By Moustafa Daly
Nearly four months ago, the Portuguese government announced ending the golden visa program as part of its strategy to combat rising housing costs, setting in motion a legal process that aims at scrapping Europe’s most popular residency by investment program.
Initially, the government intended to close off the route to new golden visa applications, and force current golden visa holders to convert to other types of residency – a proposal that was met with backlash from the legal community in Portugal for what was described as unconstitutional retroactivity of the law – before the government eventually backtracked on that in the final bill proposal.
On May 29, 2023, the parliament began debating the bill, inviting legal experts and stakeholders to weigh in with their opinions on the bill.
Sara Sousa Rebolo, partner at Lisbon-based Prime Legal, was at the May 29 parliamentary session to present the opinion of the legal community.
“The government does not intend to foresee any kind of retroactivity,” says Rebolo to Uglobal.
Representing a legal team comprising of three Portuguese law firms, PAIIR, ERG Legal and Prime Legal, Rebolo and her team made the case for the golden visa before the parliament. Specifically, they outlined to the MPs the immense economic value the program has brought upon Portugal, as well as its potential to finance social infrastructure through the inflow of direct and indirect investments.
They also cautioned the parliament against the image risks associated with an abrupt termination of the program and the potential of Portugal losing its investment attractiveness in the process.
The legal team also called upon the parliament to “establish a transitional period to present reliable and independent studies on the impact of the program, safeguard investors and entrepreneurs, corporate individuals (on the supply and demand side), as well as the delay and difficulties with the apostille and legalization services of foreign documents,” adds Rebolo.
Until when will Portugal’s golden visa be open?
Though the government had initially intended to halt all new applications, it eventually rescinded from that position and the golden visa continues to be available to investors until the final parliament vote.
“It is still possible to submit Golden Visa applications and the foreseen amendments have not yet been approved, so I advise my clients and investors to keep working on their processes, so we can submit their applications before the end of the program,” says Diogo Capela, co-managing partner at Lamares, Capela & Associados.
Though that date remains unknown, Rebolo expects it to be in July.
“Until June 16, the Commission will receive more data from us, concrete proposals and collect more information to start the discussion on the specialty, being expected that the final diploma will be approved in July, at the end of the current legislature,” explains Rebolo.
Rebolo remains confident that this may not be the end after all.
“All parliamentary groups showed interest in the topic and openness to, at least, listening to the suggestions made,” says Rebolo. “We are very confident in the work we are doing and truly hope to be able to bring some good news to the sector soon.”
The impact of the golden visa bill on investments in Portugal
Since the government made clear its intention to end the program back in February, a 50% increase in the number of applications has been reported, according to Reuters – with many investors seeking to make it before the enactment of the bill.
The announcement also caused cancellations of real estate projects that local media have reported amount to €800 million, an amount which would have added activity worth €4.8 billion to the country’s economy in the long run. These projects would have created nearly 3000 jobs and generated €500,000 million in tax revenue, as reported by local media.
As per legal experts and economists, the golden visa has had a net positive impact on the Portuguese economy.
“Since the program’s launch in 2013, 11,180 Residence Permits were issued [to golden visa investors], and the investment raised was around €7 billion,” says Capela. “It is necessary to contextualize that approximately 10 million people live in Portugal.”
Are there alternatives to the golden visa in Portugal?
A lesser known visa is available to foreigners in Portugal, the D7 visa – aka ‘passive-income’ visa.
This visa type enables non-EU foreigners to reside in Portugal should they be able to provide proof of sustained passive income of €760 per month – giving its holders the right to live, study, work, and rent or purchase real estate.
The catch? It obliges its holders to live in Portugal for at least 183 days a year – which the golden visa doesn’t. However, this may remain a viable path for foreigners who intend to make Portugal their main residence, and it doesn’t require lump sum €250,000 investment.
Another option, which is seemingly favored by the government, is the Entrepreneurship Visa.
“The idea of the Portuguese Government is to process applications for Residence Permits for investment activities (or golden visas) through the Entrepreneurship Visa Regime, which is slightly different and meets other criteria,” says Capela.
“[It] is applicable to foreigners who wish to invest in Portugal in the most diverse areas and implies relocation to Portugal. However, and contrary to what happened with golden visa, under this modality, the nature of the investment is assessed, depending on the context, by one of the following entities: AICEP – Agency for Investment and External Trade of Portugal, Banco de Fomento, IAPMEI - Agency for Competitiveness and Innovation, National Innovation Agency or Ministry of Culture,” he further elaborates.
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