Portugal may be famous to the rest of the world for its Port wine and soccer superstar, Cristian Ronaldo, but here at Nomad Capitalist, Portugal is much more famous for offering one of the best Golden Visa programs in the world.
As an EU member state, Portugal offers a high standard of living in terms of work, healthcare, climate, infrastructure, stability, safety, and education. Portugal’s quality of life is a big draw for those looking to reside in or become a citizen of a European country.
For the folks with enough money, Portugal’s Golden Visa program is the European equivalent of an open-door invitation to do just that.
Technically speaking, the “visa” is actually a fast-track residence by investment program that grants non-EU/EEA citizens a Portuguese residence permit in exchange for a five-year investment in the country. This “golden” residence then allows the holder to obtain citizenship several years down the road if they meet the qualifications.
Portugal hasn’t always held its doors open to foreigners in this way, but when the Great Recession crippled its economy, Portugal looked outward for solutions. On October 8, 2012, Portugal introduced the first Golden Visa program in Europe in an effort to attract foreign investors who could both fill the government’s quickly emptying coffers and reignite the Portuguese real estate market.
More than half a decade later, it is clear that the program has done just that. I visited Porto, Portugal back in 2009 and again in 2017 and the difference was staggering.
Since its inception in 2012, the Portugal Golden Visa program has attracted over 7,500 investors and injected approximately 4.35 billion euros ($4.95 billion) into the Portuguese economy.
In fact, the program has been so successful that, in January of this year alone, the Golden Visa had already collected over €85 million from 146 investors (and 241 of their family members). More than 90% of all applicants obtained their residence permits via real estate acquisitions, which is by far the most popular form of investment.
In this article, I’ll lay out all of the details of the Portugal Golden Visa program so that you can understand what Portugal is offering and what they require from you so that you can then make the decision as to whether the residence program is the right solution for your individual needs.
In this article, I’ll cover:
- The Benefits of Portugal’s Golden Visa
- The 3 Investment Types
- Program Requirements, Documents, and Fees
- A Step-by-Step Golden Visa Application Guide
- The Tax Benefits of Non-Habitual Residence
- Who Should Consider the Portugal Golden Visa?
Portugal is one of several Golden Visa programs in the world. If you are unfamiliar with Golden Visa’s in general, you can go here for an explanation of how they work, who they benefit, and the programs available in Europe. If you’re looking for information about citizenship by investment programs, the following articles and videos can help:
- How to Become an EU Citizen
- Fastest Countries to Become a Citizen
- How to get EU Citizenship in 4 Months
- The Most Efficient and Affordable Economic Citizenship Program
- 19 Fake Citizenship by Investment Programs Revealed
The Benefits of Portugal’s Golden Visa
Before we jump into too many details of how the program works, let’s look at the reasons why you should consider Portugal’s Golden Visa in the first place.
Foremost is the fact that Portugal offers a top-notch Tier A passport. As of 2019, Portuguese passport holders can travel to 184 countries visa-free, making it the sixth most powerful passport on our Nomad Passport Index. While your initial investment will not automatically get you a passport, it will set you on the path toward citizenship. And, at just five years, Portugal’s naturalization timeline is one of the shortest in Europe.
But you won’t have to wait for citizenship to enjoy travel benefits. Your Golden Visa residence permit will grant you visa-free travel privileges within the Schengen Area and many other countries around the world. Having a residence permit in most any Schengen country will give you more legitimacy when applying for visas in countries that still require you to obtain one. This is a particularly attractive aspect of the Golden Visa for applicants who have limited travel privileges with their current citizenship.
Aside from granting you the right to live in Portugal and work toward citizenship, your Golden Visa residence will also allow you to legally work in the country. If you don’t want to spend much time in Portugal while you wait for citizenship, you are only required to spend an average of seven days per year there to maintain your residence. And, as a resident of an EU country, you have the right to live and work in any of the EU/EEA countries.
