The Portugal Golden Visa program is an attractive gateway into the EU for many foreign nationals. It is a flexible and affordable path to residency and investment opportunities,
Thousands of interested HNWIs, entrepreneurs, and retirees have already been approved for the program. Now, they are experiencing the rewarding lifestyle and financial benefits of living in Portugal.
Today, Immigration Explorer covers all you need to know about the Portugal Golden Visa program. We reveal who should apply, new real estate changes for the program, and the tax advantages. Plus, we cover options for tax optimization through the non-habitual resident tax (NHR Portugal) scheme.
What to Know about the Portugal Golden Visa Program
As of 2019, over 7,500 foreign nationals were granted Portuguese residency through the Portugal Golden Visa program. They contributed more than 5.6 billion USD to the country’s investment assets. And the largest of these being residential property purchases.
Moving forward, Portugal has announced changes to the location of where real estate may be purchased. So, this is relevant for applicants who apply for permanent residency using the real estate investment option.
Beginning 1 January 2021, only real estate investments outside Lisbon, Porto, and the Algarve region may qualify. Thus, this effectively means properties in the countryside.
While real estate is not the only option for getting a residency card in Portugal, 90% of applicants have used this method. In fact, it provides quick access to European countries through the straightforward and easy Portuguese Golden Visa application process.
How to Apply for Portuguese Residency
To begin with, there are three main ways to apply for Portuguese residency.
- Real estate property investment
- Direct investment
- Creation of ten jobs in the country
Now, let’s look at those options in a bit more detail.
1. Real Estate Investment
Purchase one or more properties totaling ~586,000 USD (500,000 Euros) in approved locations per the 2021 amendment. Properties that are more than 30 years old only need to reach a minimum of ~423,000 USD (350,000 Euros).
On the other hand, properties in low-density areas require ~484,000 USD (400,000 Euros) investment. Real estate older than 30 years requires ~339,000 USD (280,000 Euros) investment.
2. Transfer of Investment Funds
Make a minimum investment of ~1.17 million USD (1 million Euros) or less depending. This depends on the recipient of qualifying investment funds.
3. Job Creation
Finally, you can also create a minimum of 10 jobs. There are few current stipulations on the manner or investment value of this business opportunity.
Your Next Steps
So, the initial application requires that for all options the qualifying investments must be maintained for at least 5 years. Plus, investment funds must originate outside Portugal.
Beyond that, foreign applicants must enter into the country through a valid Schengen Visa. They must comply with immigration and Schengen service protocol, present proof of health insurance, and a clean criminal record. Find out more about the required documents here.
Many foreign nationals and included family members live in Portugal or reside in Portugal a large portion of the year. But the Portugal Golden Visa program only requires a minimum stay in the country for 7 days in the first year. And then 14 days for each subsequent two-year period is necessary to maintain the Portugal visa application.
Portugal’s Golden Visa Program and Taxes: What You Should Know
Compared with other European countries, Portugal can have moderately high taxes. In fact, personal income is taxed at rates between 14.5 to 48%. The corporate tax rate is 21%, although there are exceptions and reduced rate policies. Any rental income made is taxed at 15%.
The personal capital gains tax is 28% and corporate capital gains tax is 25%. Moreover, there are municipal taxes for both residents and resident companies.
In fact, Portugal has signed more than 50 double tax treaties. So, this is beneficial to foreign nationals who apply for the Portugal Golden Visa program.
More Financial Benefits
Other financial advantages include affordable real estate. Especially outside the major city centers, plenty of healthcare options, and high quality of living. Further, most basic commodities, such as general products and local goods are much cheaper than other EU jurisdictions.
For foreign nationals who enjoy traveling or have business-related trips, Portugal is well connected and close to major international destinations. This saves time and money in the long-term.
However, one of the most attractive financial incentives is the NHR Portugal Tax scheme for new Portuguese residents who have applied for the Portugal Golden Visa program.
Take Advantage of the NHR Portugal Tax Scheme
As Golden Visa applicants, foreign nationals receive tax breaks for the first 10 years through the NHR Portugal tax regime (non-habitual resident). The purpose of the tax incentive is to provide relief from financial burdens for foreign investors and professionals who contribute to the economy of Portugal.
