Golden Visa Program :: Fiscal Benefits

Avoiding a depreciative view, under the Golden Visa Program, Portugal does not have a mere facilitation strategy of granting Residence Permits (the so called Golden Visas) but more of a goal in promoting and attracting foreign investment in Portugal, in a solid and sustainable way. To do so, a set of advantages, on different levels, were placed together in order to promote internal development and reward investors.

Attracting and strengthening investment is only possible when the rules of the game, between obligations and benefits, are transparent, consistent and lasting. This is the main focus of the Golden Visa Program.

For investors looking to settle in Portugal there is the possibility of enjoying a highly attractive tax regime.

These days, foreigners see Portugal as a major investment target. Its climate, the friendly and hospitable Portuguese spirit, together with safety and a privileged geographic location are key factors, appreciated by worldwide investors. Successive distinctions and international awards received, from North to South, especially in the tourism sector, have contributed heavily to the appreciation of who we are and what we have to offer.

In May 2014, Portugal successfully concluded the “Adjustment Program”, agreed on with Troika (International Monetary Fund; European Central Bank and European Commission) that enabled it to gather a set of investment opportunities, highly favourable to foreigners.

Among the most relevant macro-economic and financial indicators we highlight:

• GNP keeps evolving positively, from -3% in 2009 to +2% in 2015 (estimated);
• Budget deficit in strong recovery, from -8% in 2009 to -1.8% in 2015 (estimated);
• Public debt interest (10 years) in continuous reduction, from 10.3% in 2011 to 1.6% as for March 2015;
• A positive Balance of Trade since 2013 (€2.9K Millions); recovering from a deficit of €12.8K Millions in 2010;
• Unemployment rate in sharp recovery;
• Yields between 9% and 6% over the last 3 years (2012/2014)

In a systematic way, we will remind you of the main benefits and requirements of the Program, applicable to foreign citizens from outside the state-members of the European Union.

Foreign citizens who gather all the conditions for being granted the RPIA – Residence Permit for Investment Activities can benefit from the following advantages:

• Free access to the Schengen Area (26 countries);
• Accessibility to a profession or exercise a remunerated activity in Portugal;
• Right to family reunification, i.e., dependent family members can join the investor, benefiting the same rights as the investor, inside the Portuguese territory;
• Access to the Law, Health and Education System with the same conditions as a Portuguese citizen;
• Access to permanent residence, after a 5 years period;
• Be eligible to apply for Portuguese nationality, after a 6 years period.

There are seven requirements for investment, according to the latest update to the Golden Visa Program, from last June 2015:

1. Transference of capitals in a value of at least €1.000.000;
2. Creating at least 10 work positions;
3. Making real estate investment in a value equal, or superior to €500.000;
4. Rehabilitating Urban Real Estate in properties constructed at least 30 years ago, or property located in Urban Rehabilitation Areas and where the applicant invests at least €350.000 in such rehabilitation works;
5. Supporting Public or Private Entities which work in the scientific field, through an investment fund on research and development activities, integrated within the national technological system, by transferring an effective amount of capital equal or higher than €350.000, to be applied to the above mentioned activities;
6. Supporting promotion and funding of Entities, Activities and Organisms – Public or Private – which engage in Artistic or Cultural Activities, Rehabilitation or Heritage Recovery, or National and Municipal Culture, by transferring an effective sum of capital equal or higher than €250.000;
7. Participating in Financial Entities, with investments made through the acquisition of participation units in investment funds or venture capital, directed to the capitalization of small and medium sized companies, under an effective transference of capital equal or higher than €500.000.

After the investment, and to be able to fully benefit from the conditions offered by the Golden Visa Program, the investor must:

• Establish his stay in Portugal in a period no longer than 90 days after his first entrance in the country, and renew the Golden Visa in the 2^nd and 4^th year after its issuance;
• Remain in Portugal 7 days (consecutive or interleaved) during the 1^st year, and 14 days in every of the subsequent periods of 2 years;
• Hold the investment during a 5 year period;

And how does the special Tax Regime actually work?

Investors interested in living in Portugal, may benefit from an attractive Tax Regime, provided by law for Non-Habitual Residents, valid for a 10 year period.

In the case of citizens from other European Union state-members, the access to this beneficial tax regime does not depend upon the attainment of a Gold Visa, which is only granted to citizens from countries outside the European Union.

The main requirements to be classified as a Non-Habitual Resident are:

• Prove residence in Portugal for at least 183 days, or
• Being holder of a house in Portugal and proving intention to use it as main residence.

The main advantage from being qualified as NHR is the fact that they are, usually, free from paying taxes in Portugal, from their foreign income.

However, this exemption doesn’t include professional income. However, these can, in certain cases, benefit from a reduced tax currently fixed in 20%+3.5%.

Income earned in Portugal is taxed in general terms, except for professional income which, once again may in certain cases benefit from a special reduced tax, as above mentioned.

It is important to highlight that Portugal also has a wide range for Double Tax Avoidance Agreements with 65 states/territories, all of the under the OECD, which facilitates and clarifies the whole process.

Additionally, Portugal has no tax on fortune and currently all donations and inheritances are, usually untaxed.

The Golden Visa Program and its tax benefits, offered to all of those looking to set their residence here, invite you to a longer stay in Portugal. But don’t forget to pinpoint Cascais as a mandatory destination to visit. Here, more than being able to enjoy the advantages of this excellent Resident Permit for Investment Activities, you will find a place with the lifestyle you and your family have long been looking for.

Come for a reason. Stay for many!

Our thanks to Dr. Nuno Cunha Barnabé, Specialist in Tax Law at Lawyers Society PLMJ | Email: nuno.cunhabarnabe@plmj.pt • T.: +351 213 197 300