One year after the rumors about the end of the Portuguese «Golden Visa» investment immigration program, the changes that will redraw the outlines of the legal regime have now been published, being the eighth amendment to Law No. 23/2007 of July 4.
It should be noted that the program is maintained in its generality and without transitional periods contrary to what had been anticipated by the Government itself a few weeks ago. In fact, all the changes now published will only come into force on January 1st of next year, 2022, allowing investors and providers to reorganize their projects and timings.
The changes are very surgical and aim to redirect investment to inland areas, encourage urban renewal and cultural heritage, as well as job creation. The changes now introduced sin for not bringing with them the long-awaited new investment options associated with green and/or blue projects (the so-called «green visa»), maintaining the 8 investment options already available, through an occasional update of the minimum investment amounts:
i) The simple transfer of capital (bank deposit, acquisition of public debt instruments of the Portuguese State, acquisition of securities or other equity investments), whose minimum value is updated from €1,000,00.00 to €1,500,00.00, as of 2022;
ii) The creation of 10 jobs;
iii) The acquisition of any type real estate for €500,000.00;
iv) The acquisition of real estate, whose construction has been concluded at least 30 years ago or located in an area of urban rehabilitation and the execution of rehabilitation works of the acquired real estate, in an overall amount equal to or greater than €350,000.00;
v) The transfer of capital applied in research activities developed by institutions integrated in the national scientific and technological system, increases from a minimum investment of €350,000.00 to €500,000.00 as of 2022;
vi) The transfer of capital in the amount equal to or greater than €250,000.00, which is applied in investment or support of artistic production, recovery or maintenance of national cultural heritage;
vii) The acquisition of participation units in investment funds or venture capital funds focused on the capitalization of companies, increases the minimum investment from €350,000.00 to €500,000.00, as of 2022, thus raising the investment requirement in one of the most wanted options by investors in 2020; and
viii) The transfer of capital for the incorporation of a national commercial company, with the creation of 5 permanent jobs, or to increase the share capital of an already existing national commercial company, with the creation or maintenance of 5 jobs, also increases from a minimum investment of €350,000.00 to €500,000.00 from 2022;
Contrary to expectations, the minimum value of investment in the acquisition of real estate has not changed, remaining €350,000.00 / €500,000.00, respectively, depending on the choice of investment in real estate for rehabilitation or not, while also maintaining, in principle, the benefit of reducing this minimum investment value by 20% if the real estate is located in a low density area.
However, there is in fact the introduction of a significant change in the scope of real estate investment: the diploma now published, which will only take effects on January 1st 2022, determines that, in relation to real estate intended for housing purposes, its acquisition is only eligible under the «Golden Visa» if it is located in the islands of Azores and Madeira or in certain inland areas of the country (see list).
It is therefore important to understand how the Border and Immigration Services (SEF) will interpret the concept of «housing» used by the Government in this law. We believe that, given the documentation traditionally required with the submission of this type of processes, the tax certificate will probably have the final word here, or at least, would be the most objective way to assess the purpose of the property.
Thus, knowing that article 6.1 and 6.2 of the Municipal Property Tax Code foresee that urban properties can be divided into housing, commercial, industrial or service properties, land for construction and others, and that this classification derives from the permit or license which determines the classification of the property, we believe it is possible to conclude that the most pacific interpretation would be that, after January 1st, 2022, all properties whose tax certificate mentions as purpose «Commerce», «Services», «Warehouses and industrial activity», «Parking», or for example, «Storeroom and storage», will continue to allow the access to residence permits by investment, being only the properties allocated to “housing” subject to geographical restriction..
Consequently, it seems that the Government has left a open window to all real estate investments in stores, restaurants, offices, but also, in accommodation units in tourist developments or aparthotels, regardless of their location in cities such as Porto, Lisbon or Faro, thus allowing these sectors to make use of this program to recover from the effects of Covid-19 Pandemic.
This small window may trigger the need to consider some urban planning changes to the real estate projects during 2021, as it is not uncommon to see cases where, for example, apartments licensed for housing are actually used for local accommodation (short rentals), and therefore, to maintain their eligibility to obtain the Golden Visa, if acquired after January 1st of 2022, they should be reclassified as «services» and not «housing».
It should also be noted that under the current regime, the residence applications that are requested until December 31st, 2021 are safeguarded, thus benefiting from the current law and the inexistence of geographical limits or increases in the minimum investment amounts.
All renewal processes or requests for family reunification, even if requested after January 1st, 2022, already under the changes now published, will also be safeguarded.
It is anticipated that 2021 will be «the year» of Golden Visas in Portugal, maintaining the growing trend that began in 2020, with a significant increase in applications from nationals of the United States of América, South Africa, India, Vietnam, and now also the United Kingdom, although most investors, in global terms, continue to come from Asia, Brazil, Turkey and Russia.
Despite the changes now announced, the Portuguese Golden Visa program maintains the arguments that lead to its preference by foreign investors because of the security and quality of life provided by the country, as well as the possibility of benefiting from a most favorable tax regime for non-habitual residents (NHR) and access to one of the strongest passports worldwide and consequent European citizenship.