Another benefit of the program is that Portugal’s real estate market is one of the most secure and attractive among all of the Golden Visa countries. Unlike neighboring Spain, where squatting and apartment “occupations” became the norm following the recession, Portugal has had constitutional property protections in place since 1974 that prevented such issues.
Portugal’s real estate market was never prone to wild speculation either (unlike in the US where unqualified buyers were looking to become “no money down millionaires” before the bubble burst). Plus, the country never had sprawling developments of tacky tract homes that swallowed up huge areas of exurbia.
As a result of Portugal’s more reserved real estate market, some old-school tourist destinations that have retained their authentic charm are still available for sale. Thanks to the thousands of Golden Visa investors, the great deals are fewer and farther between than before, but Portugal is still cheap by European standards. If you’re looking for a European property investment with a warm-weather climate, Portugal is worth considering.
The program itself is also considered quite stable as it has support from almost all of the political parties in Portugal. The program’s application and approval process has become slower in recent years, though, due to some resistance and the general bureaucratic nonsense you would expect from a western country, so don’t count on the program being around forever. However, it is stable enough to invest now without worrying about the government changing its mind tomorrow and kicking you out.
Another benefit that is unique to Portugal’s Golden Visa program is the possibility of establishing non-habitual residence and tapping into incredible tax savings this program offers, especially by Western European standards. We will address this particular benefit in more detail below.
Finally, there are other ways to become a resident of Portugal, including demonstrating certain assets, getting a job in the country, or having a Portuguese spouse or domestic partner. The benefit of the Golden Visa in comparison to these other residence pathways is that it allows you to bypass all of the normal requirements. (It should be noted that, while the Golden Visa removes the language requirement for residence, you will need to know some Portuguese to become a citizen.)
At its core, the true appeal of the Golden Visa is that you will be given preferential treatment during the immigration process in exchange for your investment in the country.
The 3 Investment Types
Portugal’s Golden Visa program requires an investment in either real estate, business, or capital contributions. While the real estate option is the most popular, the other two options are available to folks interested in starting a company and hiring Portuguese workers or making financial contributions to institutions or businesses in Portugal.
Each of these three paths entitles you to a Portuguese residence permit, renewable twice over the course of five years before you can become a Portuguese citizen, with all of the benefits (and potential future drawbacks) that come with European Union citizenship. Here are the details on the three different investment types:
1. Real Estate Investment
The Portuguese government offers three different real estate investment categories for investors.
The first option is to invest in any property worth 500.000€ ($570,000) or more. The investment can be in one property or ten properties. Regardless of how many properties you purchase, the investment has to total that amount. By spreading your investment over several properties, you can use part of that value for your overseas residence and the remaining portion for investment.
The second option incentivizes rehabilitation of older properties by lowering the investment cost to 350.000€ ($398,000). The property can be anywhere in the urban rehabilitation area, but it has to be at least 30 years old or older, and it has to be a renovation project.
At Nomad Capitalist we’ve encountered some deals for this investment bracket before. A deal might occur in the form of a developer wanting to renovate an old building in Lisbon and searching for investors. Usually, the developer will sell shares of the property. Perhaps, they find ten families willing to invest 350.000€ ($398,000) each. The developer then has their project funded and gives the investors a 3% share of the profits each year for five years. After that, when the families have a permanent residence, the developer pays them back.
The third option is aimed at increasing investment in the Portuguese countryside. This is the cheapest option at just 280.000€ ($319,000), but only real estate investments in rural properties qualify. These properties often appear in the no man’s land between Portugal and Spain where there is basically nothing.
Offers for this bracket are few and far between. However, I saw a deal for a developer not long ago who was turning a rural property into a boutique hotel. The deal was to make a hotel with 20 rooms with the help of 200 investors who each pay 280.000€ ($319,000). While these deals are much less common, they do exist.
