Avenida Gil Vicente, nº 583 4400-166 Mafamude, Vila Nova de Gaia, Portugal
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Today we will analyze the details of the Portuguese immigration program and discuss the pros and cons of this method of obtaining a second passport. Our expert is Oleg Railean, Head of Amber Star Real Estate, who has been working with the Portuguese Golden Visa program since its foundation.
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Governments of different countries launch similar programs to support the economy. Only selected projects or sectors get the official support. For example, you can buy a dozen complexes in Montenegro with an eye to citizenship. In Cyprus, you can buy only new buildings. And in Riga, all the money must be invested in one object, i.e. economy-class real estate is excluded from the program.
The Portuguese Golden Visa program is flexible. You can implement any investment strategy. New and secondary buildings, housing and commerce, premium or economy class... An applicant for citizenship can collect any combination of objects in any region of the country.
By the way, about the Portuguese real estate market. Why there is a need to invite more foreigners by promising a European passport?
There were some problems in the market back in 2012? when the Golden Visa was first launcheds. The situation has changed dramatically since, just look at the chart below: this is the house price index in Portugal, an average indicator that says little about the cost of a particular object, but perfectly illustrates the general trend.
We see a healthy moderately growing market with no signs of overheating. The average price per square meter in the country at the beginning of 2021 was €1,200, apartments in Lisbon (€3,200) and Porto (€2,300) were still significantly cheaper than in comparable cities of France, Spain, and Italy.
If you need to find out the market value of an object in a certain region, study the interactive map (English) from the Institute of Statistics of Portugal. It contains data on cities with a population of more than 100,000 people. A more practical option is to contact Amber Star Real Estate, and experts will explain all the nuances of pricing and show alternatives.
The obvious success of the real estate sector has already led to the fact that the government has decided to change the Golden Visa program. The current terms are valid until December 31, 2021. We will talk about the reforms further.
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So, you can choose any type of property on the market. But you need to invest at least €500,000 to apply for a residence permit, and then citizenship. The price threshold is relatively high. For comparison: in similar programs of Greece and Latvia it is enough to invest €250,000, €300,000 in Cyprus, €350,000 in Montenegro, but in Spain it also starts from €500,000. The costs in Malta are above a million euros.
At the same time, in Portugal, if several conditions are met, the price threshold can be reduced almost twice.
First, if you purchase an object that is located in the urban rehabilitation zone, the minimum required amount will be €350,000. These zones are usually in intensively restored historical centers. Let's say, you can buy a new project from a developer in the center of Porto, invest €350,000 and get a residence permit.
The same price limit of €350,000 is set for any property that is older than 30 years and needs renovation. The minimum amount already includes repair costs, the object can cost €300,000, and renovation - €50,000. The main thing is to immediately conclude a contract with the contractor.
Renovation projects in reality do not require the active participation of an investor. A good realtor will help you find a promising object and a contractor who will take all the work on their own. Amber Star Real Estate provides such services.
Secondly, for participants of the Golden Visa program who choose real estate in areas of low population density, the benefit is 20% of the minimum price. If you take any object in the province, it is enough to invest €400,000, and if it is also older than 30 years or located in the urban rehabilitation zone, then the threshold is reduced to €280,000.
Thus, the Portuguese program can become one of the most affordable in the European Union.
Properties for €280,000-400,000 differ from propertiess for €350,000-500,000 only by location. They must be located in areas with a low population density. In fact, four-fifths of the territory of Portugal (with the exception of large cities) belongs to such areas. For example, the entire south of the country fits this definition, although the area is developed. We can't say that there are more risks in such area, but it's just not Lisbon or Porto. If we want to draw an analogy, it is like buying a house in a country side. There are plenty of interesting offers. In 2021, we closed eight Golden Visa with an entry threshold of €280,000. Almost all clients chose individual projects, and two families bought residential real estate in the Algarve.
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The Portuguese program has a very clear commercial logic. You do not give money to the state or subsidize lagging industries. You invest in the future of your family, choosing the most liquid projects on the market. The property can be sold after five years, when you get a passport. Most likely with a profit.
For comparison: in Malta, applicants for a passport make a non-refundable contribution of €600,000 to the state fund. In Montenegro, the state asks for €100,000, in Latvia 5% of the property price are required. These are duties without any legal expenses.
There will also be additional costs in Portugal, but relatively small. For an accurate calculation, contact the specialists of Amber Star Real Estate, the total amount depends on the composition of the family and other parameters.
But the income in Portugal is decent, if there is a desire to rent out real estate. There are even projects that guarantee owners a certain profit, which is convenient for those who want to receive passive income in euros, without worrying about the situation on the rental market.
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According to the terms of the program, payments must come from abroad. If there are not enough funds for the main contribution, you will not be able to get a loan from a Portuguese bank, but no one prevents you from using leverage in your native country.
