Newsletter 12 Changes to Portugal’s Golden Visa program to take effect next year, 2021

On the 7th of February, the Portuguese Government approved the State Budget for 2020, which contains some changes regarding the necessary conditions for the attribution of Golden Visa (GV), as well as the tax benefits for Non-Habitual Residents (NHR).

The international press, namely the Financial Times on the 28th of January, stressed that these measures contained in the State Budget would hinder access to the Golden Visa (GV) programs, and to obtain tax benefits for Non-Habitual Residents (NHR), foreigners who live or intend to live in Portugal under these laws.

The Assistant Secretary of State to the Prime Minister, recently declared in an interview, that these changes, despite being presented in this year’s budget, should only come into force in early 2021, so as not to affect any process that has already started.

Regarding these changes, the major differences expected⁽¹⁾ for 2021 are: the issuance of Golden Visas based on real estate investment can no longer be carried out in Lisbon and Porto.

It is true that the vast majority of the 8000 GV’s issued since 2012, about 95% of these, were for real estate investment and the majority being in these cities (one of the reasons for the renovation of many buildings), which implied a substantial increase in the values ​​of the real estate.

On the other hand in relation to (NHR), due to pressure from several European countries, namely Finland and Sweden, the current total tax exemption for 10 years will be changed to an annual IRS rate of 10%.Despite being a little less interesting situation, it remains a very rewarding advantage considering the 40% or more paid in the countries of origin.

Given this scenario, many investors, real estate companies, law firms and other stakeholders in these processes have already publicly expressed their dissatisfaction with that legislation.

These issues have already been discussed since November and these changes are only valid for the future, not applying to foreigners who already benefit from the GV and RNH concessions, as the law does not allow these changes to have retroactive effects.

In the case of our customers, as of last December, we were informed of this possibility of changing the law, so the contracts for the purchase and sale of the intended properties were immediately executed, the bank deposits defined by law were made and all the necessary documentation with the Foreigners and Borders Service (SEF).
Whoever does not do this in this period, and who has already defined that claim, is because he was misinformed or advised.

Will these changes to the law be a problem for anyone wishing to buy an apartment in Lisbon or Porto and still enjoy Golden Visa status? Yes.

Apart from some specific situations, we have to see each case in the proper perspective, that is, changes in the new State Budget imply that in 2021, the purchase of real estate in the two largest cities, Lisbon and Porto, more specifically in its Metropolitan Areas (see Map I below), that is, within a radius of about 50 km from these cities, in the amount of 500 thousand euros, it no longer qualifies the non-European buyer to have a Golden Visa. But access to this Program is still possible, now with investment in other areas of the country.

Map I – Lisbon and Porto Metropolitan Areas

Objectively, what are the main reasons for wanting a Portuguese Golden Visa: besides being the third safest country in the world, from possibility to move freely in the Schengen space, as well as the possibility of obtaining nationality for yourself and family members in the first degree, the objective is to have a plan B, taking into account the uncertainty of the future, both for economic and political reasons.

We know from clients coming from New York or São Paulo, that when we offer them houses in the cities they answer that they are fed up with metropolises and want peace and quiet, preferably with sun and beach.

We even see advantages in this claim of some customers for two reasons: first, due to the excellent network of motorways, they are still 30 minutes from the beach and an international airport, and on the other hand, the real estate aspect, while in the cities of Lisbon and Porto for half a million euros (capital required for GV), currently a T1 is purchased, in the vicinity of these areas for the same price you can get a villa with a pool and also 30 minutes from the sea.

In summary, Portugal, due to its small size, the quality of its infrastructures and the price of real estate on the outskirts of large centers, continues to offer a quality of life for those looking for a European Golden Visa.

Duarte Jardine

 ⁽¹⁾– changes mentioned above will only take effect after the publication of the budget law in the official Journal, Diário da República, which should take place from 24 February.