Golden Visa – A profitable investment?

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Golden Visa – A profitable investment?

by | Wednesday, 3 March 2021 | Investment

Golden Visa – A profitable investment

Although the advent of vaccines showed a light at the end of the tunnel to solve the pandemic crisis, we are still far from solving the serious economic crisis that will follow.

There are doubts as to whether the government measures in the various countries to stimulate and recover the economy will be taken in time, and if so, whether they will be sufficient to guarantee some immediate stability that will allow the gradual economic recovery.

While risk is always an inalienable part of investment, in times of greater uncertainty any investor appreciates the security of informed analysis, and that is our goal with the several articles I shall be doing twice a week concerning the Golden Visa and the different forms of investment.

In my first article, I shall initiate the analysis of the most common form of investment, real estate.

Although there are several forms of investment under the Golden Visa, real estate investment has remained the preferred form of investment since the beginning, corresponding to €4,908,676,856.49 of the total €5,431,263,516.27 invested since October 2012, under the Golden Visa program.

According to many international consultants, the Portuguese Golden Visa program is among the most sought after and successful global visa programs, specially by the means of real estate investment, along with other destinations such as Switzerland or Montenegro.

Real estate investment under the Golden Visa can be carried out in two ways:

(a) acquisition of real estate of a value of €500,000 or more;

  1. b) Acquisition of real estate, whose construction has been concluded at least 30 years ago or located in an area of urban rehabilitation and execution of rehabilitation works of the acquired real estate, in the total amount equal to or over €350,000 or more;

The value of any of the forms of investment may be reduced by 20% when it is carried out in low density territory (NUT III level with less than 100 inhabitants per km2 or per capita GDP below 75% of the national average)

The legal nomenclature of the Golden Visa program is Residence Permit for Investment, and as the name indicates, the investment can be capitalized, so the applicant can, besides using the acquired property as his/her own home, rent it or use it for commercial, industrial, agricultural or tourism purposes.

It is important to focus on this characteristic of the investment, on its ability to be capitalized, not just held, and how stable that form of investment will be in Portugal for the next years.

Given the high volatility of cryptocurrency investment, which requires a highly informed investor to be contemporary within the blockchain system, the fact that commodity markets are in an uncertain period of transition, and that the stock market leaves some apprehension as to future stability, real estate investment turns out to be a relatively safe investment given the indicators of the past year.

Also, there will be tax benefits associated with any of the forms of property investment, whether in the scope of rehabilitation, or for the purchase of a permanent dwelling, or even through the exploitation of the property for tourism or long-term rental purposes. These tax benefits will be analysed in future articles.

In the following articles I will make an analysis of the real estate market in Portugal, with a special emphasis in Madeira Island, either in the perspective of sale, renting or any other form of profitability, either in the housing, commercial or tourism market, always aggregated to an investment perspective within the Portuguese Golden Visa program.

auctor Pedro Marrana

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Tax advisors or a tale as old as time

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As tax advisors since 1995, we have heard our fair share of tales as old as the time of expats relocating to Portuguese territory for immigration and tax purposes, ending up not complying with Portuguese tax law and therefore facing unpleasant surprises (penalties,...

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