The Portugal Golden Visa program offers great flexibility for non-EU citizens who want to gain residency in Portugal. It’s an excellent solution for those who have sufficient capital available and don’t wish to make Portugal their main base.
At Digital Émigré, our goal is to help people get EU citizenship. So this article will evaluate the Golden Visa as a potential pathway to a Portuguese passport. After reading it, you’ll know if the Golden Visa makes sense as your best route into Portugal, or if one of the alternative pathways (such as the D7 passive income visa) is a better fit for you.
We’ll also explain the upcoming 2021 Golden Visa changes – and fill you in on one of Portugal’s best-kept secrets. For this article, we’ve spoken with several experienced Portuguese immigration lawyers to ensure the details are accurate.
What is Portugal’s Golden Visa program?
Portugal launched its Golden Visa program in 2012 to boost its economy by encouraging non-EU citizens to make investments in the country. In return for their investment, Portugal offers a five-year residence permit. This includes the benefit of visa-free travel across the whole Schengen area of 26 countries in total.
Unlike most other golden visa programs, and residencies in general, the Portuguese Golden Visa allows investors an unusual level of freedom, as it only requires them to spend around 7 days per year actually in-country. So far, the program has attracted thousands of investors and provided a significant boost to Portugal’s economy.
Chinese citizens have been the main adopters of the Golden Visa program, followed by Brazilians, South Africans, Turkish and Russians. In 2021, Portugal Golden Visa applicants are likely to include increasing numbers of US and British nationals, due to the growing need to escape from the legacy of Trumpism and post-Brexit fallout.
The Portugal Golden Visa is also an excellent choice for Hong Kong citizens. Hongkongers have special rights in the UK, including a pathway to citizenship. But, post-Brexit, more Hongkongers are turning away from the UK in favour of EU member countries like Portugal, where residency (and citizenship) allow free access to the entire Schengen zone of 27 countries.
Portugal Golden Visa vs D7 Passive Income Visa
The key difference between the two is that the Golden Visa requires you to have the ability to make a significant investment in Portugal. There are various different ways to do this, but you’ll need to have access to at least €250,000 of capital (for the least expensive pathway).
In contrast, the D7 ‘passive income’ visa is accessible to any non-EU citizen who can show proof of passive income coming from outside Portugal. In practice, this can include a wide variety of sources, such as income from remote work, pensions, real estate, or investments. In addition, applicants for the D7 visa only have to show a monthly income requirement that reflects Portugal’s minimum wage. This is one of the lowest in the EU. In pure financial terms, the D7 is the more accessible pathway.
If you’re interested in moving to Portugal using the D7 visa, check out our full guide here.
When choosing between these two options, it’s also important to consider the amount of time you’ll need to spend in-country. To be eligible for residency under the D7, you have to make Portugal your main base. You’ll need to become tax resident and spend at least six months in-country every year for the next five years (until you become eligible for either permanent residency or citizenship). In contrast, Golden Visa residents can spend minimal time in Portugal. This amounts to just a couple of weeks per year (although they can spend more if they wish).
To discuss getting residency via the D7 visa, contact us today.
The Golden Visa and Portuguese Citizenship
As a Golden Visa holder, the limited time you spend in-country may have implications for getting Portuguese citizenship. Your citizenship application will require you to show proof of integration with the local community. For example, attending conferences in Portugal, being a member of a local club, learning the language, or simply having your main residence in Portugal.
For Portugal Golden Visa residents, who only spend several weeks per year in country, providing the required level of integration can be challenging. This is something to keep in mind if you intend to use your Golden Visa residency as a pathway to eventual Portuguese (and EU) citizenship. In contrast, D7 residents have to make Portugal their main base, therefore many of the ‘proof of integration’ factors occur naturally as a result.
Requirements for the Golden Visa
Any third country national (excludes Portuguese nationals and EU/EEA citizens), with the required investment is eligible to apply for the Golden Visa. You can invest either as an individual or through a suitable legal entity. You will also have to meet physical presence requirements to meet, but these are very low.
After making your investment, you’ll need to maintain it for at least five years. You’ll also need to spend at least seven days in Portugal during year 1, and at least 14 days during every 2 years after that. This is an extremely low requirement compared to other Golden Visa schemes in the EU 27.
Portugal Golden Visa Investment Pathways (valid until Dec 31, 2021)
There are a range of options for getting the Portugal Golden Visa, rather than just investing in property, although that’s one of the most common pathways. Here’s the full list (applicable for the rest of 2021).
- Invest in property of a value of least 500,000 EUR
- Invest in property in urban rehabilitation areas, or constructed at least 30 years ago, with value of at least €350,000
- Create at least 10 jobs for Portuguese nationals
- Transfer capital of at least €350,000 to incorporate a registered company in Portugal and create at least five permanent jobs.
