AFTER BREXIT - Should Britain buyers be looking into the Golden Visa?
Portugal’s Golden Visa scheme, which grants Portuguese citizenship to non-EU nationals, will soon be offered to British investors once the transition period of Brexit ends in January 2021.
Until now, it hasn’t been clear whether UK residents have been eligible for the Portuguese Golden Visa, officially called the Residence Permit Programme, during the 11-month transition period of Brexit.
While the UK officially left the EU at the beginning of the year, the country has remained bound to the EU’s rules, meaning it has still technically been ‘part of the club’.
However, this grey area will cease to exist from January 1, 2021, meaning that British nationals should start considering ways to reside in the EU and benefit from border-free travel within the Schengen area.
Created in 2012, the Golden Visa scheme enables non-EU residents to obtain Portuguese citizenship if they invest in businesses or at least €500,000 in real estate.
However, the rules were changed in February 2020 to reduce property market speculation and encourage investment in low-density regions (The measure aims to encourage investment in low-density regions, as well as “investment in urban regeneration, cultural heritage, environmental or social activities of high value, productivity and job creation”).
So, what exactly has changed? The main difference, which has drawn both praise and criticism since the proposal was approved, is the restriction of property purchases to inland municipalities and the autonomous regions of Azores and Madeira.
This means that those investing specifically in properties in Lisbon and Porto (the most popular option since the scheme began) will now not be eligible for Portuguese citizenship. However, there are still advantages.
The investment doesn’t have to be concentrated on a single property. Investors can buy various properties that amount to the total value of €500,000, which can then be rented out.
With various benefits proposed to those who invest in inland properties or businesses, this still proves to be an appealing option for foreign investors. There are beautiful countryside properties available across the Algarve.
The strategy involves local authorities (called Câmaras Municipais) offering buildings or land at give-away prices, reducing taxes, and supporting rental costs to fight their low demographic density. Each authority develops its own attraction project.
The initiative looks to generate jobs in areas that have become more deserted over the years due to the recession, the Portuguese moving to larger cities and abroad, and the drop-in birth rate.
It is worth noting that these changes will only be enforced in 2021. Until then, the rules remain the same during this “adjustment period”. Besides investing in property, non-EU citizens can apply to the Golden Visa programme by investing at least €350,000 in investment funds, venture capital or in scientific research, or investing €250,000 in preserving national heritage, among other options.
Popularity of the Golden Visa
While there are several Golden Visa programmes offered by EU countries, Portugal’s incentives scheme remains one of the most popular, with investors attracted to its benefits and its flexibility.
With the news that demand for Portuguese citizenship has soared (Pandemics and political shifts are pushing many families and individuals to become citizens of some of the world’s safest countries. Thanks to its incentive programmes, tax breaks and sense of security, Portugal is one of those countries, with citizenship requests at an all-time high), 108 Golden Visas were granted in July alone, according to the national Immigration and Borders Service (SEF).
Of these, 98 were through the acquisition of real estate and 10 through capital transfer, mainly from China, the US and Brazil.
Portugal’s Golden Visa scheme requires an investment of €500,000 in real estate, and in return provides a residency permit for a family including dependent children.
The rules were recently reviewed (as mentioned above), but due to the pandemic, all new plans have been put on hold.