Some of the benefits of the tax regime include:
- Tax exemption on foreign income for 10 years
- Specific professions and self-employment income made in Portugal is only taxed at 20%
- No charge on remittance of funds to the country
- Tax exemption on gifts or inheritance when it is to a direct family member
- No wealth tax
- Enjoy Portugal’s status as a white-listed EU tax jurisdiction
- No minimum stay requirement
The best part is that foreign nationals who first apply for the Portugal Golden Visa program may then qualify for the NHR Portugal tax regime. One of the key components is that the NHR requires that an individual must acquire some form of real estate. The intention must be to maintain this residence as a habitual home.
While renting a place for a year qualifies an individual for the NHR Portugal program, purchasing a real estate investment has several advantages. It provides a qualifying investment for the Portugal Golden Visa program and ensures a foreign investor can gain NHR status.
Furthermore, since there are no requirements on the amount a resident must stay in Portugal to maintain their status, the minimum stay limits for a Portuguese Golden Visa are enough to cover both NHR and permanent residency status.
Who Should Apply?
While certainly, the country offers a quality of life for many foreign nationals as well as financial incentives for first-time residents through the NHR Portugal scheme, the Portugal Golden Visa program is most attractive to four types of foreign investors.
High-Net-Worth Individuals (HNWIs)
HNWIs and their families have the opportunity to make relocation decisions to improve their standard of living and protect valuable financial assets. Portugal is a great country to seek optimized solutions for saving through the NHR Portugal tax regime as well as limit daily living and travel expenses.
The residency program does not require a lot of initial capital beyond the purchasing of qualifying real estate investment, which can be used as a place of residence or an option for passive income through rental contracts while away.
Business Owners and Entrepreneurs
Portugal is a business-friendly location. It has not only a warm, welcoming culture but also plenty of international professionals connected to Europe and other international markets. The Portugal Golden Visa program grants the freedom to applicants to work and travel visa-free throughout the EU. And business start-up can qualify a foreign business owner for a residency permit through their company incorporation.
Even if a foreign national chooses to use another option such as real estate investment as a means of securing their residency card, the business environment in Portugal is easy to navigate and encouraging for new company formation.
Retirees
Under the NHR Portugal tax regime, retirees can get the most out of their pension funds. They can do so by avoiding taxation on foreign income and remittance of these funds into the country for their first decade in the country.
Any locally-sourced income, such as rental income from property investments, is taxed at the 20% flat rate for ten years. With a pleasant climate, vibrant culture and destinations to explore, and extensive, affordable healthcare options, Portugal makes retired life more fulfilling.
Foreigners Who Want to Apply for Portuguese Citizenship
For foreign nationals interested in obtaining a second passport can use the Portugal Golden Visa program as the first step towards applying for Portuguese citizenship.
After a 5-year period of residing in Portugal, an applicant may apply for citizenship. There are also paths to citizenship for foreign residents who did not permanently reside in the country throughout the duration of this time if they can demonstrate investment and ties to the country as well as pass a language test.
In all, a foreign investor could reap the rewards of the Portugal Golden Visa program, the NHR Portugal scheme, and, in the end, apply for Portuguese citizenship!
The Takeaway
To sum it up, the Portugal Golden Visa program is a great choice for many foreign nationals. HNWIs can capitalize on their financial investments and protect their assets. Entrepreneurs can explore financial solutions to optimize and grow their businesses.
Even retirees can get the most out of their retirement funds while having a vibrant lifestyle, more healthcare options, and develop the potential for passive income generation. Further, the NHR Portugal tax regime allows for all foreign nationals to enhance their tax optimization solutions. Regardless of the investment route, they take in gaining Portuguese residency.
The multilingual professionals at Immigration Explorer can help you get started on this new chapter of life. Leave the stress of figuring out the application process or locating real estate in Portugal to us!
Contact our team today! We assist you in the process and connect you with our extended network of quality professionals. Make the Portugal Golden Visa program your best investment!