Golden Visa in Portugal? Why Madeira?

Last Updated on February 18, 2021 by Miguel Silva Reichinger Pinto Correia

Golden Visa in Portugal, a residency and citizenship by investment program, is having some of its rules changed when it comes to the investments requirements that allow someone to take up residency (and eventually citizenship) in Portugal.

One of the changes the Portuguese Golden Visa program pertain to the location of the of real estate investment. Under the new rules for the Portuguese Golden Visa real estate investment can only be considered, for the purposes of obtaining the residency permit, if said property is located in the Autonomous Region of Madeira (the Pearl of the Atlantic), in Azores or in the interior of the Portuguese mainland.

The Madeiran Real Estate Market and the Golden Visa

Real estate investors in Madeira can be divided into two categories, those coming from the European Union and those coming outside of the Union, both in search for a safe place, high-standard quality of life and eternal Spring.

Golden Visa in Madeira, through  is mainly sought after by South Africans, British, Americans and Russians. Why Madeira? While house prices in Portugal rose 5.9% in 2020, in the midst of the Covid-19 pandemic, settling at €2,147 per square metre (m2), Madeira’s housing prices rose 7,8%, above the mainland’s average (reflecting not only the quality the construction quality of the property’s sold, but also Madeira’s unique location and spring-like weather throughout the year allowing the use of the properties for touristic rentals in a sustained way).

Statistics also show that the median price of dwellings in Madeira (1,332 €/m2) are above of Portugal’s northern capital, Porto, (1,264 €/m2) – registering a year-on-year rates of change +12.2%. Therefore, it is not surprise, to find a Madeiran municipality (Calheta) among the Portugal’s top 10 municipality for rentals.

Madeira being named the “Best Island Destination in the World” by the World Travel Awards for several years in a row has also made a positive impact on its desirability as an real estate market that is sought after by investors with medium and long-term visions, since the characteristics that gave Madeira the award for “Best Island Destination in the World” will not disappear.

Another reason for why real estate investors opt for Madeira is its safety, from a Covid-19 pandemic point of view, thanks to the way the Regional Government has successfully managed the pandemic and the regional healthcare system resources to fight it.

For all the reasons above plus the quality of life and work-life-balance that one finds in Madeira it is no surprise that Madeira is on track to become one the most sought after regions where one can do an investment to obtain a Portuguese Golden Visa.

 

 

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Golden Visas Limited to Madeira

Last Updated on February 18, 2021 by Miguel Silva Reichinger Pinto Correia

What will change?

The Portuguese Government has published its decree-law introducing substantial changes to the Portuguese Golden Visa programme and thus the following new rules apply to obtain said visa:

  • Capital transfer in the amount of 1.5 million euros or more;
  • Capital transfer in the amount of € 500,000 or more, which is applied to research activities carried out by public or private scientific research institutions, integrated into the national scientific and technological system;
  • Capital transfer in an amount equal to or greater than € 500,000, intended for the acquisition of investment fund units;
  • Capital transfer in an amount equal to or greater than € 500,000, intended for the constitution of a commercial company with headquarters in the national territory.
  • The purchase of real estate with a value of € 500,000 or more is only allowed when the houses are located in the Autonomous Regions of the Azores and Madeira or in the interior territories.

These changes come into force on January 1, 2022.

Why Madeira, of all other places in Portugal?

Weather: Geographically located off the coast of Africa, Madeira is certainly European.  The currency is the euro, the culture is European and politically speaking Madeira is 100% Portuguese.  And yet the climate is sub-tropical with temperatures rarely dropping below 20 degrees centigrade even in the winter, and a high level of rainfall in the mountainous interior ensures the island is very green for the majority of the year.

Reduced operational costs: Madeira offers low operational costs when in comparison with other European countries. In fact, the cost of human resources and the price of several goods and services are very competitive when directly compared with other European locations, allowing companies to face considerably lower costs when establishing operations in Madeira.

