Portugal Golden Visa: Pros & Cons

Portugal Golden Visa: Pros & Cons
Portugal Golden Visa: Pros & Cons

Since 2012, there has been a “golden visa” program in Portugal for obtaining a residence permit by investment. For investors, this is an opportunity for visa-free travel in Europe and a short path to EU citizenship in just five years.

If one gets to know Portugal better, it’s easy to fall in love with the country. It turns out that it is a wonderful place to live in; with a good climate, vast nature, a variety of attractions, a high standard of living, quality education and medicine.

Several hundred investors and their families have already received a residence permit by investment with our help. Based on this experience, we will tell you the pros and cons of a Portugal residency visa by investment.

History of the Residence by Investment Program

The program has been operating since 2012 and has been considered one of the best in the world according to various ratings for several years in a row.

Over the entire period of the program’s existence, more than nine thousand foreign investors have received a residence permit in Portugal. Most of them are from China, South Africa, Turkey, Russia and Brazil.

Golden visas issued from 2012 to September 2020

Total number of visas issued: 9,200 as for the end of 2020

Good news for future investors is that all the main political forces are in favor of developing the program. The first golden visas began to be issued under the conservative government, and in 2015 the socialist coalition made the conditions for obtaining them even more attractive.

It is an important source of income for the Portuguese budget, especially against the background of the economic situation in the world. Every year, golden visas bring the country about 800 million euros, and the total investment has already reached 5.5 billion euros.

10 largest investment programs in 2019

Country Investment volume
in USD millions
USA 1800
Cyprus 1480
Turkey 1340
UK 959
Portugal 885
New Zealand 860
Greece 850
Spain 835
Australia 703
Malta 280

In 2019 Portugal entered the top five countries by investment volume among similar programs

Conditions for obtaining a residence permit in Portugal: loyalty to investors and family members

The Portuguese program of obtaining a residence permit by investment is one of the most loyal in Europe.

A residence permit can be obtained by both the investor and his family members. This opens up great opportunities for business, travel, education and a comfortable life in a stable country. Wealthy people often view Portugal as a pleasant place to relax and live for the whole family.

Requirements ro investors are standard for most European programs:

  1. Age over 18 years old.
  2. No criminal record.
  3. Legal source of income.

In recent years, the European Union has tightened its requirements for investors. For example, Cyprus was forced to introduce independent verification of all passports issued prior to 2018. In Portugal, the requirements are less strict so far. To reduce the risk of rejection, Immigrant Invest also independently conducts Due Diligence.

The whole family can participate in the program: the investor, spouse, minor children and parents over 65 years old. The investor can also include children under 26 years old in the application, if they are not married, study at a higher educational institution and are registered at the same address as the main applicant.

Thanks to simple and comprehensive conditions, more than 15 thousand family members of investors have received a residence permit in Portugal since 2012. The program can be considered “family-friendly”: for example, our clients from Novosibirsk with two children have received residence permits in Portugal and now the whole family travels around Europe without visas. Details were told in the case study “From cold Novosibirsk to warm Cascais”.

Portugal Golden Visa: Pros & Cons
Cascais is a charming town which is a half an hour drive from Lisbon. This is the ideal place if you want to combine beach holidays, surfing and sightseeing

The residence permit is given for one year and is renewed twice for two more years – for 5 years in total. To confirm the status, an investor needs to spend seven days in Portugal in the first year and 14 days every two years thereafter. It won’t be a problem to engage yourself in a place like Portugal. One can explore charming museums, take road trips to small towns, stroll along the beaches or surf the strong waves – Portugal appeals to everyone of all different tastes.

After five years, the investor will be able to obtain permanent residence and apply for Portuguese citizenship, which will give even more freedom in travel and business.

