Portugal’s draft bill to end its Golden Visa sparks constitutionality concerns

By Moustafa Daly

Following the announcement from Portuguese Prime Minister Antonio Costa to end the country’s popular golden visa program in mid-February, his government has released the official draft of the proposal it intends to present to parliament. It aims to ‘ensure housing for all’, and thereby “the revocation of the residence permits for investment activity, through the tenth amendment to Law No. 23/2007, of July 4, in its current wording, which approves the legal regime for entry, stay, exit and removal of foreigners from the national territory,” as per the official government announcement.

The draft bill, which was made public last week, opens the door to public discussion and debate on the wording and provisions of the bill – with the debate set to end on  March 24, an 8-day extension to the initial one-month period that was set to end on March 16; aimed at giving all stakeholders and interested parties with enough room to join in the debate.  

The bill isn’t just set out to put an end to new golden visas, but is also pursuing changing the conditions for current golden visa real estate investors. “Renewal of residence permits for real estate investment activities granted […] depends on proof, by the owner, that the properties are leased for housing purposes by for a period of not less than five years or are being used by the holder's or his descendant's as permanent residence,” according to the draft bill.

In other words, current golden visa holders will have to present proof that their properties are leased on the long-term housing market, not, for example, on Airbnb, in order for them to get their visas renewed.

“The holder must deliver the supporting elements to the competent authorities for the renewal of the residence permit for real estate investment activity, up to 90 days before the expiry date of the authorization,” as per the announcement.

Perceived unconstitutionality by the legal community in Portugal

“It is our understanding, as well as that of the legal sector that works in this area, that the proposed wording of the law, in the terms presented, suffers from illegality and unconstitutionality in view of the retroactive effect that contains and will not enter into force as it is,” said Prime Legal in a statement.

“As such, we believe that this is not the wording that will come out after the period of public discussion, neither from the discussion in the Parliament. Several entities, including political parties,” further stated Prime Legal. “Madeira Island Government, Associations, private Work Groups and others, have spoken out on the subject, and are taking steps to maintain the program, albeit under different conditions and / or to ensure a transition period that safeguards ongoing processes and investments.”

Therefore, as per Prime Legal, there are strong legal grounds to challenge provisions that are not in full compliance with the law to protect the interests of investors as per basic legal principles such as ‘principle of non-retroactivity of the law, legal security, proportionality, the right to private property, among others, all of them constitutionally foreseen,’ as per the statement.

Portuguese President Marcelo Rebelo de Sousa urges caution 

Upon the parliament vote on the government’s proposal, which is expected to pass due to the fact that the government has a ruling majority in the parliament, the bill is going to end up on the president’s desk, who can either approve it, request amendments as per the constitutional court’s view of the bill, or veto it.

Thus far, the president’s stance hasn’t been made entirely clear, but he expressed his skepticism over the constitutionality of the proposed measures. Recently speaking to journalists at the Lisbon Tourism Exchange, he urged the government to present definitive measures, albeit stressing that when they arrive to his desk, he maintains the option to send them to the constitutional court if they raise legal concerns.

He also didn’t rule out the possibility of vetoing the bill altogether. “They will say to me that vetoing doesn’t do much good when there is an absolute majority,” he said to journalists as per local media, referring to the ruling Socialist Party.

“No, it does. I'm not going to veto for the sake of vetoing, I'd rather not veto; I'd rather there be a process that goes quickly... If it's accurate, in terms of conscience, and the Assembly confirms this - then there is no drama,” he added.

Possible scenarios for Portugal’s golden visa 

In Prime Legal’s view, laws in Portugal often don’t change in a disruptive manner, and their legal team expects the golden visa to continue being available to investors for at least 45 days if not more. They also anticipate major changes to the wording of the law in a way that guarantees investors’ rights and doesn’t violate the constitution.

“At this point, nobody knows – neither the Government nor the Parliament – what the exact content of the final amendments to the law will be,” they announced, however acknowledging that there is ‘significant risk’ that the program would be terminated in the short or medium term – calling upon investors to quickly finalize their pending applications so that their ‘consolidated situation’ (i.e. finalized golden visa process) can be protected.

This article has been updated by Uglobal Staff.

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