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PORTUGAL
Golden Visa 350k-500k
 Portugal Golden Visa changes announced on February 16, 2023. The current Socialist government of Portugal has announced the end of the program. The details aren’t clear yet, but since the party has an absolute majority in the parliament, they can push through any regulation they want, as long as it’s constitutional.

In summary: There is a deadline fast approaching on applications for Portugal’s Golden Visa.
Uncertainty remains as we wait for the March 16th parliamentary debate to clarify details but we already know that in the coming months, applications for Portugal’s Golden Visa will be closed.

Portugal Golden Visa Changes in 2022

The Portuguese government rolled out new regulations concerning the Portugal Golden Visa. The changes took effect on 1 January 2022. This law restricted the ‘qualifying’ areas for real estate investment within Portugal and made several investment options more expensive.

The government explained these changes as a necessity to evenly spread foreign investment to other parts of Portugal. With the Lisbon and Porto real estate market thriving, the government focused its attention on developing the property market in Portugal’s interior areas.

As of 1 January 2022, the following changes are in place:

Real estate changes in 2022

  • Investors cannot invest in residential property in popular urban areas such as Lisbon, Porto, and much of the Algarve, as well as coastal towns like Setúbal and the Silver Coast.

  • Applicants can only buy residential property in designated interior areas of Portugal worth at least €500,000 or €350,000 if investing in a rehabilitation project. If the residential property is located in a designated ‘low-density’ area, then a 20 percent discount applies.

  • Investors can purchase commercial property anywhere in the country worth at least €500,000 or €350,000 if investing in a commercial rehabilitation project. If the commercial property is located in a designated ‘low-density’ area, then a 20 percent discount applies.

  • Investors can buy residential and commercial property anywhere in Portugal’s autonomous islands of Madeira and Azores, worth at least €500,000 or €350,000 if investing in a rehabilitation project.

Capital transfers changes in 2022

  • The capital transfer amount requirement increased from €1 million to €1.5 million.

  • The Investment fund minimum subscription requirement increased from €350,000 to €500,000.

  • Investment in scientific research increased from €350,000 to €500,000

  • Investment into an existing Portugal-registered business increased from €350,000 to €500,000

  • An investment into the arts and cultural heritage worth €250,000 stayed the same.

It’s important to note the difference between interior areas and low-density areas. Check out the map below explaining the differences.

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Property Tax in Portugal

 

The rates of property tax in Portugal vary depending on value and type of property purchased and whether it is to be your main residence or second home. Below are the current rates of property tax in Portugal. These scales apply only to purchases on the mainland. 
Different tax rates apply in Madeira and the Azores 

 

 

IMT Scales(Mainland Portugal) 
Please note these scales may be subject to change

Main Residence

 

Value of Property Transaction% Tax Payable Amount to Deduct

Up to €  92,407                         0%

From €  92,407 to €126,403.    2%  €  1,848.14

From €126,403 to €172,348.    5%  €  5,640.23

From €172,348 to €287,213.    7%  €  9,087.19

From €287,213 to €574,323.    8%  € 11,959.32

Over €574,323                          6%



Second Home
 

Value of Property Transaction% Tax Payable Amount to Deduct

Up to € 92,407                          0%

From € 92,407 to €126,403.     2%   €    924.07

From €126,403 to €172,348.    5%   € 4,716.16

From €172,348 to €287,213.    7%   € 8,163.12

From €287,213 to €550,836.    8%   €11,035.25

Over €550,836.                         6%


 

Value of Property Transaction  % Tax Payable

Rustic and Agricultural  Plots 5%

Other Property and Urban  Plots 6.5%

Offshore in Blacklisted Jurisdictions 10%

 

Other Portugal Property Taxes and Financial Matters

Stamp Duty and Registrations
When buying a property in Portugal there is also Imposto de Selo (Stamp Duty) on deeds, mortgages and loans to be paid which ranges from 0.4%-0.8% of the purchase cost depending on the type of transaction and the property value. Your laywer will register the property in your name.

Power of Attorney (Procuração) 
Many buyers tend to leave their lawyer a signed Power of Attorney with specific powers to sign the Promissory Contract, utility contracts and complete on their behalf. This is easily done again in a Notary's office and takes on average half an hour and currently shouldn't cost more than 50 to 75 euros. This is recommended if you don't have the time to come over regularly to sign and deal with the bureaucratic part of the process. 

