About the show

Each episode on the investment Immigration Podcast by Uglobal.com, host Salman Siddiqui sits down with leading professionals, attorneys, thought leaders and government officials to discuss the latest developments impacting citizenship and residency by investment. Whether you´re someone who takes part in cross border transactions, works in the investment immigration community or are personally interested in participating in citizenship or residency investment, tune each week to the Investment Immigration podcast to stay up to date on what´s happening in the investment immigration world.

About the host

Salman Siddiqui is the host of Uglobal’s Investment Immigration Podcast series. Siddiqui is a versatile storyteller and embodies the spirit of a true global citizen. His own immigration journey took him to many places around the world, including the UK, Cyprus, Turkey, and Qatar. He has written dozens of in-depth articles and features on global investment immigration programs for the Uglobal Immigration Magazine and website. He is a journalist and creative content editor by training. He earned his master’s in arts degree from SOAS, University of London. He is currently based in Berlin, Germany.

Salman Siddiqui

Episode Transcript

Raquel de Matos Esteves: [00:00:00] I think this industry is all about trust. And as lawyers, promoters, everyone in the industry, we’re doing our best to keep investors trust in Portugal and in our government. That was the big challenge of the year and now we just simply have to readjust. We were previously working with other investment options. We now have to pay more attention, some new network and new contacts. It's also good, and I think we should see it as a new opportunity and be prepared for new challenges. It's good.



Salman Siddiqui: [00:00:38] Welcome to the Investment Immigration podcast by Uglobal.com, with weekly in-depth interviews with the world's leading investment immigration professionals. Welcome to another episode of the Investment Immigration Podcast brought to you by Uglobal. I'm your host, Salman Siddiqui, and today we are going to focus on Portugal. Now, a lot has been happening in Portugal recently, so there's a lot of confusion about whether the real estate option is there on the table or not. There's a lot of back and forth going in the Parliament. First, it was said that the parliament is just going to approve it immediately. Then suddenly the president of the country got involved. He vetoed the bill. Now it's going back. And there's a lot of political drama going around that, and it's a lot of confusion. So today in this podcast, we're going to try to clarify what's happening. And especially on this issue, I have a very special guest all the way from Lisbon. She's going to explain to us why this is happening, what is the entire background of it, and what is the future for foreign investors looking to buy real estate in the country, and what other options are there now? My guest today is Raquel de Matos Esteves, she's the founding partner at RME Legal. Welcome to the show, Raquel.

Raquel de Matos Esteves: [00:01:59] Thank you for having me. It's a pleasure to be here and to be able to have this discussion about the golden visa in Portugal and everything that has been going on.

Salman Siddiqui: [00:02:10] That’s why we have you on our show. So please, Raquel, explain to our listeners, firstly, give us an overview of the recent reforms that have taken place in Portugal's golden visa program and what motivated these changes, given the whole political drama that's happening around it?

Raquel de Matos Esteves: [00:02:29] So it all started back in October 2022, when the Prime Minister had made some comments about the golden visa and the fact that it maybe has already completed its main objective to Portugal. And if the program would still make sense to the country. One month after that, in November, there was another political party that tried to approve the revocation of the program, but the government party did not approve that ending of the program by now. And we all thought that maybe, okay, it was just something that we should not take seriously. But surprisingly, in February 2023, there was this big program called More Housing bill, a literal translation from Portuguese. And the government was approving measures to stop the increasing of prices for houses in Portugal, mostly in the big cities. And the proposal by then was to completely revoke the program all investment options with immediate effect. Fortunately, the industry fought back, explaining that the Golden visa was more than purchasing property in Portugal. There were other types of investment also showing that investing in real estate for habitation purposes was no longer available in Lisbon, Porto and the main regions, and it has not helped decreasing the price. So there has been some back and forth. And finally, we have had the final approved version in July which the president of the republic vetoed. So basically he sent it back to the Parliament saying that it did not agree with the decision. But last week we had confirmation that this bill is approved and it should enter into force very soon. So now I think at least one good thing is there won't be any doubts from no one. So the uncertainty period has ended.

Salman Siddiqui: [00:04:27] Are you saying that the president has now agreed with the contents of that housing bill, and there is no problem?

Raquel de Matos Esteves: [00:04:34] Now, under the Portuguese rules, the president may disagree once and send it back to the Parliament for new discussion and new voting. But unfortunately, when it is approved again, the president must accept the Parliament's decision. At this moment, it will be final decision, it will enter into force.

