Tag Archives: Portuguese Golden Visa

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

Our multidisciplinary team of lawyers, economists and accountants has more than 20 years of experience and is able to provide expats an integrated approach to investment and relocation to Madeira Island by operating as one-stop-shop. Through MCS expats are able to deal in an huge array of matters such as personal and corporate income taxation in Madeira, immigration (including Golden Visa), company incorporation, legal assistance with real estate purchase/rental and succession

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Golden Visa in Portugal? Why Madeira?

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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Portugal’s Golden Visa: Investment Funds

One of the fastest routes to obtain Portgual’s Golden Visa, residency by investment program, is through a capital transfer into an investment fund.

Under the current Golden Visa rules, one can apply for a residency permit in Portugal (with full free travel access to the European Union) through different investment options, one of them being a capital transfer of the amount of € 350 000, or higher, for the acquisition of units of investment funds or venture capital fund of funds dedicated to the capitalisation of companies, capital injected under the Portuguese legislation, whose maturity, at the moment of the investment, is, at least, of five years and, at least, 60% of the investments is realized in commercial companies with head office in national territory.

Note that the minimum investment for the Golden Visa, under the fund, is way lower when compared with the investment in real estate (€ 500 000) or simple capital transfer (€ 1 000 000).

Main advantages of the opting for an investment fund:
  1. The fund must be professionally managed by experts.
  2. Venture capital funds are a tax-efficient vehicle.
  3. Some funds offer a minimum return hurdle-rate (usually of 5%) which means managers will only be compensated if the fund performance is above a certain percentage.
  4. Some funds have the support of the Portuguese Government through subsidies or financed by the IFD (Instituição Financeira de Desenvolvimento).
  5. Funds must be regulated and must comply with the rules stipulated by the Portuguese Securities Market Commission (CMVM), which means that fund managers are regularly audited by third parties.

(2) Unlike real investment, which is subject to municipal transfer and property taxes and notary fees and rental tax (if investment is rented out), investment in funds is not subject to initial taxation and may even be tax-exempt.

Types of investment funds for the purposes of Golden Visa application

There are several types of investment funds, such as, for example, securities funds (which invest mainly in shares), real estate funds (which invest mainly in real estate) and venture capital funds (which focus on investment in companies).

Advantages of the Golden Visa

Portugal’s Golden Visa grants the holder the following rights:

  • Residence visa waiver for entering Portugal.
  • Living and working in Portugal, on condition that they stay in Portugal for a period of 7 or more days, in the first year, and 14 or more days, in the subsequent years.
  • Benefit from the Non-Habitual Resident tax regime, if the applicant wishes to permanently relocate to Portuguese territory.
  • Visa exemption for travelling within the Schengen Area.
  • Family reunification – this means that the following applicant’s family member can also get benefit from the Golden Visa:
    • The spouse (marriage or civil union and regardless of gender);
    • Minor children (below 18 years old) or dependents of the couple or the spouse with special needs;
    • Minors (below 18 years old) adopted by the visa holder of the respective spouse (be means of a decision issued by the competent authority of the country of origin, provided that the law of that country recognizes adopted children identical rights and obligations as to the natural affiliation and as long as that decision is recognized in Portugal);
    • Children of age, dependent of the couple or of one spouse, single of age and studying at an educational establishment, irrespective of the country where said establishment is located.
    • Parents of the golden visa holder or of the respective spouse, that are dependent
    • Minor siblings, under the legal guard of the golden visa holder pursuant to a decision issued by the competent authority in the country of origin and as long as such decisions is recognized or obtains legal recognition under Portuguese jurisdiction
    • Minor children or children with special needs, single, including adopted children of the partner of the golden visa holder as long as legally trusted to the them.
  • Applying for permanent residence after 5 years.
  • Applying for Portuguese citizenship after 6 years (subject to knowledge of the Portuguese language).
Why apply through Madeira Island, Portugal?

Golden visa applications are processed, on average, faster, when compared to the Portuguese mainland.

For more information on these matters, please do not hesitate to contact us. MCS and it’s team has more than 20 year of experience in assisting private and corporate clients in investing in Portugal and Madeira Island.

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