Some crafty investors might be considering traveling to Portugal to complete a renovation project on their own. While you may think it’s easier than it sounds, we assure you that it is not. Portugal’s bureaucracy makes this process very tedious, and you don not want to deal with that on your own. Unless you plan to move to Portugal and get a part-time job while you work on renovating, completing a renovation project on your own is unlikely.
Should you be willing to take the real estate investment route, you can’t expect to make a significant return on investment. People who are looking to make a decent ROI of 12% or more are not going to get that with this scheme. The prices in Portugal have gone up and the yields have gone down. Returns will be low and investors need to accept that. This is the price investors pay to get a Tier A passport.
The entrepreneur option is one of the most overlooked aspects of the Golden Visa program. It is not for everyone, but if you fit the bill, it could save you €500,000 in real estate investments and still get you an EU residence permit.
The main requirement of the program is that you create at least 10 jobs in Portugal and register each employee in the Portuguese Social Security system. Portuguese companies pay 23.75% of gross wages to social security and employees pay a rate of 11% on their salary. To qualify for the visa, both of these rates must be met.
Other taxes involved in this setup include corporate and personal income tax. The corporate tax rate hasn’t risen in the last few years and seems to have plateaued at 21%. The personal income tax rate is about 48%, but you can reduce that tax if you prove you are a non-habitual resident.
Entrepreneurs who are considering hiring in Portugal should know that it doesn’t offer the cheapest labor in Europe. While it’s not the most expensive labor available, as of 2018 the minimum wage was 700€ ($797) a month and the average monthly wage was in the area of 1.166€ ($1,328). That’s a far cry from the minimum wage in other countries like Ukraine (266€ or $303) and Moldova (276€ or $314). Portugal definitely isn’t cheap compared to all of the Eastern European countries that I’m always talking about, but the program may still be the right fit for you and your business.
This program is best suited to a certain type of entrepreneur, especially nomad capitalist entrepreneurs who are growing their business and amassing staff around the world. For instance, while I like to hire people from all over Europe, if I were to just hire Portuguese workers I could qualify for the program. If you are looking to hire in Europe, Portugal could be a prime location to hire content creators, back-office workers, salespeople, web developers, etc. As long as you are willing to pay your employees subject to Portuguese standards, you can hire just about anyone.
And, even under that set-up, your employees wouldn’t have to be in Portugal full-time. They may work some of the time at an office in Lisbon, but they could also be traveling around. As long as they’re subject to Portuguese immigration and tax law, they wouldn’t have to live full-time in Portugal.
You would not have to live full-time in Portugal, either. Since the Golden Visa program does not require you to be a resident, you wouldn’t have to migrate yourself or your entire company to the Iberian Peninsula to qualify. As long as you maintain your residency be spending roughly seven days a year in Portugal, you’re set.
Thanks to the non-habitual residence scheme, you could spend more time in the country if you wanted to without compromising your tax status, but long-term physical residence in Portugal is not required for you to maintain your Golden Visa residence permit.
Portugal’s entrepreneur program is not a great fit for the one-man business start-up. It is a better fit for entrepreneurs who have a larger, growing business that can sustain ten employees over at least a six-year period.
It’s also a great fit for someone who’s running a business overseas but doesn’t necessarily want to spend much time in another country, let alone live there.
For example, I recently had a client from the United States who wants to continue living in the US. He has around 100 employees and is looking to move some of them overseas. In his case, he could hire ten Portuguese employees and automatically qualify for second residency without having to live in Portugal.
If you have a smaller scale business, are on more of a budget and are interested in living overseas, then Lithuania or another country might make more sense for you. In some countries, you can get a residence permit by hiring just a few employees. In others, you can qualify for a second residency just by running a business.
Portugal’s Golden Visa entrepreneur program is not for everyone.
Nevertheless, it is a very good option for someone with a bit more money and a bigger staff who’s willing to spend more hiring Western Europeans instead of going and living somewhere else. It is a great program that not many people consider. If you have the money, consider it.
3. Capital Contributions
Outside of the real estate investment and entrepreneur route, there are also various capital contribution options available.
