the person can withdraw from investments.
- The residence permits already issued to foreign investors are not going to be annulled.
What has gone?
The most popular financial routes to Portuguese residence are not available any longer:
- Purchase of residential or commercial property worth €280,000 to €500,000 depending on the region;
- Deposit of €1,500,000 in a local bank.
What options are still available?
Foreign nationals seeking legal residence in Portugal can invest in local business or investment funds and they can also support science and arts in the country.
Investment into business
The requirements to foreign investors into business ventures in Portugal have changed a bit. Now to qualify for a residence permit the foreign investor has to do the following:
- Create 10 jobs: in this case, no minimum investment amount is specified;
- Invest €500,000 in a new or an existing business venture headquartered in Portugal and thus create 5 new jobs;
- Alternatively, invest the same amount and preserve 10 existing jobs over 3 years;
- Open a new company in an underpopulated area and create at least 8 jobs.
The definition of an underpopulated area has not changed since 2017. It is an area where:
- The population density is less than a hundred people per a square kilometer;
- The GDP is less than 75% of the national average.
A large part of Portugal is underpopulated except for a narrow strip of land along the coast.
Investing into business in Portugal would be an attractive option if it wasn’t for the taxes: they are high in the country.
Investment funds
A foreign national can qualify for a residence permit if he/ she puts at least €500,000 into a collective investment fund in Portugal. No discounts are available in underpopulated areas. The fund shall not invest into real property: only in business companies.
Investments into science, arts, or cultural heritage
The applicant can make a non-returnable donation to:
- A private or a state fund conducting scientific research – from €500,000;
- An organization engaged in restoration of cultural heritage and creation of works of art – from €250,000.
A 20% discount is available in underpopulated areas. Even without the discount, this is the lowest ‘price’ of a Portuguese residence permit.
Even though the requirements of the Portuguese golden visa program have changed, it is still possible to acquire legal residence in the country by investment. Without doubt, you will need professional assistance when applying for a golden visa to Portugal.
