Portugal Broadens the Golden Residence Permit
August 4, 2015
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“Portugal has opened up the scope of its Golden Residence Permit to encourage investment into science, cultural heritage and urban rehabilitation” , note Nadine Goldfoot and Duarte Duarte de Athayde, of Abreu Advogados. The reforms introduce four additional options for investment and also incentivise applicants to invest in areas of low density and lower than average GDP.
Portugal’s Golden Residence Permit (‘GRP’), introduced in October 2012 with the aim of providing HNWI with the opportunity to take up residency in Portugal through investment, has proved popular, particularly with the Chinese market. From inception to 30 June 2015, 2420 permits were issued to main applicants (1947 going of these to Chinese applicants), of which 2289 were granted on the basis of the real estate investment option[1]. Successful applicants can seek permanent residence in Portugal after 5 years under the permit, and may be eligible to apply for Portuguese Nationality after 6 years.
Residence has previously been granted where investments are made into Portugal in the form of:
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Purchase of real estate of EUR 500,000 or more; or
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Capital transfer of at least EUR 1,000,000 to a Portuguese bank account or to a Portuguese company; or
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The creation of at least 10 jobs in Portugal (only 3 permits have been granted on this basis)[2].
The new options for investment
The reforms do not restrict the original options, but introduce four additional options for investors:
- Acquisition of properties, to be held for 5 years, in an amount equal to or higher than EUR 350,000: where they were built at least 30 years ago, or they are located in urban rehabilitation areas as well as the rehabilitation of properties acquired[3].
- Transfer of foreign capital of at least EUR 350,000 to be applied in scientific research activities, developed by public or private institutions of scientific research, integrated into the national scientific and technological system[4].
- Capital transfer of at least EUR 250,000, to be invested in artistic production support, recovery and maintenance of national cultural heritage[5].
- Capital transfer of at least EUR 500,000 to invest in investment funds or capital ventures, oriented to the capitalization of small and medium companies, with a viable capitalization plan. The investor will be entitled to receive profit from its participation in the fund and to liquidate the asset at the end of the investment period.
Encouraging investment into targeted areas
If the above referred investment (excluding the investment in funds and in capital ventures) takes place in low-density areas (those with less than 100 inhabitants per km or with a GDP per capita below 75 % of the national average) the investment amount will be reduced by 20%. The same applies to the creation of employment, in a move designed to encourage investment into such areas.
Finally
Two further changes have been implemented to tighten regulations around the GRP.
Firstly, when the investment is in real estate, it will be compulsory to provide the tax details of the property in order that the acquisition value of the property can be measured against its tax value. Secondly, an external auditor has been introduced in order to maintain transparency and to deal with any money laundering and corruption issues.
These reforms will be welcomed by investors and the industry alike both for their broad vision as to the value investors can add to the country and their regard to international regulatory standards and industry reputation.
Duarte de Athayde, of Abreu Advogados, comments: ‘Almost 3 years since its implementation, the Golden Visa Program is a constant “work in Progress” as the newly adopted rules evidence… In any event the Golden Visa Program has been a success in Portugal, having boosted the real estate market while providing foreign citizens with a safe investment and free movement in Schengen. The new rules diversify the type of target investment in order to promote scientific research and cultural investment as well as to encourage investment in rehabilitation of properties and investment in areas with a low population density’.
[1] Official statistics released by the Government of Portugal at: http://www.sef.pt/portal/V10/EN/aspx/apoiocliente/detalheApoio.aspx?from...
[2] Official statistics released by the Government of Portugal at: http://www.sef.pt/portal/V10/EN/aspx/apoiocliente/detalheApoio.aspx?from...
[3] Under the Immigration Law the investment has to be maintained for 5 year. Notwithstanding, the Investor may choose to change the investment type during that period, recovering [part of] the investment made and possibly realising some profit. In any event, after 5 years the investor is free to liquidate the investment
[4] This alternative still needs to be clarified by the government although it is not anticipated that this amount is recovered in itself.
[5] Again, this alternative still needs to be clarified by the government including whether this amount is recovered in itself.