Connectivity: Business wise, Madeira has a highly qualified workforce and most of the people speak and understand the English. Add that to the fact the its Cristiano Ronaldo Airport connects you to most of European capitals (Paris, Amsterdam, Vienna, Zurich, London, Berlin…) and it is easy to understand why the tech start up scene is developing.

In terms of international communications connectivity, Madeira is connected to a Submarine Cable Station connecting Europe to Africa and the Americas, hosted in the “Madeira Datacenter”, operating several international optical submarine cables, allowing interconnectivity with national and international SDH networks and providing, as such, significant advantages in terms of quality, cost, bandwidth and scalability.

Safety: Madeira is Portugal’s safest region, with a criminality rate of just 26 criminal cases per thousand inhabitants.

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Minimum wage increase

Last Updated on February 3, 2021 by Miguel Silva Reichinger Pinto Correia

The two parties that support the majority in Madeira’s Legislative Assembly consider it reasonable and realistic to set the regional minimum wage at 682 euros (still the lowest in Western Europe).

The proposal, approved by Madeira’s Legislative Assembly, of the Regional Government, which was agreed by most social and economic stakeholders, represents a net increase of 31.12 euros compared to 2020 (i.e. an increase of 4,8%), and a 32% increase compared to 2015.

Once it receives assent from the Representative of the Republic on the Autonomous Region of Madeira, the minimum wage law will take effect retroactively, i.e. January 1st 2021.

 

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Will and Testament for Expats in Madeira

Last Updated on February 4, 2021 by Miguel Silva Reichinger Pinto Correia

What is a ‘cross-border succession’?

A succession is the transfer upon death of the estate — rights and obligations — of the deceased. Rights can be, for example, the ownership of a house, a vehicle or a bank account; obligations can include debts, for example.A cross-border (or international) succession is a succession with elements from different countries: for example, the deceased lived in a country other than that of his/her origin, the heirs of the deceased live in a different country or the deceased owned assets in several countries

Why are EU rules on cross-border successions necessary?

Every year more citizens in the European Union move to another EU Member State to study, work or start a family. As a result, each year more than half a million families are involved in cross-border successions.In cross-border successions, the authorities of several countries may have legal authority to deal with the succession (for example the authorities of the deceased’s country of nationality and the authorities of the country in which the deceased last lived) and the laws of several countries may apply (for example the laws of all the countries where the deceased owned property). Citizens may therefore need to start succession proceedings in different countries and deal with the laws of various countries. This can be costly and may result in authorities issuing conflicting decisions.To make cross-border successions easier to plan and manage, the EU adopted legislation in 2012, the succession regulation (Regulation (EU) No 650/2012).

What does the EU regulation do?

The regulation lays down rules to determine which EU Member State’s authorities will deal with a cross-border succession and which national law will apply to that succession. In this way, a citizen or a testator (the person who makes a will) can plan their succession and heirs no longer need to deal with multiple national laws and authorities.The regulation also makes it easier for a court decision or a notarial document dealing with a succession matter issued in one EU Member State to have effects in another EU Member State. Finally, the regulation creates the European certificate of succession (ECS), a document that can be requested by heirs (as well as legatees, the executors of a will and the administrators of the assets of the deceased) to prove their status and exercise their rights in another EU Member State.

For the purposes of the regulation, the term ‘EU Member State’ should be understood as covering all EU Member States except Denmark, Ireland and the United Kingdom, as the latter countries do not participate in the regulation.

