Portugal

Portuguese citizenship grants the right to settle, work, and study in all EU countries and allows visa-free or visa-on-arrival access to over 180 destinations worldwide. Portuguese citizenship can mainly be acquired by those who are descended from Portuguese parents or grandparents, by marriage or civil union, or by birth in a Portuguese territory.

In relation to those who are resident in Portugal, including those who follow the residence by investment program, it is possible to apply for citizenship after five years of legal residence in Portugal, if:

– The applicant is at least 18 years of age

– The applicant has been a resident in Portugal for at least five years

– The applicant has basic (A2 international level) knowledge of the Portuguese language

– The applicant has not been convicted for a crime that corresponds to a penalty equal to or more than three years according to Portuguese law

In order to create more favorable conditions for citizenship approval, the applicant may demonstrate tangible connections with the Portuguese community. Portugal allows dual citizenship.

Henley and Partners assists private clients in applying for citizenship on the basis of the requirements listed above. 

Benefits of a Portuguese golden visa

1. Visa-free travel in Europe’s Schengen Area and the right to live, work, and study in Portugal
2. Eligibility to apply for citizenship after five years while keeping other citizenship(s)
3. Low physical presence requirement (14 days during the first two years and 21 days for the subsequent three years)
4. Excellent international and Portuguese schools and universities
5. High quality of life, local cuisine and wines, rich culture, mild climate, and a high level of security
6. International quality healthcare clinics and hospitals

Portugal golden visa requirements

Applicants can choose any one option in any one of the following categories:

Capital transfer

One of the following options:

1. EUR 500,000 for the acquisition of investment fund or venture capital fund units committed to the capitalization of companies incorporated under the Portuguese law, with a maturity of at least five years and with at least 60% of the investment portfolio in companies with a registered office in the national territory (real estate entities do not apply)
2. EUR 500,000 for research activities of public or private entities that are part of the national scientific and technological system.
   – EUR 400,000 in a low population density area*
3. EUR 250,000 in support of artistic production or in the recovery or maintenance of national cultural heritage.
   – EUR 200,000 in a low population density area*

Business

One of the following options:

1. Creation of a minimum of ten new jobs
2. -Eight new jobs in a low population density area*
3. EUR 500,000 for the incorporation of a commercial company that is registered and headquartered in Portugal, creating a minimum of five permanent jobs for a period of three years (or for the increase of the share capital of a company already incorporated and headquartered in Portugal, creating at least five permanent jobs or maintaining at least ten jobs for three years)

*A low population density area is defined as less than 100 inhabitants per km² or with a GDP per capita below 75% of the national average.

Procedures for the Portugal golden visa

Applicants are introduced to the Portugal team to commence the process, either remotely or in person. This includes preparing legal documents, obtaining a taxpayer number, selecting a qualifying investment option, and opening a bank account. Once the investment is finalized and personal documents are collected, the application is submitted online and accepted by the government authority.

The client and family then visit Portugal to provide biometric data and original documents at the immigration office.

Upon application approval and payment of the residence card(s), a two-year residence permit is issued, renewable for one subsequent period of three years. The client can thereafter either extend the temporary permit again, apply for permanent residence, or apply for citizenship.

Portugal Real Estate

Portugal has long been a popular choice for expatriates. In general, the cost of living in Portugal is low in comparison to other European countries, and there are several advantages to purchasing real estate in the country. Portugal’s non-habitual resident tax regime provides excellent tax benefits including a set 20% tax on personal income over a 10-year period and no double tax charges on self-employment, employment, or pension income derived from abroad.

Recent legislation has determined that foreign retirees can live in Portugal and receive a tax-free pension income. The Portugal Golden Resident Permit Program allows foreign citizens to purchase a property in the country for a minimum value of EUR 500,000. The purchaser is eligible to apply for residence, and if the investment is maintained for a further five years, they can apply for Portuguese citizenship. The program has been a great success and has prompted an increase in the purchase of real estate in Portugal by foreign investors.

Acquisition of property in Portugal

Buying a new property in Portugal can be expensive, but ultimately, the cost depends on the location and the age of a house. In some locations such as city centers or historic villages, the new property option may not be possible. Buying an existing house usually requires less paperwork both at a contract level and when requesting financing. In Portugal, a house can be occupied immediately after the deed has been signed and registered. This is an important factor for some, particularly if there is an urgent need to relocate or to generate profitability by offering a property in the holiday home rental market, for example.

Are there any restrictions on the acquisition of real estate in Portugal by foreign buyers?

There are no restrictions on foreign buyers purchasing a property in Portugal. The only pre-requisite for potential buyers is having a Portuguese tax number, which is needed at the time of purchase.

How can immovable property in Portugal be acquired?

Immovable property in Portugal can be acquired locally or remotely (that is, it is not essential to be in the country at the time of acquisition). The real estate industry in Portugal exists as it does throughout Europe and has evolved towards a more interactive and online approach, such as through virtual tours, which is particularly beneficial to potential foreign buyers.

Does the applicant need to open a bank account in order to purchase property, and if so, what is the procedure?

The applicant must have a Portuguese bank account as well as a Portuguese taxpayer number when purchasing a property. Assistance is provided in preparing all the necessary documentation for acquiring a taxpayer number and opening a bank account, and this can be done locally or remotely.

What additional expenses will the real estate transaction incur?

Anyone purchasing a property in Portugal will pay property transfer tax, stamp duty, notary fees, and registration fees (signing of the title and registration of the deed is done at the land registry). Stamp duty is fixed at a rate of 0.8%. Deed costs vary according to the purchase price. Registration costs are EUR 250 per property. Other property transfer taxes include rustic articles at 5% and commercial, services, or land tax at 6,5%.

What kind of returns can be expected from property investment in Portugal?

Net yields range from 3% to 5% on residential property, 5% to 6% on commercial property, and 7% to 8% on industrial property.

How is rental income taxed?

Rental income is taxed at a flat rate of 28%. All expenses related to the property are deductible, such as insurance costs, levies, monthly costs, municipality tax, rental and property management fees, and any maintenance done on the property prior to or during the rental period.

What other immovable property-related taxes and charges are imposed in Portugal?

An annual municipality tax (IMI) is imposed on all owned property in Portugal. This tax is based on a tax evaluation that is then applied at a rate of 0.3% to 0.4%. IMI is updated every three years by the tax office when revaluating each area of the country. Each municipality incurs a different rate, which is always between 0.3% and 0.4% (the highest rate is usually applied in municipalities that have historical value).