Investors Rush to Portugal as Golden Visa Changes Loom
11 October 2021
Portugal has one of the most prominent residency by investment programmes in the world. The Portugal Golden Visa has attracted more than 26,700 individuals to Portuguese shores since its launch in 2012 and is becoming more popular with time.
However, the Portuguese government recently announced significant changes to their Golden Visa Programme, which may restrict some investors from benefiting from the current lower investment thresholds and flexibility before the changes take effect on the 1st of January, 2022.
What is the golden visa?
The Portuguese Golden Visa is a popular immigration route through which foreign investors who make a qualifying investment and submit a full application are granted Portuguese residency for themselves and their families. The popular and efficient qualifying options currently include:
- Buying any real estate property for a minimum of EUR 500,000
- Buying a rehabilitated property aged 30 years or older for EUR 350,000
- Buying a rehabilitated property in a low-density area for EUR 280,000
- Or investing EUR 350,000 in an investment fund
The Golden Visa allows its holder to live, study, and work in Portugal while also having a flexible path to Portuguese citizenship and thus EU citizenship; as those with a Golden Visa who reside at least seven days a year in Portugal and are able to show ties to the nation as well as having a basic understanding (A2 level) of the Portuguese language are eligible to apply for Portuguese citizenship after five years.
What are the upcoming changes?
The Portuguese government issued a decree on the 13th of July, 2021 that details rule changes that will come into effect on the 1st of January, 2022. The changes come in two types; locational and financial. The first affects the real estate options, while the second involves the fund options.
Starting from the 1st of January, 2022 residential properties in certain areas such as Lisbon, Porto, and the Algarve will not be eligible for the Golden Visa. This means investors will have to look at the Autonomous Regions of the Azores and Madeira or in inland territories of Portugal for qualifying residential properties. The government is looking to encourage foreign direct investment into the more rural areas of the country.
This change is the most significant, as almost 90% of all applicants last year invested in property to gain their Golden Visa, with the vast majority buying real estate in Lisbon, Porto, or the Algarve. However, clients looking to buy a residential property in Lisbon, Porto or the Algarve and qualify for the Golden Visa still have the opportunity to do so before the year ends but they must start the process this month.
While the minimum investment threshold for real estate remains the same, the threshold for the investment fund option, which accounted for 9% of all applicants last year, will rise from EUR 350,000 to EUR 500,000, setting it on par with the upper threshold for the real estate option.
All investment funds are monitored by the government through the CVMV and they have been gaining in popularity as they offer benefits such as:
- A straightforward process without the need to travel to Portugal to conduct due diligence prior to the client’s Golden Visa application submission
- A variety of funds to choose from which range from conservative to more aggressive investment strategies
- Less costly than the traditional real estate option as there is no title transfer, stamp duty fees at the purchase stage, or ongoing property tax
Those looking to take advantage of the current EUR 350,000 investment fund pricing will need to apply this month.
Why should you invest before the changes come into effect?
While the golden visa itself will remain active and popular even after the changes are implemented, buying now will allow you to purchase real estate in the most popular areas of Portugal.
The housing markets in both Lisbon and Porto will remain robust as Golden Visa buyers only consist of 6% of the total luxury real estate market; as they have shifted from large cities to global economic hubs. Expats and the Portuguese locals will continue to buy and live in Lisbon and Porto, ensuring that the housing market remains steady.
The Algarve also provides a prime opportunity to purchase real estate as it remains an attractive vacation destination for both locals and international tourists, while its commerce landscape continues to grow.
Buying a property in these prominent, prime locations also provides you with an opportunity to earn rental income over the required five year hold period, which offsets a portion of the initial immigration fees. It also gives clients a tangible asset for their own use if they so desire.
For those interested in the fund option, initiating the process now is a prudent financial decision and ensures a cost savings of EUR 150,000.
Last cutoff date to onboard with RIF Trust:
In consideration of all the steps involved, administrative workload and estimated time required to meet the mandatory pre-submission requirements, Latitude has carefully determined that a cutoff date of 15th October 2021 must be met for onboarding and qualifying under the current regulations.
Note that pre-submission work involves:
- Submitting and passing RIF Trust’s initial due diligence to ensure you are a viable candidate for the programme.
- Opening a bank account in Portugal and obtaining a NIF ( tax id ). The process requires compiling KYC documents from your home country.
- Choosing an investment fund or real estate option. Latitude has a number of available funds and over 15 attractive real estate projects to choose from.
- Compiling information and supporting documents for your immigration application to SEF. These include civil documents, police clearances, financial documents, proof of children's dependency etc...
How to apply before the changes take effect?
You must initiate the process this October.
Our experienced team will help you find a suitable qualifying option that meets your needs and budget while also efficiently filing your application with the authorities before the changes are implemented, ensuring you get the best possible solution for you and your family. Contact us today for a comprehensive consultation.