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I have a client from England. He took a loan from an English bank and bought a property in Portugal. About six years ago, I worked with Chinese buyers, who also took financing in a homeland for the Golden Visa. Another client said that he received a loan on the security of cryptocurrency. So, it is not forbidden to take loans, on the contrary, it will help to confirm the source of capital in the documents. The main thing is that the money comes from abroad.
One more point: you can take out loans in Portuguese banks, but with one condition. For example, we are going under the program of €350,000, the client has this money, but chooses an object for a million. The missing €650,000 can be deposited with credit money from a Portuguese bank. The same is true with installments: we pay the main amount immediately, and everything in excess of it can be paid gradually.
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The European Golden Visa programs impose additional requirements on participants. For example, they oblige foreigners to live in the country for most of the year so that the status can be extended or "converted" into citizenship, prohibit them from working, require a change of tax residence and regular payments to the treasury of the country. The Portuguese program stands out from the others: there are many rights given, but only a few requirements.
The first is to keep the property ownership for five years (before obtaining permanent residence or citizenship, then the objects can be sold without losing the passport). The second is to spend 14 days in Portugal every two years (this is more of a pleasant incentive to go on vacation than a serious restriction).
There are many prospects. First of all, visa-free travelling even in conditions of closed borders. The Golden Visa allows you to move to Portugal at any time. You will be able to run a business there or get a job; children will be able to attend kindergartens and schools, medicine and social guarantees will be available under insurance. At the same time, moving is a right, not a duty.
Another important advantage, which is not available to locals, is the preferential tax regime Non-habitual Resident. A foreigner can become a resident of Portugal and not pay tax for ten years (!!!) for some types of income from foreign sources, and the profit received on the territory of the country will be taxed at a preferential rate.
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The composition of the family is another parameter by which the Portuguese Golden Visa surpasses its competitors. In Latvia, for example, only a spouse and minor children are considered close relatives who can get a residence permit together with an investor.
Here the spouse, minor children, children who are financially dependent on the investor from the age of 18, parents on both sides (if they are over 65 years old or younger and are dependent at the same time), brothers and sisters of any spouse under the age of 18 who are under guardianship.
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Spouses do not have to be official, civil ones can submit documents together as well. It is goof if you have children, but also does not change anything much. The connection is proved, for example, with the help of common ownership of property, a joint lease contract, a common bank account. We had such cases – documents are accepted, a residence permit is issued.
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The main thing is the ease of obtaining a passport. Today you can buy an apartment in Lisbon, continue to live in your native country, receive income from Portuguese real estate and come on vacation from time to time, and in five years you will have the right to get a European citizenship. Yes, it will be necessary to pass a language test, but a minimum level (A2) is enough, which foreigners easily reach in a couple of months.
You can get the citizenship faster only in Montenegro (but it is not part of the European Union and its passport is not so valued) and Malta (but the costs are many times higher and there is a huge non-refundable payment). Previously, there was an accelerated procedure in Cyprus: passports could be issued in 9-12 months with an investment of €2 million. But in 2020, this program was closed, and now buyers of Cypriot real estate are waiting for the right to apply for citizenship for seven years.
In Spain and Latvia, you will have to wait for ten years, plus you will have to give up your first passport. It is also ten years in Greece, but you can convert a residence permit into citizenship only if you permanently reside in the country. In Italy, France, Germany and most European countries, there is no prospect of obtaining citizenship simply for buying real estate at all.
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IThe pace of issuing Portuguese Golden Visa slowed down this year because of two reasons. First was the lockdown during which state agencies worked with restrictions, and many foreigners could not come to the country. Secondly, the confidence that the conditions of the program will be changed soon. In the second half of the year, this led to a stir and the formation of queues in the migration services. As a result, the actual terms of registration of residence permits stretched from six to eight to ten months and even up to a year.
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Now there is a huge demand from those who want to participate in the according to the old rules. We submitted 14 applications for our clients in August alone. Therefore, I recommend everyone to act quickly. Do not wait until you open a bank account, but pay for the transaction through a lawyer's trust account , it will take a maximum of a week. Portuguese banks operate according to their own regulations, they do not care about the terms of the Golden Visa program, compliance can last one and a half to two months. There is nothing to worry about, the account will be opened later. The main thing is to have enough time to apply for a residence permit.
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And finally, about the reforms. The situation in the real estate market of Portugal has developed and the government is forced to think about avoiding overheating and unjustified price increases. The authorities have decided to exclude residential real estate in Lisbon, Porto and most coastal zones from the Golden Visa program. The purchase of an apartment and a villa in the most popular regions of Portugal will no longer be the basis for obtaining a residence permit. Commercial real estate will still be available for participation.
In order to have time to participate in the program according to the old rules, you must submit an application through the SEF (Service for Foreigners and Borders) website by December 31, 2021 inclusive. And before that you need to choose a property and conclude a purchase and sale agreement. All this can be done remotely. Personal presence will be required only for the delivery of biometric data.
Avenida Gil Vicente, nº 583 4400-166 Mafamude, Vila Nova de Gaia, Portugal