You can make any of the following investments to qualify for a Golden Visa:
- A capital transfer with a value equal to or above 1.000.000€ ($1,139,000).
- Invest 350.000€ ($398,700) in a venture capital fund from a Portuguese company that is at least five years old and has a head office in the country.
- Invest 350.000€ ($398,700) in an existing Portuguese company alongside creating five permanent jobs for a minimum of three years.
- Invest 350.000€ ($398,700) in scientific research conducted by a public or private institution that is part of Portugal’s scientific or technological systems.
- Invest 250.000€ ($284,800) in supporting the arts, culture or recovery or maintenance of Portuguese cultural heritage.
Besides the option that requires you to create five permanent jobs for three years, all of these investments have to be maintained for five years. As is common with investments of this kind, you’ll need to provide proof of investment to the government. Take care to keep any and all receipts regarding this transaction.
Program Requirements, Documents, and Fees
To be eligible for the Golden Visa, you must meet several requirements. They are as follows:
1. Be a Third-Country National
This requirement simply means that you cannot already be a Portuguese citizen or a citizen of any EU or EFTA country to apply. Over half of all current applicants are from China, but the number of applicants from other countries such as Russia, Turkey, South Africa, Brazil, and others has slowly grown over time. In fact, applicants from countries other than these top five have grown from 9% in 2015 to over 20% in 2019 — a testament to the growing popularity of the program.
2. Make and Maintain a Qualified Investment for a Five-Year Minimum
If you go the real estate investment route as most folks do, you can do so as an individual or as a qualifying legal entity. However, buying real estate in Portugal through a foreign corporation exposes you to hefty transaction taxes, so it’s best not to use your offshore corporation to buy.
The good news is that, at least for now, foreign real estate owned in your name is not a reportable financial asset in the United States. Owning overseas property is a great way to diversify your assets and invest in a place you’d like to live. While I would always support keeping your offshore bank account in a separate country from your second residence, Portugal is a nice place if you like a Mediterranean climate.
3. Fulfill the Minimum Residence Requirement
You must spend at least seven days in Portugal during your first year as a resident, at which time you must renew your permit. After that, you only need to renew your permit every two years and show proof that you have spent at least 14 days in the country during that period.
4. Provide Proper Documentation
When it comes to paperwork, Portugal’s process is more straightforward than many citizenship by investment programs in the Caribbean. This is mostly because Portugal requires you to do the paperwork for your Golden Visa in Portugal.
Eliminating the distance factor greatly improves the documentation process.
Regardless, it is still essential to have a good understanding of the program and its requirements because not all Portuguese lawyers are as efficient as they could be. Not to mention that there are more moving parts in the Portugal Golden Visa, so there are more things that can go wrong if you’re not careful.
The application process requires that you submit personal documents as well as proof of your investment(s), including the following:
- A passport or other valid travel ID
- Proof of your legal entry into the country (i.e., Schengen short-stay visa)
- A certified copy of a background check from your country of origin or residence (issued within 90 days of submitting your application)
- A completed permission form which authorizes SEF to your Portuguese criminal records
- Proof of health insurance (to cover your stay in Portugal)
- Declaration from you stating that you are compliant with the investment requirements
- Evidence that you are in good standing with the Portuguese Tax and Customs Authority and Social Security systems
- Statement from your bank that confirms the transfer of funds
- Proof of payment of the Portuguese Golden Visa fees
Apart from the noted exception, all documents have to be valid for at least 180 days before submitting your application.
On top of those documents, you have to prove that you are committed to maintaining your investment for at least five years, as well as proof of your investment. Some examples of proof you can provide are:
- Deeds of purchase for all real estate investments
- Employment contracts for jobs that you created within the country
- A bank statement that displays your capital contributions
Ensure that your paperwork does not get rejected by getting all documents translated to Portuguese. SEF requires that documents be translated by a Portuguese notary or by a Portuguese consulate in the country of origin.