Benefits of participating in the Portuguese Golden Visa program
+ Spouse and children may participate
+ You only need to spend seven days a year in the country
+ It is a shortcut to citizenship in only five years

Cons
– Parents under 65 and children over 26 cannot be included in the application

Travel to Europe without a visa

Portugal is a member of the European Union. Therefore, obtaining a residence permit makes it possible to visit 30 European countries without a visa: all countries that have signed the Schengen Agreement, as well as Cyprus, Bulgaria, Croatia and Romania.

You need to be careful when choosing a program because the borders of Europe, the European Union and the Schengen area do not coincide, and each country has its own rules. For example, the right to visa-free travel to the UK is only granted by Portuguese citizenship, not a residence permit.

With a residence permit, you can live in Portugal for as long as you like. Children can study at a university and parents can spend the whole year at a Portuguese villa. In other countries, the standard Schengen rules apply: a maximum of 90 days within six months.

Pros
+ You can stay in Portugal without restrictions
+ Opportunity to obtain citizenship faster than by naturalization

Cons
– A visa to the UK and Ireland is compulsory

Portuguese citizenship: getting an EU passport in 5 years

A Portuguese passport opens up even more opportunities and due to the country’s advantages, many industry ratings give it a top rank. For example, the Nomad Passport Index takes into account the number of countries with visa-free travel, the level of taxation, quality of life and other parameters which puts the Portuguese passport in fourth place.

Nomad Passport Index rating

  1. Luxembourg
  2. Ireland
  3. Switzerland
  4. Portugal
  5. Sweden 

The Portugese passport opens up an opportunity to become a cosmopolitan. Portuguese citizenship is highly valued all over the world: with the passport one can travel to 133 countries without a visa, including the USA, Canada, Japan and Australia.

In the European Union, the investor will be considered a full citizen with all the privileges: he will be able to live, work and study freely in any country.

Citizenship applications can be submitted after 5 years. This is one of the shortest terms in the European Union. In Spain and Greece, one can apply for citizenship only after 10 years. In addition, Spain does not allow second citizenship. And for the investor, this means that he will have to give up his first citizenship.

To obtain Portugal citizenship, investors must fulfill two conditions:

  1. Pass the Portuguese language proficiency test with at least A2 level. This is basic enough to keep up a short conversation or write a letter.

  2. Observe the minimum stay in the country – 7 days a year. This time can be used to practice the language.

Ordinary applicants also need to prove their connection to Portugal: for example, having a job, real estate or family ties. Investors with a golden visa do not need to prove anything further.

Conditions comparison for obtaining European golden visas

Portugal Spain Greece
Investments From €350,000 From €500,000 From €250,000
Period of citizenship obtaining After 5 years After 10 years After 10 years
Preferential taxation Yes, non-habitual resident No No
Possibility to have a second citizenship Yes No, it is needed to give up your first passport Yes
Real estate ownership Can be sold Can be sold Lifetime ownership
Time spent in the country to obtain citizenship 7 days a year 183 days a year No requirements

If you become a Portugal citizen, you will not have to give up your first passport: both Portugal and your motherland country will consider you as their citizen in full. A special tax regime for non-habitual residents will help avoid double taxation.

The Portuguese residence permit program in itself can solve your problems, for example, give you freedom of travel in Europe, and at the same time will provide citizenship of the European Union in a short time.

Pros
+ Possibility to obtain citizenship faster than by naturalization
+ Visa-free travel to 133 countries of the world
+ Work, study and vacations in the European Union without restrictions

Cons
– Confirmation of Portuguese language knowledge at A2 level

Business in Portugal: new opportunities

Portugal is a safe and stable country for entrepreneurs. As in the entire European Union, everything here is very predictable from the point of view of civil legislation. In terms of ease of doing business, the country ranks 39th out of 190 (World Bank’s Doing Business rating), and in the Corruption Perceptions Index – 29th out of 180 (Transparency International rating).

The country was hit hard by the 2008 crisis, but has recovered faster than neighboring Spain and Greece thanks to investment and a resurgence in tourism. GDP growth was also associated with the fact that the authorities abandoned austerity and, on the contrary, began to increase consumer demand.

