Government Aims to Scrap Portugal Golden Visa

Do Something. Anything!

“Don’t just do something stand there” was a phrase Ronald Reagan was claimed to have said to a meddling Congress and António Costa’s socialist government may have done well to heed these words on Thursday regarding the Portuguese Golden Visa, arguably one of the most successful inward investment programmes in Europe in the last 10 years. But what can you do when your poll ratings are down at 27% and you have a housing crisis on your hands? The Portuguese Golden Visa was included in a package of measures aimed at alleviating the housing crisis in Portugal. Prime Minister António Costa may have been well advised to just stand there with regard to the Golden Visa. But when you need a headline that shows you are doing something, anything, then the Golden Visa which could be labelled as both “immigration” and “wealth” was perhaps an easy target for the left of centre party.

Europe’s Most Successful Golden Visa Programme

In the 10 years since its introduction the Portuguese Golden Visa has brought over €6 billion into the Portuguese economy. It started as a €500,000 investment into property. Any property in fact. And in its early years almost entirely comprising of Chinese investors buying residential property in Lisbon. But those days are long gone, and several iterations of the programme have led to investment today almost entirely focussed on renovation, rejuvenation and mostly commercial buildings. In fact, today’s typical investor is no longer from China. The biggest market today is for American investors, but the range of countries is incredibly broad. At La Vida we have had investors successfully invest in the Portugal Golden Visa from 101 different countries.  The €500,000 today only applies to residential property outside the main cities or coastal areas. And hence there is next to zero interest in the market in such investments.

Renovation Projects

All the focus today is on the €350,000 and €280,000 renovation projects, a change that the government successfully introduced to channel inward international investment away from residential property and towards projects that could bring real economic benefits to the areas where they were. These are commercial projects, often and in the most part, hotels that help rejuvenate areas bringing jobs and income to local communities. We have seen these projects not only renovate dilapidated buildings themselves but help transform the whole area around bringing shops, commercial enterprises, and residential housing in their wake. That’s not to mention of course the jobs that come along with this. All on the back of inward international investment without a penny or cent being spent by the Portuguese tax payer.

Golden Visa is no longer Residential Property

At La Vida, of the 600 plus properties we have sold to investors since the programme changes were announced in 2021 only a handful could be considered for residential use. The rest are not for living purposes and have helped bring investment and jobs into mainly commercial and hotel projects. And aside from a minority of interior region €500k fincas that is what the investment migration industry, agents, developers and our clients are focussed on today.

Business Investment

And what about the business investment route? Invest €500,000 in a business and create 10 jobs to gain a residency visa. A great idea. If you can find such investors willing to take a chance on building a business in a country, they are barely familiar with just to gain a residency visa. Better still, why not gain the visa first, get to understand the country and its markets then invest? This is what most experienced entrepreneurs and those most likely to be successful will do. This is what the real estate element of the Golden Visa offers. Low risk and passive investment to start with that in time, be it years or generational will eventually lead to wealthy investors looking to create business in a country whose markets and opportunities they understand. There are few quick wins to be had in this way and the government should see this as a long-term play.

What Next for the Golden Visa?

So how is this likely to play out in the coming weeks and months? Well, the Portuguese government is not able to simply change the legislation without due process and it is likely this has a long way to run yet. There is a process to be followed in the coming months which will no doubt provide time for the public, businesses, and other interested parties to have their voices heard. The preliminary proposal is expected to be debated in the coming four weeks and a meeting of the Council of Ministries will then take place, consider any amendments, and put this forward for a vote in the Parliament.  If approved a separate commission will then prepare a final draft which then gets resubmitted for a final vote. If voted through, then this proposal is forwarded to the President of the Republic who may approve or send it back to Parliament to be redrafted.

So, plenty of checks and balances in place one might assume and the fastest time this process would work out and legislation put into place is expected to be around 6-8 weeks, that is without any delays or likely transitional period. The last Golden Visa legislation change in 2021 took over 12 months to come into law.

What Now for Applicants?

So, what does this mean for investors already in process and those still considering applying for the Golden Visa in Portugal? For anyone who has already submitted their Golden Visa application into SEF (the Portuguese body that administers Golden Visa applications) we see no reason why they will be affected by the proposed changes. For investors already in the process or those still considering applying we would urge them to act quickly, press on with their application (which typically involves legal fees of no more than €5000 before committing to investment) and get ahead of any legislation change that may come in.

All in all, there is a lot of politics to play out here and hopefully the voice of reason among business and the populace can begin to have its say in the weeks ahead.

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