In October 2012 the Portuguese Government introduced the Golden Visa scheme, a residency program which has since attracted more than €5.7 billion of direct foreign investment into Portugal.
With the aim of attracting High Net Worth Individuals (HNWIs) to the country, the Golden Visa offers a a residency visa for up to 5 years in exchange for a qualifying investment made in Portugal and is valid only for non-EU-EEA or Swiss citizens.
As of the beginning of 2021, UK passports lost their freedom of movement in the Schengen Area. Here are 3 great reasons why UK citizens could look at Portugal for residency; travel rights across Europe, a desirable lifestyle, and ultimately a European citizenship through investment.
The Golden Visa requires applicants to invest and apply using the one of the following routes:
Changes To Come As of January 1st 2022
Following amendments to the Portuguese 2021 State Budget, the Golden Visa scheme will see officially acting changes as of January 1st 2022, particularly for citizens looking to invest via a real estate acquisition.
After many years of a successful real estate industry in the capital, Lisbon and other cities such as Faro and Porto, as of beginning of 2022, foreign citizens looking to invest in real estate, in order to obtain legal residency will be restricted to invest only in “low density” rural areas.
This amendment to the visa scheme has been introduced so as to “boost” investment in cities within the interior of Portugal, which in the Algarve does not include the most sought after touristic parishes and will perhaps hinder real estate investment, via the scheme, in the area.
What About The Fund Investment Route?
This could be the alternative for investors who wish to apply for the residency scheme however do not see a profitable return, in real estate, in “low density” rural areas. The investment fund route was introduced through an amendment in Portuguese Law in August 28th, 2017.
This route might not be the answer for all citizens however for HNWIs, especially if experienced and knowledgeable investors, this application process could prove to be an interesting business venture. Alongside applicants needing to have experience in fund investments, there is also the need to supply proof and sufficient funds. Which until the end of 2021 requires a minimum investment of only €350,000, which will jump up to €500,000 as of January 1, 2022.
The fund investment route sees great advantages. It presents a low investment, security, tax-efficiency, portfolio diversification and most importantly low fees and taxes seeing as these do not require payment of Transfer Tax, Stamp Duty or Notary Costs which are applicable to real estate purchases.
Nonetheless the exit period is at a minimum of 5/6 years, depending on the fund you choose to work with, as well as perhaps, some lack of control as to funds allocation, performance and management fees.
Which Route To Choose For The Golden Visa
In the current real estate market, for clients who are made aware and interested in the Golden Visa, we have noticed a surge in buyers looking to invest for this particular reason, before the amendment of January 1st. Needless to say if Portugal is your destiny of choice and you are non-EU-EEA or Swiss citizens, this could be the perfect time to buy.
If the fund investment route also represents a profitable and stable market, bear in mind the deadline for a €350,000 capital transfer will only be available until the end of 2021. In conclusion, besides alterations to come, the options still available are very attractive given the freedom to travel throughout Europe, alongside a residency in a sunshine filled, safe and stable haven such as Portugal.