- Transfer capital of at least €1 million
- Transfer capital of at least €350,000 to invest in public or private scientific research
- Transfer capital of at least €350,000 for investment in local venture capital funds
- Transfer capital of at least €250,000 to to support artistic projects or national cultural heritage
Portugal Golden Visa Changes in 2022
Summary of changes
Investment threshold increases (starting Jan 1, 2022)
- Property (Low density areas only) €280,000 for rehabilitation in low-density area, €400,000 for new development
- Funds: Increase from €350,000 to €500,000
- Incorporating local business: Increase from €350,000 to €500,000
- Scientific research: Increase from €350,000 to €500,000
- Capital transfer: Increase from €1 million to €1.5 million
Golden Visa Changes: Property
Focus on low-density areas
The Portuguese government has recently announced new changes to the Golden Visa scheme.
One of the most significant changes involves removing major cities Lisbon, Porto and the Algarve from the list of Golden Visa real estate investment areas. These changes will take effect on January 1, 2022.
After New Year’s Eve 2021, new Golden Visa applicants for the property investment route will be restricted to central Portugal, the Azores or Madeira. The government has announced changes to several other Golden Visa routes too, here’s the full list.
The decision has been controversial as critics believe it will harm the property sector, especially amid the pandemic. Golden Visa investors have typically turned to Lisbon and Porto as the best options for getting a good return on their investment. But with these popular cities now out of the scheme, Golden Visa applicants will have to look elsewhere.
Time is running short to make a Golden Visa investment in Lisbon, Porto or the Algarve. Contact us today to schedule a consultation.
Despite the impending changes, Portugal still has a lot of good property investments…and here’s our favourite.
Golden Visa in Madeira
We’ve done extensive research on the island of Madeira, and we’re excited! We believe Madeira is an excellent alternative to Portugal’s typical big city investment destinations. Madeira has developed a burgeoning ‘digital nomad’ scene. The pandemic is partly driving this, along with local government initiatives, such as the brand new Digital Nomad Village in Ponta do Sol.
Among this new nomad community is a growing number of longer-term immigrants (many of them British or American digital émigrés). Many arrived to wait out the pandemic, then decided to stay and apply for residency. This shift will soon change Madeira’s image away from being a destination for retirees and honeymooning couples.
Madeira offers a compelling alternative to mainland Portugal, especially in terms of how it has handled the pandemic. The warm weather means that socialising outdoors is possible all year round, convenient for lessening the spread of viruses. What’s more, Madeira is an autonomous region and can define its own rules. At the time of writing (February 2021), mainland Portugal is under full lockdown, while Madeira has only an evening curfew.
Real estate prices in Madeira are good value compared to Lisbon or Porto. You can find particular bargains outside of the capital Funchal. Many investors believe that Madeira is currently undervalued. Real estate prices may start rising in early 2022, as the pandemic fades away and Madeira takes its place on the digital nomad map.
Madeira vs Mainland Portugal
For Golden Visa applicants, Madeira has several advantages over the mainland. If you intend to get your Golden Visa by setting up a company in Portugal, Madeira offers the following tax advantages:
- Reduced corporate tax rate of 5%, applicable on the taxable income derived from operations exclusively carried out with non-resident entities or with other companies operating within the framework of the MIBC
- Full exemption from withholding tax on dividend remittances from the Madeira companies to non-resident single and corporate shareholders
- No withholding tax on worldwide payment of interest, royalties, and services.
This compares favourably to the mainland corporate tax rate of 21%. You can access these benefits through applying for a licence with the Madeira International Business Centre (MIBC).
Madeira will be one of Portugal’s new hotspots after the pandemic. Why not get a head start? Chat to us today for more info on investing in / moving to Madeira.
The Golden Visa application process
In general, Portugal is a highly bureaucratic country. The Golden Visa application process is no exception. The process itself isn’t complicated. But it will require you to collect a large number of documents.
Here’s a summary of the basic steps in the process. Please note, this is a rough guide only. There may be additional requirements, depending on where you apply. We suggest that you work with a qualified lawyer to guide you through this process.
- Apply for your Portuguese tax number (NIF). This will be essential for most aspects of life in Portugal.
- Use the NIF to open a local bank account
- Select and finalise your desired investment (we recommend discussing the details with a local lawyer)
- Once the investment is made, gather all documents, both from your home country and from Portugal. Documents in other languages will need to be translated into Portuguese and legalised.
- Submit the Golden Visa application through your lawyer and pay the associated fee
- Once you receive approval from SEF, they’ll assign you an appointment slot to get your biometrics done. Make sure to bring all your original documents along to this meeting. NB: this is the only step that requires you to visit Portugal in person; everything else can be done remotely via your lawyer.
- Finally, wait for approval and pick up your residence card
For those with available capital, getting Portuguese residency via the Golden Visa route can be a smart option. But if you intend to go for citizenship, showing proof of integration is a key factor to think about.
More questions about the Golden Visa? Ready to make an application? Contact us today.