The study of “Emerging Trends in Real Estate Europe 2019” shows that Lisbon is the most attractive city to invest in 2019. The consulting company PwC carried out this study. This is no surprise considering the tax incentives and the Golden Visa Program that Portugal offers to foreign investors.
Economists at Standard & Poor's (S&P) Global Ratings predict a 2.5% drop in house prices in Portugal after prices were on the rise before the crisis. Yet, the agency suggests that a rapid recovery and strong growth may occur by 2022, thanks to the large-scale support by the Portuguese government. Although this may seem an unfortunate event for the economy, foreign investors may turn the crisis into an opportunity. They can do this by purchasing properties in Portugal, for a long-term benefit.
Thanks to the important steps and investments in the country, Portugal has become a very dynamic market in Europe over the years.
Changes in the Economy after Covid-19
In these turbulent times we are going through along with the pandemic, one may have doubts about investing in a foreign country. However, Portugal seems to have handled the process very well in terms of its economy. According to the European Commission, although the forecast of GDP growth rate for 2020 was -9,8; for 2021 the forecast is 6,0.
Furthermore, Knight Frank suggests that the capital of the country, Lisbon is likely to see strong price growth (5%+) in 2021. The reason behind this is that Lisbon is already one of only four cities in the world which are expected to see prime price growth in 2020. “In Lisbon, Portugal’s handling of the crisis combined with strengthening demand and limited prime supply, will underpin price growth.”
Another good sign of the country’s economy is the stable rate of unemployment. Summer 2020 Economic Forecast of the European Commission suggests that: “On the positive side, unemployment remained broadly stable in the range of 6.2-6.3% in March and April as temporary dismissals did not have an immediate statistical impact..." It goes on "...and government short-term work schemes also helped offset the shock.”
Investment Options in Portugal: The Golden Visa Program
Portugal Golden Visa Program allows you residency, and potentially citizenship in Portugal. You can obtain these rights in return for an investment in the country. SEF (Portuguese Immigration and Borders Service) statistics suggest the following:
Between the periods of October 2012 and July 2020:
- A total of 9.015 main investors, and
- A total of 15.431 family members of the investors have benefited from the Golden Visa Program in Portugal. Investors enjoy a variety of offers. These include Double Taxation Agreements (DTA), and the Non-Habitual Resident (NHR) Program. Also, visa-free travel to Schengen countries.
What do these arrangements include? Well, Double Taxation Agreements (DTA) aim to prevent people from paying taxes on the same income in both countries. In this way, if you earn income anywhere outside of Portugal, the income will not be subject to taxation in Portugal. So, you will be taxed on the same income only in one country. Portugal signed DTAs with several countries. You can check whether your country has an agreement with Portugal while applying for your Golden Visa.
In addition to DTA, the Non-Habitual Resident (NHR) regime is also very helpful. Under this program,
Most of your foreign source income is exempt from taxation for ten consecutive years. If the foreign income is from a country Portugal has DTA with, it will not be taxed. On the other hand, even if your income is not from a foreign source but from a Portuguese source, expats in Portugal are subject to lower taxations.
If you have a “high-added-value” profession, you will be treated generous tax exemptions.
Normally, only citizens of EU/EEA/Switzerland can apply for the NHR program by being a resident in Portugal. However, you also can benefit from NHR via your Portugal Golden Visa.
Minimum Amount of Property Investment in Portugal Golden Visa Program
There are several ways to invest in Portugal when you apply for the Golden Visa:
- Purchase of a real estate property in Portugal with a minimum value of €500.000
- Purchase of a real estate property older than 30 years in Portugal. Also, renovating the property, where the minimum value of the purchased property is €350.000
- Purchase of a property located in the rural areas in Portugal. In such places, the minimum investment amount is reduced 20% to €400.000 and €280.000 respectively for the above two options.
- Capital transfer of €1.000.000
- Owning a company that creates a minimum of 10 jobs for Portuguese citizens
- Investing €500.000 in Portuguese investment funds or venture capital
- Investing €350.000 in a Portuguese risk fund
- invest a minimum of €250,000 in the arts or in the reconstruction or refurbishment of national heritage projects