Doing business in Portugal is an opportunity to enter the international market. The economy is very diversified: industry, agriculture, fishing, shipping, all industries related to tourism, handicrafts and services are developed here. It has relatively cheap labor and inexpensive real estate compared to other European countries.

It’s easy to open your own business: there is a one-stop shop and many law firms that help with the preparation of documents. Opening a bank account, appointing a director, hiring an accountant – the whole process takes 2-3 days. You can buy a ready-made company with documents for the required type of activity – registration will take several hours.

Portugal Golden Visa: Pros & Cons
Our client Nikolay bought a hotel in Madeira, which brought in only 3% of income. Two years later, he managed to increase the yield to 12% per annum

The Portuguese tax system has long been established: it is clear and transparent. If there are changes, then they are aimed at stimulating certain industries or regions.

At first glance, taxes are quite high. That being said, there are many benefits to support new businesses. For example, a flat corporate tax rate is 19%, and for a new business with income up to €15,000 – 17%. Value-added tax is 23%, and for the production of food, medical devices and services in the hotel business – 6%.

Pros
+ Clear and transparent business environment
+ Security and lack of corruption

Cons
– It is difficult to achieve high returns in most industries

Income tax: preferential treatment for 10 years

If you spend a lot of time in Portugal, you will be able to take advantage of preferential tax treatment from the first year. Non-habitual resident status can be obtained if you live in the country for more than 183 days a year.

This status provides tax benefits for 10 years and avoids double taxation:

  1. Most income earned abroad will not be taxed. This includes income from self-employment, pensions, dividends and other income.
  2. The income earned in Portugal will be subject to a flat rate of 20% for 10 years. This rule applies to highly qualified professionals: engineers, architects, teachers, doctors and even top managers of companies.

Pros
+ No double taxation with 78 countries
+ Reduced rates for 10 years

Cons
– To become a tax resident, one needs to reside in the country for 183 days per year

Investment options: a great choice for an investor

The government offers wealthy people eight options for investing in the Portuguese economy.

It should be noted that this is exactly an investment: you do not need to pay any non-refundable contributions. For comparison: when obtaining a golden visa in Malta, you need to pay €30,000 to various funds.

An investor needs to be careful when choosing a program because the borders of Europe, the European Union and the Schengen area do not coincide and each country has its own rules. For example, the right to visa-free travel to the UK is only granted by Portuguese citizenship, not a residence permit.

Investment options for obtaining a residence permit in Portugal

Investments in real estate €500,000
Investments in real estate over 30 years old and in areas of cultural and historical heritage €350,000
Capital transfer, e.g. a deposit in a Portugese bank €1,000,000
Investment in research activities €350,000
Investments in a new or established Portugese business that will provide or keep at least 5 job positions €350,000
Investments in restoration and conservation of national cultural heritage €250,000
Investments in shares of investment and venture funds €350,000
Creating a business that will provide at least 10 new job positions

Investments in real estate remain the most popular among investors. One of the reasons for the popularity is low property prices compared to other European countries.

How many square meters of housing can be bought for 1 million euros in European capitals
London 43
Vienna 51
Paris 52,2
Rome 81,4
Berlin 90,9
Madrid 124,6
Lisbon 125

According to Knight Frank, in 2018 it was possible to buy for a million euros an apartment in Lisbon of ​​125 m2, and London – only of 43 m2

Every year, more and more investors choose real estate that requires renovation: built more than 30 years ago or located in areas of cultural and historical heritage. The purchase sum will start from €350,000 including the cost of renovation.

There are development companies that buy houses or entire neighborhoods, renovate and sell apartments to investors with a guaranteed income of 4-5% per annum. Apartments are rented to tourists, and the investor has the opportunity to use the property for a certain number of days a year. There are few such objects and there is a high demand for them.