Salman Siddiqui: [00:04:53] And just for our listeners benefit, if you could explain, the president from my understanding, was that he wasn't completely reversing the option of real estate. It was more of some kind of accommodation that was needed in the tourism sector or housing, isn't it? Basically, it doesn't really matter whether the veto was there or not.

Raquel de Matos Esteves: [00:05:14] Exactly. It became irrelevant. And the reasons for the president to have decided for the veto before were political reasons. It was not about the golden visa, specifically because the program is huge there. It's a significant number of changes to the Portuguese legislation related to tax benefits for construction, related to rental regimes related to Airbnbs. So the changes are enormous. And the president understood that the damages that it could cause to the economy would be very severe. And it was not proven that the measures will result in the decreasing of prices of habitation to Portuguese people. So he basically stated that politically it is agreed, but there was not a question of anything going against the Constitution or something else.

Salman Siddiqui: [00:06:06] What happens now though, like can we now today say that the real estate option and Portugal's golden visa programme is no longer there?.

Raquel de Matos Esteves: [00:06:16] In 1 to 2 weeks it won't be there. So those who are still finishing the investments in real estate, they should submit the applications very, very soon. If someone is in the process and have acquired property and wants to submit, the Golden Visa application should do it in the next 1 or 2 weeks. But let's focus on the new regime. I think that's what matters for everyone now. It is very clear that it is not possible to acquire a residency and the investment in real estate, so it's no longer possible to purchase property, whether it is for habitation or for commercial purposes. It's no longer possible anywhere in the country. And it's also important to say that the government is also alerted that indirect investments in real estate will not also be allowed. So funds that are investing in real estate or creating a company that invests in real estate, this will also not qualify as eligible investments for the Golden Visa. Okay. The real estate should completely be avoided for this purpose. Another aspect I think it's relevant to mention is foreign citizens are not forbidden to purchase real estate in Portugal. This needs to be very clear. Anyone residing in the country or not can purchase real estate in Portugal. Any type of real estate in all Portugal, mainland or the islands. It is just not suitable for this specific purpose. But you can reside in Portugal and have a golden visa through any other type of investment. And you can buy a property to live, or simply to rent or any type of investment you wish.

Salman Siddiqui: [00:07:52] So let's now talk about what's now there on the table in terms of the Portugal's golden visa program, what kind of investments are now eligible?

Raquel de Matos Esteves: [00:08:00] Okay. We have three main areas of investment that are still eligible. First of all, we have the investment where the applicant needs to transfer €500,000 and acquire units of investment funds. And those funds need to have 60% of its amount invested in commercial companies domiciled in Portugal. The idea is to have the funds to help Portuguese companies, so there is a minimum threshold. The funds need to be invested in Portuguese companies. This is a very hassle free type of investment. It's truly using your money, putting it to work for you. You can expect a return on your investment. Hopefully by the end of the five years or more you are free to continue. Then we have another type of eligible investment we could call job creation. The applicant can either create ten or more jobs in Portugal directly or through a company, or can choose to incorporate a company or invest in an existing company with a minimum amount of €500,000. Again, and with creating the company, it also has to create or maintain five employment contracts. The jobs must be maintained for the period of five years, so it's important to do the calculation, understand what are the costs involved here to make sure the applicant understands the investment that is really doing. It's not just the initial investment. There is also an ongoing cost of keeping a company in Portugal and keeping employment contracts in Portugal. And finally, we could say this kind of a donation because it's not expected to have any return on this investment. The applicant can transfer the same €500,000 to invest in research activities conducted by public or private scientific institutions. These projects must be approved. It's necessary to have declaration issued by the competent authorities attesting these investment, or the transfer of €250,000. Investing in artistic production to support arts renovation of the national heritage. Also, there is a competent entity in Portugal that has pre-approved several options. The applicant can choose between the available projects at the moment. Those would be the eligible routes to apply for a golden visa in Portugal.

Salman Siddiqui: [00:10:29] Now, we've already said that this is the end of the real estate opportunities in Portugal, but if they want to do it via a company to set up a business, for example, they will need an office, right? So how do they solve that problem? What do they do then?

Raquel de Matos Esteves: [00:10:47] This is also very new to us. So lawyers will be facing these new problems. Now, I would say this is just only my opinion; not official and not verified yet, but once you have a property that needs to be used for the business like an office space. Imagine you want to start a bakery, you need a physical space. In that case, it should not be considered investment in real estate because what you are doing is selling cakes and so on. If you start a company and you invest in properties to rent, this is clearly a real estate business. I think we will need to go case by case and present it to the authorities to clarify any questions. We will have more updates in the coming years with success cases, I hope, but at this point we really need to be very, very careful when advising clients to make sure the authorities won't see this as real estate investment.

