In October 2012 the Golden Visa Programme was launched. The main objective of the programme? To attract international capital into the country. Following the economic crisis of 2008 there was a real need for the programme. It has since become one of the most popular residency by investment programmes not only in Europe but also across the world. The programme has granted over 11,500 Golden Visa’s.
Many of our clients have taken advantage of the Golden Visa programme. This tax residency by investment option quickly allowed them to assume Portuguese tax residence without the need to spend significant time in Portugal each year. It also then provided a method to apply for the Non-Habitual Residence Scheme.
Non-Habitual Residence Scheme
The 10-year NHR scheme is particularly attractive for those with overseas income that stem from a jurisdiction which has a Tax Treaty in place with Portugal. Most Treaties provide for source countries to apply tax, but many don’t then actually apply tax where the individual is non tax resident. The Portuguese NHR scheme provides exemption from most foreign sourced income and so this is where tax can be avoided altogether. The scheme was at one time thought to be the best tax secret in Europe, and even small changes, as outlined in an earlier blog. relative to taxation of pensions, didn’t lessen it’s ongoing popularity.
Post Brexit, the Golden Visa programme also provided free entry and circulation in the Schengen space, allowing unrestricted access to UK nationals in some 26 European countries. This, combined with guaranteed sunshine, international travel links, high standards of accommodation and local services (especially healthcare), has led to the Portuguese Golden Visa becoming one of the most attractive options for many globally mobile UK high net worth individuals.
Despite the roaring success of the programme and the boost to the economy and housing market, it looks like all of that will soon come to an end.
The Golden Visa has been pointed to as one of the major contributing factors for high inflation and unsustainable rises in housing costs which has now meant many residents in Portugal cannot afford a home. By ending the programme, the hope is that the country will be able to tackle its housing crisis. The Portuguese government has effectively now responded to the concerns about the programme:
- On 16th February 2023 they declared that the Golden Visa programme will be discontinued.
- On 15th April, a proposal law was issued indicating acceptance of new applications until such time that the final bill has been approved by the government. This process is estimated to take at least 45 days – some say 60 days (wef 15th April).
In conclusion – if you move quickly, there is still a window of opportunity to apply!
Portuguese Visa’s – other options
If you are not in a position to apply for the Golden Visa, it’s worth pointing out that the NHR scheme remains available for Portuguese tax residents and residence can still be achieved via alternative visa routes, for example:
D7 Visa – Retirement or Passive income – required annual income from property, pension, minimal salary
D2 Visa – Business investment – start a new business in Portugal, transfer existing one to Portugal, or invest in Portuguese business
There are various criteria to be met in each case, but the fundamental difference to the Golden Visa is days of presence requirements. Essentially the Golden Visa required minimum physical days in Portugal, just seven days. The D7 and D2 visa options require a minimum 182 day stay each tax year.
If you are considering a move overseas, and would like to investigate how we can help you plan and mitigate international tax exposure, please don’t hesitate to contact Lynn Gracie, or your usual AAB contact.