Portugal residence by investment: real estate objects

Shares in a boutique hotel in Cascais worth of €350,000 suitable for purchase under the Portugal Golden Visa Program

Portugal residence by investment: real estate objects

Shares in a boutique hotel in Cascais worth of €350,000 suitable for purchase under the Portugal Golden Visa Program

Portugal residence by investment: real estate objects

Shares in a boutique hotel in Cascais worth of €350,000 suitable for purchase under the Portugal Golden Visa Program

Portugal residence by investment: real estate objects
Portugal residence by investment: real estate objects
Portugal residence by investment: real estate objects

If you are interested in luxury real estate or have a preference for the region of Portugal, it is better to start with an investment of €500,000. There are no restrictions on the number of objects: you can buy one house or several apartments.

After five years, you can get a permanent residence permit or citizenship and return your investment by selling real estate. How our clients bought real estate in Cascais.

Pros
+ You can invest in real estate, shares of investment funds or business – there are eight investment options
+ Investment property can be sold after 5 years
+ No non-refundable fees

Cons
– Cost of participation in the program starts from € 280,000

Investments in real estate in Portugal: sound liquidity

There is a steady demand for real estate in Portugal. According to Standard & Poor’s, Portugal is one of the three leaders in the rate of growth in prices for European real estate: in 2019, the growth was 7%.

In many countries that grant golden visas, real estate is overvalued. For example, in Montenegro and the Caribbean, the demand is fueled by the holders of citizenship by investment.

In Portugal, demand for real estate is driven by other factors. Many Brazilians go there because they consider Portugal to be their second homeland, as well as people from other former Portuguese colonies, such as Angola. The British travel to the south of the country to retire, while the French and Italians move to Portugal for the preferential tax regime.

There is also a local demand for real estate: 10 million people live in Portugal. For comparison, Cyprus has 1.2 million inhabitants, while Malta has only 500 000. Moreover, demand is growing against the backdrop of a stable economy and low unemployment.

Portugal Golden Visa: Pros & Cons
Portugal is a golfers' paradise: there are more than 25 golf clubs in the Algarve alone. The year-round influx of tourists from all over the world also affects the constant demand for real estate

In 2019, 22 million tourists visited the country who needed rent. Housing by the sea for traditional beach holidays, surfing and golf clubs are common. Regarding Lisbon, there are many students, businessmen and major international events.

It should be added that since 1974, constitutional protection of property has been in effect in Portugal. It can be compared to Spain, where squatting has flourished in recent years: illegal migrants take over premises in which no one lives, and according to the law they cannot be evicted.

Portugal residence by investment: real estate objects

A two-storey villa with a pool in a golf resort in Budens. Purchase price is €575,000

Portugal residence by investment: real estate objects

A two-storey villa with a pool in a golf resort in Budens. Purchase price is €575,000

Portugal residence by investment: real estate objects

A two-storey villa with a pool in a golf resort in Budens. Purchase price is €575,000

Portugal residence by investment: real estate objects

A two-storey villa with a pool in a golf resort in Budens. Purchase price is €575,000

Portugal residence by investment: real estate objects
Portugal residence by investment: real estate objects
Portugal residence by investment: real estate objects
Portugal residence by investment: real estate objects

Pros
+ Yield up to 7% per annum
+ Annual cost growth of 5%
+ Real estate can be sold in 5 years

Cons
– Foreigners cannot rent properties in some areas of Lisbon and Porto

Discover the world with a Portuguese Golden Visa

The main advantages of a Portuguese residence permit are: visa-free travel in Europe, reliable refundable investments and a short path to EU citizenship. In exchange for investing in the country’s economy, an investor gets the opportunity to feel a new level of freedom and security.

The Portuguese Golden Visa offers several investment options for different tasks and investor budgets. The investor can choose the traditional path of buying real estate for €350,000, or to diversify investments by buying shares in venture funds, or even choose an entrepreneurial path and open a business in Portugal.

There is a lot of misleading or outdated information on the Internet about Portugal golden visa program. To make no mistake and understand the nuances, contact Immigrant Invest: we are always up to date.

Immigrant Invest is a licensed agent of the EU and Caribbean government programs.

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