5. Pay All Related Fees
This is not the kind of residence where you go in, flash some papers around, pay a $200 fee and come back and get your card. There are substantial fees involved because the entire program is set up so that they can make money off of the process.
The Portuguese government knows that their audience is made up of wealthy investors who want a European passport and never-ending access to the EU and are willing to pay for it.
A Tier A passport does not come without a hefty price tag.
Besides the financial investment you make (which is double the amount required for Greece’s Golden Visa), you will also need to pay a fee of 5.147,80€ ($5,860.00) for every applicant, including yourself and any dependents. Fortunately, when you renew your visa, the fees are slashed to 50% of those original rates.
In addition to those fees, there is also a processing fee of 514,80€ ($590.00) for the main applicant and an additional 80,29€ ($92.00) for each family member that must be paid with the initial application and with each renewal.
Qualifying dependents include the applicant’s spouse and children under 18; children over 18 can qualify if they are unmarried and in school. Retirement-aged parents in the family can qualify for this visa, as well.
While the Portuguese Golden Visa has less paperwork involved than other similar programs, it’s a good idea to get professional help to ensure that everything is done correctly and to deal with the country’s bureaucracy. Lawyer’s fees for the Portugal Golden Visa process can cost anywhere between 4.000€ to 5.000€ ($4,500 – $5,700).
If you decide to go the real estate investment route, you’ll need to factor in taxes, stamp duty, and other fees as well. While it depends on which investment bracket you choose, you are safe expecting to pay around 9%-10% of your investment in these fees. The bulk of that cost comes from the Property Transfer Tax (IMT) if you are investing in real estate.
Again, this program is not cheap. These fees are just a part of the price you pay to get the best of the best. If you are not willing to pay these fees, then you should consider a different residence by investment program.
A Step-by-Step Golden Visa Application Guide
Step One: Decide how you will make your investment
Before you apply for this visa, you need to have already made your investment. If you are investing in real estate, bear in mind that property purchases in Portugal can take anywhere between one to three months to finalize.
Step Two: Begin gathering all the necessary documents
While you wait for your investment to go through, you can start gathering documents for your application as it can take a few months to obtain them all. Requesting police checks can take some time, so while you are waiting to receive that document, you can work on getting your Portuguese credentials. You’ll need to get a Portuguese NIF or fiscal number and open a Portuguese bank account, as well. Both of these things can take place remotely, so you can get ahead of the game before you arrive in Portugal.
Step Three: Finalize the investment
Transfer the funds needed to complete your investment to your Portuguese bank account. After that, you can make the investment.
Step Four: Translate your documents into Portuguese
While you are waiting for your investment to finalize, you can focus on getting your documents translated into Portuguese. You’ll need to ensure that the translation is certified by a Portuguese notary or a Portuguese consulate in the country of origin to meet SEF’s requirements.
Step Five: Complete the pre-application registration
The immigration office, Serviço de Estrangeiros e Fronteiras (SEF), has an online portal where you can submit your application. However, you have to pre-register before you can apply.
Since Portugal’s residence by investment scheme can be quite complicated, your lawyer or another legal representative is likely to handle this for you. Once the pre-registration is completed through this website, you can then pay the application fee of 514,80€ ($590.00) and 80,29€ ($92.00) for each family member. You will also have to submit a copy of all of the required documents at this time.
Step Six: Schedule your appointment
Once you are pre-approved, you can then make your appointment. In bigger Portuguese cities like Lisbon and Faro, it can take up to three months to get an interview. If you schedule your interview in a less populated district, you might be able to reduce your waiting time. You can find a list of SEF branches here.
Step Seven: Attend your appointment
In your appointment, an immigration official will interview you, and they will collect your biometric data. If you are applying with your family, be sure to bring them along so that you can submit all of the applications simultaneously. By doing this, you will save yourself months of application processing time.
Step Eight: Wait for approval
Once you’ve attended your appointment, you have to wait three to six months to be approved. When your application is finally approved, you must pay the permit issue fee of 5.147,80€ ($5,860.00) per person before you can receive your residence card.