Inheritance Tax and Wills Inheritance Tax (IH) was abolished in 2004 for spouses, children, grandchildren, parents and grandparents. All other beneficiaries are subject to 10%(IH). Non residents are advised to make a Portuguese Will to make it easier to dispose of your Portuguese property. 

Capital Gains Portuguese tax residents receive a 50% exemption before the capital gain is added to the normal income tax scales. To calculate the capital gain tax due, you can deduct all buying and selling costs and any capital improvements on the property in the last 5 years prior to the sale. Non tax residents selling a property in Portugal currently get charged 25% flat rate of capital gains.


Exceptions to Capital Gains You may be exempt from capital gains: 

  • If the property belonged to you prior to 1st January 1989

  • If you are a tax resident in Portugal and selling your main residence and investing in another main residence in Portugal, as long as the reinvestment is made either less than 2 years prior to the sale or within 3 years subsequent to the sale of the property.

  • If you are a tax resident in Portugal and sell your main residence in Portugal and reinvest in another main residence within the EU or EEA (as long as there is an exchange of information clause with Portugal regarding tax matters).


Corporate Ownership Corporate ownership can have substantial advantages over direct private ownership if well thought through. Not least in terms of benefiting from stamp duty exemption and reduced capital gains. There are several structures to choose from including offshore structures in white listed countries. There are also other Portuguese company structures benefiting from reduced tax rates. 

Please contact Portugal Property Experts for more information on corporate ownership or any aspect of property tax in Portugal

Residency You will be considered a tax resident if you spend 183 or more days in Portugal; this does not need to be consecutive.

Fiscal Representation Non-resident homeowners are required to appoint a Fiscal Representative to ensure that your tax affairs are kept in order. Usually your lawyer will appoint one on your behalf as you need to pay your IMI charge and submit your tax return at the end of the year (which is compulsory under Portuguese law). this shouldn't cost you more than a few hundred euros.

Rental Licenses Many property owners choose to generate extra income from their property by renting it out to holiday makers. If you would like to do so then you must apply for a rental licence (Licença de Alojamento Local or Licença de Utilização Turística) and your property must meet the minimum safety standards set out in the legislation. We can arrange for a specialist local company to manage this process for you including gathering all the documentation, organising the inspections required and providing any additional safety equipment. 

Tax on Property Rental Income Non-residents generating income from property pay a 15% flat rate income tax and you must declare it in your annual income tax declaration (IRS form).

Bank Accounts It is recommended that you open a Portuguese bank account to pay bills, taxes etc. Again your lawyer should be able to help you with this. Documents usually required for EU citizens are: passport/or identity card, residency card (if applicable), tax number and card (fiscal number) and a proof of residence such as a utility bill or driving licence and for non-EU citizens: a passport and another valid document proving identity with a colour photo, proof of home address in country of origin, tax card (fiscal number) and proof of profession/contract of employment and company details. 

Currency Exchange There are now numerous companies that provide a free foreign exchange service. The rates offered by these companies are very competitive and if you are transferring funds from outside the eurozone they can often save you thousands on your home in the sun. This is usually quite a straightforward operation and it shouldn't take more than 3 to 5 working days to transfer your money from your local bank account to your Portuguese account. Please contact Portugal Property Experts for recommendations of reliable and competitive foreign exchange companies. 

Annual Costs

 

IMI This is similar to Council Tax and is based on the rateable value of your property not the real value. The rateable value for urban property is lower than the real market value and is based on a percentage scale ranging from 0.3% to 0.8% depending on the age of the property and the Municipal Council Area your property's in, size, level of luxury and a few other factors. For properties with a rateable value of over €1,000,000 the rate is 1%. Property in offshore blacklisted jurisdictions pay a 7.5% flat rate.

Condominium Charges If your property is in a gated complex, genertally there is a yearly condominium charge for the upkeep of green areas, pool, repairs etc. 

 

                                                                                   *          *          *

 

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The D7 Visa’s purpose vs the Digital Nomad Visa’s new approach for remote workers

Portugal has been striving in recent years to keep up with the global dynamics on migration and trying to adapt the immigration options to match the increasingly fast changes.

In the past, these remote workers and freelancers have successfully applied through the D7 Visa; however, this programme was not really designed for nomads, but for retirees and those that were able to live on their own passive income.

