Portuguese prime minister Antonio Costa said the country is likely to scrap its residence-by-investment scheme, commonly known as ‘golden visa’.
He explained that the programme has “fulfilled its role” over the decade it has been active, according to Reuters.
The scheme, called Authorisation of Residence for Investment Activity, targets non-EU nationals and allows them to receive residence rights in return for investments in the local property sector or the economy.
Portugal increased the minimum requirements under the programme in November 2021. To qualify, people need:
- €1.5m (£1.3m, $1.4m) for capital investments;
- At least €500,000 for investment funds; and
- 500,000 for property investments and €350,000 for urban renovation in qualifying areas.
The golden visa scheme was heavily criticised for causing local house prices and rents to soar, as well as intervention from the European Commission (EC) which called for such schemes to be shut.
Since its inception, Portugal attracted €6.5bn in investments by foreign nationals, mainly from China, Brazil and South Africa, with most of the money going into property.
US expats are also among the most attracted to the scheme, with demand increasing so much, that global advice firm Blacktower Financial Management recently decided to launch an American Desk specifically targeting those looking to move to Portugal.
Costa added that the scheme was only one of several visa programmes the country is currently re-evaluating.
Under pressure
Robert Webb, private wealth manager at Chase Buchanan Wealth Management in Portugal, told International Adviser: “We have been receiving an increasing amount of enquiries regarding the speculated changes to the Portuguese golden visa scheme in recent days.
“The EC is putting some EU countries under increasing pressure to change residence visas and the golden visa is a prime example. For Portugal, the golden visa has been spectacularly successful, but recently made changes to the requirements.
“With Portugal becoming increasingly popular with overseas expats and providing much needed revenue, it will be interesting to see what future changes will occur.”
Jason Porter, business development director at Blevins Franks, told IA: “In many ways the golden visa scheme in Portugal had been working against itself for several years. The rapid increase in development in the Algarve, Lisbon, Porto and the Silver Coast would have resulted in increased employment and local taxes paid, but these areas had already seen a significant increase in property prices. This and the further uplift from the golden visa has meant the same locals would still be unable to afford to buy in these areas.
“A combination of the benefits of the golden visa, the non-habitual resident 10-year tax breaks and what is a relatively benign tax system anyway was always going to lead to rampant property prices way out of the reach of the local population.
“The changes introduced in early 2022 were probably unlikely to have quenched the thirst of the European Commission, who always felt there was a connection between these type of schemes and tax evasion.
“The restrictions placed on real estate in February 2022 may well have resulted in such a significant reduction in investment there was little point in continuing with the scheme. In effect, the Portuguese government could be choosing to placate the EU, at what is now likely to be little cost to the Portuguese economy.”
A spokesperson for the Sovereign Group said the moves is not surprising. They told IA: “The EU has been pressurising Portugal for some time and whilst this a indication that change is coming it will most likely be certain conditions that are considered. As an example, higher day counts in the country, higher investment levels required and oversight of the applicants from the EU and potential limits on how many golden visa’s can be issued.
“None of this is tabled as yet but these are some of the thoughts of the professionals in the arena. When one looks at other RCBI programs around the globe these are typical of changes.
“Portugal is opening up additional visa channels and encouraging inbound skilled workers and continued FDI to build the economic strength of the country. Hence the outcome of this new change will be a positive to the country.”