Step Nine: Use and renew
As discussed, your residence permit will be valid for one year. You only need to renew your residence at the end of the first and third year. At that time, the permit issue fees will be half of their original price.
Step Ten: Become a Portuguese Citizen
If you’ve maintained your investment and your minimum residency requirements, you can apply for Portuguese citizenship at the end of five years. Just remember that you will need to know some Portuguese, so if citizenship is your goal, make sure you brush up on the language. If all goes well, you will receive a Portuguese passport, one of the more powerful passports in the world.
The Tax Benefits of Non-Habitual Residence
One final note that cannot go unmentioned when it comes to any of Europe’s Golden Visas is that most of these programs do not waive their taxation requirements for Golden Visa residents. Many people erroneously believe that if they get a Golden Visa, they won’t have to pay tax.
This usually isn’t the case.
Portugal is the one exception… as long as you are structured properly. Holistic planning in these cases is essential because messing up can cost you a fortune. But, if you are prepared to make an effort and do a significant amount of planning, you can drastically reduce your tax burden by becoming a non-habitual tax resident of Portugal.
To qualify, you must either be a Portuguese citizen or a resident, both of which are made possible through the Golden Visa program. As a non-habitual tax resident, you can legally eliminate your taxes on most foreign-sourced income, even when you spend more than 183 days a year in Portugal.
The tax residency is good for 10 years and exempts non-habitual residents from income tax on almost any foreign-sourced income, including:
- Business or self-employment income
- Income from eligible occupations
- Occupational pensions
- Capital gains (although capital gains from the sale of securities will be taxed)
- Rental income
You can learn more about the non-habitual residence scheme here.
If you do pursue this route, take into consideration that the EU does not mix well with offshore banking. To successfully combine an international tax strategy with Portuguese citizenship, comprehensive planning is necessary. You have to ensure that everything is perfectly aligned to avoid tax trouble later on down the line.
Who Should Consider the Portugal Golden Visa?
It is difficult to know if the pros outweigh the cons with Portugal’s Golden Visa program because it all comes down to your individual needs and circumstances. For many investors, the biggest plus is the path to a Tier A passport. For others, the draw is Portugal’s quality of life. For others still, Portugal may be their choice simply because it is the best fit for their offshore strategy compared to the other programs available to them.
As I have discussed elsewhere, most of the Golden Visas offered in Europe have the greatest appeal to the following three groups:
1. US Citizens who plan to renounce their US citizenship now or in the future and who want a Tier A passport to replace their US passport. These individuals may be getting a second passport now that is not as powerful and they want to work towards EU access so they can increase their travel options. In general, their aim is not just residence but eventual European Union citizenship. However, this first group may be better off building a passport portfolio of various Tier B passports rather than giving up US citizenship just to take on the bureaucracy of another big government.
2. Emerging-world Citizens who have “bad passports” and want access to the EU for the schools, the opportunities for their kids, the safety, the stability, whatever it is that they deem important. They want to live in Europe and eventually become citizens. This is the group that benefits the most from the Golden Visa program because it allows them to bypass the never-ending hassle of getting visas for their bad passport in order to travel to Europe and elsewhere.
3. Business owners and investors looking to spend all of their time in Europe. Portugal’s Golden Visa gives you unlimited access to the EU so, if your goal is to be able to live, do business and travel to the EU beyond the 90 or 180 days of visa-free access that you have on your current passport, a Portuguese residence permit may do the trick.
If you are simply looking to live in Portugal, this may not be the program for you. Other European countries offer more affordable and less cumbersome programs that would allow you to reside in Portugal. If you’re not willing to make the real estate investments, pay the capital contributions, or pursue the entrepreneur route and pay the fees involved, you should consider a different program.
All in all, Portugal’s Golden Visa program offers many benefits despite the significant investment required. For foreign investors looking for access to the EU and a powerful passport, the fees and cost may just be worth the trouble.