 

Until now, the D7 Visa was the best option for digital nomads, as applicants were required to prove a regular income that would allow them to live in Portugal. Nevertheless, the D7 Visa was not designed for remote work but it was widely used for these circumstances because it did not require the provision of a service or the existence of an employment contract in Portugal, and the applicants were able to show, in some way, that they indeed received the necessary income to sustain themselves in Portugal without having any link to a Portuguese company.

 

I. D7 Visa

 

The D7 Visa was designed to be a Residence Visa, that gives the right to a Residence Permit for retirees, individuals linked to religious organizations and for people living of their revenue. This means that the ideal applicant for the D7 Visa is someone who receives, for example, State and occupational pensions, dividends, real estate rental income or capital gains and wishes to acquire Portuguese residency and relocate to Portugal, which requires living in the country for the majority of the year, turning it into their home country, and becoming a Portuguese tax resident.

The Residence Permit that the applicant receives after successfully applying for the D7 Visa, is valid for 2 years and renewable for 3 more years. Another great advantage is that after 5 years legally residing in Portugal under the D7 Visa, the applicant becomes eligible to acquire Portuguese citizenship, which is a goal for many non-EU citizens.

 

 

II. Digital Nomad Visa

 

Digital Nomads is specifically designed for 1) foreign workers, independent professionals or entrepreneurs, 2) those whose professional activities allow them to work remotely, and 3) for individuals or legal entities domiciled or with headquarters outside of Portugal.

 

The law gives these professional Digital Nomads two options: 1) a temporary stay Visa or 2) a Visa followed by a Residence Permit. The difference between these two options lies in how long the candidate wishes to stay in Portugal.

 

  • Temporary Stay Visa for Digital Nomads

The Temporary Stay Visa for Digital Nomads is ideal for professionals who carry out their professional activity remotely and wish to do so in Portugal for a brief period. These are the "true" nomads, known as individuals who "move from one place to another rather than living in one place all of the time". As such, this Temporary Stay Visa, that is valid for up to one year, allows the holder to live and work in Portugal for that brief period without having to become a resident, as was the case when these remote workers had to apply through the D7.

 

 

  • Residence Permit for Digital Nomads

 

Portugal also created a Visa catered to Digital Nomads who want to "settle" in Portugal and live here for a longer period (more than one year), and maybe even decide to make Portugal their  home in the future. The applicant starts by submitting a request for a special Residence Visa for Digital Nomads in the Portuguese Consulate that serves the applicants’ current area of legal residence. This Visa will grant the applicant two entries and the right to stay up to 120 days in Portugal. Within these 120 days, the applicant can schedule an appointment with The Immigration and Border Service (SEF) and convert their Visa into a Residence Permit for Digital Nomads.

 

This Residence Permit, similarly to the D7 Visa, will be valid for 2 years with the possibility of renewal for 3 more years. It is our understanding that the holder of this Residence Permit, also like the D7 Visa, will have minimum stay requirements, such as during the first 2-year period, they must spend at least 16 months in the country, and during each 3-year subsequent period at least 28 months provided, in each case, that no absence exceeds 6 consecutive months. 

 

 

Portuguese NHR Tax Regime

 

As a new resident (that meets the eligibility criteria), the applicant will be entitled to benefit from the "non-habitual resident" (NHR) tax status, which grants a new resident a 10-year tax exemption on most non-Portugal-sourced types of income, whether or not they are taxed at source, and whether or not they are under a double taxation agreement (DTA) the tax at source is reduced (e.g. on dividends, interest or royalties) or even eliminated.

Furthermore, certain high added value activities that are related to employment and self-employment work may be eligible for a 20% flat tax rate for 10 years. The NHR status is highly advantageous to new Portugal residents so we highly recommend that they apply for it.

 

Although the creation of the Digital Nomad Visa, in its two types, is a remarkable step forward in the legislation and modernization of migration policies, we would like to highlight that the application process for these Visas and its granting, are still pending further regulation and clarity.

 

Portugal is frequently listed as the ideal choice for digital nomads, so it is our firm believe that this new Digital Nomad Visa will become a very important tool in simplifying the immigration of remote and independent workers to Portugal, and, of course, will also be very important for foreigners who want to continue working for international companies while enjoying the sun, local history and culture, beaches, natural parks, safety and, in general, the high quality of life at an affordable cost that Portugal has to offer.

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