Salman Siddiqui: [00:11:48] I see, and since we are on the topic, let's talk a little bit more about this job creation aspect of the Golden Visa. So do you see a lot of applicants who come via this route? What are the successful cases in your opinion?

Raquel de Matos Esteves: [00:12:01] I think we may start clarifying that the most successful eligible investment route was real estate, that's for sure. But there were already a lot of applicants going through the fund route, and there were close to none applicants going through the job creation or company incorporation. Of course, it is less attractive in terms of an investment in the type of client that don't want to do business in the country. They just want to make the investment and acquire the residency and citizenship in the future. So I must tell you that my experience, it's not large in this specific type of investment. It's not the most attractive. We think that it will be now, and that the industry in Portugal always had the expertise to find solutions when it was forbidden to purchase property for habitation in Lisbon and Porto. The industry created hotel solutions for the investors. I think here with the companies, something similar will happen. Everyone will come up with some ideas of how to make it attractive. Because when you have a business in Portugal, when you have workers, you need to be very present or have someone in the country to manage everything and does not correspond to the typical profile of a golden visa investor. There are exceptions, of course. Someone who has already considered investing in the country for some wind electricity farming. There are a lot of foreigners investing in these areas.

Salman Siddiqui: [00:13:28] I want your personal opinion on this about what's happening in Portugal. The whole premise of this whole housing bill was that it would bring the prices down of the whole housing market in the country, because it will help the common people in Portugal to buy properties and all that stuff. But do you think it's fair to blame it all on the Golden Visa program? That is because of why this whole problem occurred. Is it fair that the industry itself got to be sort of maligned in this whole political space? So I really want to know your personal opinion on this. I'm really interested to know. So please share. Yeah.

Raquel de Matos Esteves: [00:14:03] I'll be completely honest with you. First of all, I'm Portuguese and I'm also a citizen of the country, so I completely understand the problems the country are going through in terms of reputation. But I must say that those are not exclusive problems to Portugal. Everywhere in the city centers we are having the same problem. There is no new construction in Portugal. There is very, very low level of public agitation available for those who need the most. And it has been proven that the golden visa purchases are a very small percentage, and I don't think it would be enough to increase the prices this way. As a Portuguese, I also want a solution for my colleagues, for my family. In any case, I don't think that blaming foreign investors will solve anything. The prices won't go down through that route and we are simply telling the investors, okay, we don't want you here. This is a bad message for the country. We have spent years and years to attract foreign investment to the country, to gain confidence of the investments outside of Portugal. We have done an amazing job promoting Portugal and I hope, well, I think we will make everyone forget about this political drama or the past year and get back to being all good news. You can find other solutions because there are some things that should be done, and I think a good opportunity was lost. It could have been created a type of investment to help habitation for students, which is a problem that we have. We could have directed the foreign investment to the areas we want, specifically in Portugal, to be improved, and we lost that chance by completely revoking the real estate option at all. I hope this could change in the future.

Salman Siddiqui: [00:15:51] And speaking of thinking about the future a little bit. Do you think the real estate option could be revived for non-European investors in a few years? Or should we look at this as a temporary setback, or do you think it's going to be a hard sell because of the overall climate in the EU against.. we can say golden visa. What is your feeling?

Raquel de Matos Esteves: [00:16:11] Historically, Portugal typically does not get back to previous regimes when there are these disruptive changes. So I don't think it's likely that in the next 5 or 10 years, we will just get back to the real estate investments. As I see it now. Hopefully I'm wrong unless we go back ten years and we have too much houses available on the market and we need foreign investments again until this imitation crisis is solved, I don't think that it's going to happen, to be honest.

Salman Siddiqui: [00:16:45] I'm really interested to know how will you react to this challenge personally? How do you have to now change your business? What are the challenges for you?

Raquel de Matos Esteves: [00:16:54] That's a very interesting question. Thank you for asking. This year, the industry has not yet felt a big loss because we still have applicants coming to the last call and trying to get the golden visa under the real estate. So it in fact has been a good year. I think the most difficult part is to explain to foreign investors the constant changes that we have faced this year. And every week there was different news, something going on. It was forbidden. It was not forbidden. The program has ended, the program has not ended. And I think this interesting is all about trust. And as lawyers, promoters, everyone in the industry were doing our best to keep investors trusting in Portugal and in our government. That was the big challenge of the year and now we just simply have to readjust. We were previously working with other investment options. We now have to pay more attention, some new network, new contacts. It's also good, and I think we should see it as a new opportunity and be prepared for new challenges. It's good.

