Portugal Golden Visa: what has changed and why the future is still gold07 February
One of Europe’s most successful residency programmes officially called “ARI” (“Autorização de Residência para Actividades de Investimento”), Portugal’s Golden Visa Programme has undergone some changes.
Expected to come into force by the end of 2020, the new rules will mean that investors will no longer be able to purchase a property in coastal areas in order to obtain a Golden Visa.
This means that those wishing to invest in Porto or Lisbon have a window of opportunity to utilise the popular Golden Visa programme via property investment in the next 10 to 12 months.
It's also important to note that the changes will only apply to Golden Visa applications filed after the enacted date and will not affect submitted applications, be they pending or ongoing.
What's the reason behind these changes?
Golden Visa investments represent only 3% of all foreign property investment in Portugal, but the Portuguese government wants to try to drive this investment into inland areas and the islands to promote regeneration, growth and job creation, all of which have been seen in Lisbon over the last years.
The Golden Visa programme will remain accessible to investors but will no longer be available on coastline areas, including Lisbon and Porto. The government will have one year to fully implement the changes.
What will change?
With this measure, the government aims to relieve some pressure on the market prices for properties located along the coastline - highly populated areas - and promote the investment in low-density areas such as the inland and the autonomous regions like the Azores and Madeira. The reason for this decision is to help drive investment into these areas in order to promote renovation, growth and job creation.
Nonetheless, the proposal does not prohibit the possibility of renewing residence permits granted under the regime currently in force. It also does not affect the possibility of granting or renewing residence permits for family reunification as long as the residence permit for investment has been issued and granted under the current regime. Now that it has been authorised, the measure will stand till the next State Budget is approved. However, it is not yet disclosed when the new terms will be officially out.
Meanwhile, Golden Visas will still be granted in Lisbon, Porto and other coastal cities only to investors who manifest the intention of creating jobs, for example, through launching new companies or moving their businesses to Portugal.
Currently, foreigners can apply for a Golden Visa by investing €500,000 in real estate and can apply for full citizenship after five years as a resident. It is yet to be confirmed if these terms will remain the same. The Golden Visa scheme raised €4.99m since its inception in 2012 and most of the investors came from China, Brazil, Turkey, South Africa and Russia.
Whilst there are several ways to become eligible for this visa, real estate investment was the most popular method, accounting for around 90% of all applications. This programme has transformed Portugal into western Europe’s hottest property market, after Luxembourg and followed by Germany and Spain.
Why is now the time to invest?
The new year saw IMT (the real estate transfer tax) from 6% to 7.5%, a change that will only affect residential properties exceeding €1m.
Plus, the Golden Visa programme suspension to Lisbon and Porto will only take effect next year, giving at least a 10 months window of time for those interested to apply. This means that investors have a window of opportunity to invest and still benefit from the Golden Visa perks. In order to do so, it is important to ensure that all licenses are in place and that to note that opening a bank account in Portugal may take up to 6 weeks.
Portugal is still one of the hottest markets for property investment and the economy is set to grow for a seventh year, with property prices increasing 14.5% in the third quarter of 2019 according to Confidencial Imobiliário.
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