Residency By Investment In Portugal

Golden Residence Permit Program

Portuguese residence permits via investment for non-EU nationals provide an opportunity to obtain residence status and contribute towards eligibility for a citizenship application after six years as a resident.

Previously, residence was granted where investments were made in Portugal via one of the following forms:

i)The purchase of real estate of EUR 500,000 or more
ii)Capital investment of at least EUR 1 million to a Portuguese bank account or flexible investment
iii)The creation of at least 10 jobs in Portugal

In September 2015, four new qualifying options were introduced.

The new options for Capital Investment are:

i)The transfer of funds of at least EUR 350,000 to be applied to research activities carried out by entities which are part of the national scientific and technological system
ii)The transfer of funds of at least EUR 250,000 to be applied in investment or support for artistic production, or the recovery or maintenance of national cultural heritage
iii)The transfer of funds of at least EUR 500,000 for the acquisition of units in investment or venture capital funds for the capitalization of small and medium size companies

The new option for Property Acquisition is:

iv)The purchase of a property for the minimum amount of EUR 350,000 for the purpose of refurbishing it, for properties that were constructed more than 30 years ago or are located in areas of urban regeneration. The EUR 350,000 threshold includes not only the property’s price but also the investment in the refurbishment works

There are minimum residency requirements in order to qualify for the renewal of the Golden Residence Permit. However, these are very modest: seven days during the first year of residence in order to be entitled to the first renewal, and 14 days over the two subsequent year periods necessary for renewals.

Portugal Real Estate Market and Values

The property market in Portugal experienced a significant increase in demand between 2000 and 2008, which led to developers working hard to meet the demand. However, with the global financial downturn in 2008, demand for properties decreased, leaving many newly-built properties available. Therefore, prices decreased and a strong opportunity for value was created and still exists, as the market corrects itself.

Our research indicates that the most desirable areas are:

  • Lisbon – Portugal’s capital city
  • Estoril Coast and Cascais region – offering a strong lifestyle focus
  • Troia region – with a tropical atmosphere, only 40 km’s south of Lisbon
  • Algarve region – Portugal’s main tourist region, thriving with high-quality beaches and integrated resort communities

These areas offer buyers various features and the highest value for money:

  • Prime developments close to the capital city of Lisbon
    • Both Lisbon and the Estoril Coast/Cascais regions offer prime property developments, which to date have been the main focus for residence and citizenship investors in Portugal
  • Seafront properties
    • Despite the extensive coastline that the Algarve region offers, building restrictions and nature protection laws have prevented over-development, which generates higher value for the existing and approved projects due to a balance between supply and demand
    • These usually have a golf course or community at their core, offering properties that cater to all types of owners and include locals, new residents, second home owners and vacationers. Both the Algarve and Troia region, alongside the Estoril Coast and Cascais regions, offer a good supply of planned communitiesIntegrated Master-Planned communities

    The interest from foreign buyers in these areas has increased exponentially since the Golden Residence Program was launched late in 2012. With the influx of foreign owners to these areas, the property values in Portugal are increasing. This also leads to a higher quality of design and build of planned communities, which in turn attracts further long-term value.

Taxation in Portugal

Portugal has a lenient tax regime on non-resident income and newly arrived residents who may also qualify as Non-Habitual Residents (NHRs), although the standard regime imposes income tax at higher and progressive rates on the income of other residents.

Non-residents are taxed at 25 percent on Portuguese source employment and self-employed income, and at 28 percent on capital gains, rental income and various forms of investment income.

The NHR regime is designed to attract talented individuals in high value-added activities and high net worth individuals. The incentives include a reduced tax rate of 20 percent on Portuguese source income from designated professional activities and a tax exemption on a wide variety of foreign source income, including pensions, interest, dividends, royalties, as well as income from overseas professional activities, subject to certain conditions.

The employment areas which qualify for NHR status are: technical professions (architect, engineer, geologist etc); artists, actors and musicians; doctors and dentists; medical and educational professionals; IT; scientific; business investors and managerial talent. A comprehensive list can be obtained from Henley in Portugal.

technical professions (architect, engineer, geologist etc); artists, actors and musicians; doctors and dentists; medical and educational professionals; IT; scientific; business investors and managerial talent. A comprehensive list can be obtained from Henley in Portugal.

The NHR scheme is available for individuals not treated as tax residents in Portugal at any time in the immediately preceding five years. Engagement in a high-value activity is not a requirement for tax-exemption of other sources of income. The entitlement is granted for a period of 10 years from the year in which the applicant becomes tax resident in Portugal. To be tax resident, the individual has to remain in Portugal for 183 days in the tax year, or alternatively, on or by 31st December of the tax year, they must hold a dwelling with the intent to use it as a permanent residence.

Residents of Portugal who do not qualify as NHR are subject to a progressive personal income tax rate up to 48%, although additional surcharges for 2014 apply, dependent upon income levels. Currently, a 3.5% surcharge is levied, plus an additional 2.5% solidarity surcharge on income above Eur 80,000 rising to 5% on income above the Eur 250,000 level. Note that these surcharges also apply to non-exempt income of a NHR.

The standard rate of corporate income tax is levied at 25% and the standard rate of VAT currently being applied is 23%.

For more information contact us

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