What is covered by the EU regulation?The regulation deals with certain procedural issues linked to a cross-border succession — that is, which EU Member State’s authorities will deal with the succession, which national law will apply to the succession, how court decisions and notarial documents on succession matters will produce effects in another EU Member State and how the ECS can be used.The regulation does not deal with the substantive issues of a cross-border succession, such as what share of the deceased’s assets should go to his/her children and spouse and how free the testator is to decide to whom he/she will leave his/her assets. These issues will continue to be governed by national law.The regulation does not govern certain matters that can be linked to a cross-border succession, for example:

  • he civil status of citizens (for example who was the last spouse of the deceased);
  • the property regime of a couple, whether in a marriage or a registered partnership (that is, how the couple’s assets should be distributed in case of the death of one of the spouses or partners);
  • maintenance obligations towards dependent persons (for example a former spouse or children following a divorce);
  • pension plans;
  • companies, including how the deceased’s shares in a company should be transferred;
  • the recording of inherited property in a register (for example the recording of the ownership of a house in the land register).

The regulation does not deal with tax law either. The national law of each EU Member State will determine which taxes on the succession should be paid and where.

The key principles of the EU regulation

The regulation makes cross-border successions simpler and cheaper.

Authorities and law of the deceased’s last country of residence: the authorities of the EU Member State where the deceased last lived will deal with the succession and, in principle, will apply the law of that EU Member State to the succession.

Choice of law possible: citizens, however, can choose that the law of their country of nationality should instead apply to their succession. This choice of law can be made in a will or in a separate declaration. The country whose law is chosen can be an EU Member State or a non-EU country.

Recognition, acceptance and enforcement in other EU Member States: court decisions on succession matters issued in one EU Member State will be automatically recognised in other EU Member States. If their recognition is opposed, they will be declared enforceable under simplified rules. Official documents (such as notarial documents) on succession matters (for example a will or a certificate of succession) drawn up in one EU Member State will also be accepted and declared enforceable in another EU Member State under simplified rules.

ECS (European Certificate of Succession): heirs can obtain such a certificate in an EU Member State to enable them to prove their status as heirs over assets located in other EU Member States.

Source: European Commission and European Judicial Network

MCS and its multi-disciplinary team, with more than 20 years of expertise, is ready to assist you in assuring that your will and testament meets complies with your wishes and preferred law. Feel free to contact us.

 

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Digital Nomads in Madeira

Last Updated on February 2, 2021 by Miguel Silva Reichinger Pinto Correia

Digital Nomads in Madeira Islands are on the rise thanks to a joint initiative lead by the Regional Government of Madeira, Portugal’s Tourism Board and StartUp Madeira. The current digital nomad village pilot project is being run from Ponta do Sol municipality and is  ready to host up to 100 remote workers within a co-working space and surrounding village housing (plans to expand to other buildings – both in the village and elsewhere on the island – are also in the works).

Most of the digital nomads coming to Madeira Island are European Union nationals, mainly, but not only, from Germany, the Netherlands, Spain, mainland Portugal, Poland, Ireland and the Czech Republic. Notwithstanding those already present on the island, more nationalities are expected to come: South Africa, the United States and Nigeria, just to name a few.

Madeira offers a unique island life in Europe with “access to mountains and the ocean, affordability, friendly locals and “blazing fast internet“, its manageable size” which can be “more conducive to finding community and lingering longer than larger places”.

It is therefore no surprise that many digital nomads wish to remain well beyond the standard one or two month period. Nevertheless digital nomads must be aware of the tax implications and immigration implications arising from long-term stays or from engaging local economic agents (i.e. clients and/or suppliers).

Given the above,  it is important for digital nomads to engage experienced tax and immigration consultants, such as MCS, to better understand not only the implications of their move to Madeira Island, Portugal, but also any linked obligations that might arise from their relocation.

Those seeking an effective long-term relocation will be pleased to know that although Portuguese bureaucracy might be hard to grasp there are also huge benefits in complying with all the rules since day one.

Digital nomads looking into long-term relocation may apply for the Non-Habitual Resident tax scheme, a set of tax benefits that can last for a 10-year consecutive period that allow, generally speaking, for exemption of personal income tax on foreign income at capped tax rates of 20% on employment or free-lancer income (provided requisites are met).

MCS and its multi-disciplinary team, with more than 20 years of expertise, is read to assist you in your relocation to the island. Feel free to contact us.

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