Salman Siddiqui: [00:18:04] Let's talk about the capital funds option. They're under the Golden Visa program. So if you could explain to our listeners, especially our North American listeners previously, like we saw trends in the Portugal program that a lot of Americans were coming in, especially for the real estate. So how would you sell them? The venture capital fund option?

Raquel de Matos Esteves: [00:18:26] Yeah, we have to see each client or each applicant and understand the profile. We have foreign clients very used to invest in capital markets. They are used to stocks, securities. It's comfortable to them. So for those type of applicants it's very easy to sell them the funding route. There are funds investing in listed companies which are very safe option of course. There are funds investing in green energy. Let’s be honest, the market has a variety of offers to present to clients. They can choose the ones they feel more comfortable with, and they are used to make similar investments in the country of origin. For those who are more traditional clients that only see the value when it is in a house or land, it's slightly more difficult. We are able to introduce clients to the fund managers to speak with them. We are able to present them with the results from previous years. All these companies are regulated in Portugal. There are guaranteed. It's not just throwing money out the window and I think people will sooner or later understand this is also a very good option.

Salman Siddiqui: [00:19:42] If you could elaborate a little bit on the key criteria and obligations associated with the option of making a capital transfer of €500,000 to non-real estate commercial companies, for example, how does that work?

Raquel de Matos Esteves: [00:19:56] Okay, the investors should transfer the money to Portugal exactly the same as it was done before for real estate, and it is done for funding. And then we create a company in Portugal which is a relatively quick and smooth process. And once we do, we define a share capital of the company, and it should correspond to the minimum amount from that moment when we incorporate the company, we need to specify which will be the activities. The companies in Portugal cannot decide to sell shoes one day and be a lawyer the other day. Okay, so there should be a well framed business plan for this company. We register the company, it's mandatory to have an accountant in Portugal to have a company. We start the activity with the tax office, and the company can initiate all the activities in Portugal. Once it is done, we should look for employees to hire them for specific positions. Employees in Portugal have a minimum wage. They need to pay personal income tax, and the company also needs to pay Social Security charges to the government.

Salman Siddiqui: [00:21:03] Okay, and we are coming close to the end of our episode. But before I let you go, I also want if you could please talk about the other option that you mentioned, which was the donation option and the artistic funds option. Is that something that you see? Is that an easier option let's say?

Raquel de Matos Esteves: [00:21:21] It really depends on the client's profile. I have had clients who told me my goal is to get residency and citizenship in the future. I have this money, I'm happy to contribute to the country, and I don't want to hear about any next steps. I don't want to be in a non-ending process. I don't want to do anything else. Tell me if I need to help the country and invest in some scientific research, or in some museum or theater in Portugal. I'm happy to do it. And I feel like I'm going to be compensated by gaining residency. It's really depends on the type of client we are dealing with, but there are several investors who see this as a good option.

Salman Siddiqui: [00:22:03] And is it simpler the process? Is it like a quicker processing time?

Raquel de Matos Esteves: [00:22:08] Yes. When compared to the company creation, it will be faster. The funds are also very fast and smooth process. We just need to make sure the fund is eligible and meets all the conditions. The most delayed now would be the company creation because you need to find employees and legalize them and everything else. But yes, the donation would be probably the quickest one.

Salman Siddiqui: [00:22:34] Before I let you go, I'll also give you an opportunity to make your sell your pitch for 30s for Portugal's golden visa program under the new rules, so please go ahead.

Raquel de Matos Esteves: [00:22:44] I think investors should all look to Portugal again if they have stopped looking before. There has been some kind of a drama that is now solved. We will be able to be back in business again with certainty, and we think that the country still has a lot of opportunities to offer in terms of investment. The new eligible routes for the Golden Visa are good options as well. We just need to give them a chance and take a look and don't miss the opportunity to visit the country, and you will understand why this program is so famous around the world.

Salman Siddiqui: [00:23:20] Fantastic! Thank you so much Raquel for being part of the show. Really appreciate you taking out the time and explaining to us everything, so thank you. And in the end, I'll just want to give a shoutout to our listeners that please stay tuned to our show. We'll be bringing you more professionals from around the world to explain the golden visa programs, the investment immigration options for you. So please stay tuned and thank you. You've been listening to the Investment Immigration Podcast by Uglobal.com. Join us again soon for more in-depth conversations exploring investment immigration opportunities from around the world.

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