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There are a number of programmes currently being offered by different governments in the EU, which have been designed to attract foreign investment. The main countries offering these schemes currently include Portugal, Spain and Greece.

One of the main issues facing non-EU investors, is that no foreign national is permitted to
spend more than 90 days in any six month period in the EU without obtaining a Visa from the
country that he / she is visiting.

The principal benefit of buying under the umbrella of the Golden Visa scheme is that once
you have acquired your property, you acquire a Residency Permit to reside in Portugal. This
permits you stay in the country in question in accordance with the terms of the visa, so that
the EU time constraints no longer apply to you. You accordingly have freedom of movement
to any of the 26 other countries in the Schengen area by virtue of your visa.

The key questions which essentially relate to any of these schemes are :
- The level of investment required
- Any limitations that may apply to the location of the investment
- The length of time you need to stay in the issuing country to avail yourself of the visa
- The tax implications for an individual and his family
- The indicative price of properties currently available in the market
- The rental possibilities

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The most well-known of these schemes is the Portuguese “Golden Visa”.
There are a number of different categories of Visa that can be applied for depending on the
personal position of an investor. The two most sought after visas are:

(1) A “Golden Visa” where an investor will acquire a commercial or residential property(ies)

The Portuguese government has a number of different levels of investment:
- €280,000 If you invest in a low-density area, with the project being a qualified
investment by the Portuguese Immigration and Borders Service
- €350,000 in a property in a Portuguese urban regeneration area,
- €400,000 in in a low-density area - essentially one located outside the most
popular tourist destinations in Portugal
- €500,000 in residential or commercial properties located anywhere in Portugal
other than in Lisbon, Porto and most of the coastal areas

While an investment in property is perceived to be the best solution for investors,
other investment options also exist in order to obtain a residence permit and include:
- an investment in bonds or bank deposits €1.5M),
- an investment in one of the approved investment funds (minimum €500,000),
some of which invest in real estate

- a €250,000 to preserve national heritage or
- €500,000 in approved research and development activity in Portugal.

One of the stated purposes of the scheme is to encourage the redevelopment of areas
outside the main tourist destinations. Accordingly in order to apply for a visa under the
scheme, the property could not be located in Lisbon, Porto and the main coastal areas
(essentially down in the Algarve).

However there remain attractive coastal areas which do qualify and are for example only
30 minutes by car from Lisbon.

It should be noted that an investment in a hotel would meet the requirement of investing
in commercial property, and there are some investment opportunities available in this
sector.

An interesting opportunity if you are prepared to go a little further, is that properties
located in Madeira or the Azores are included within the programme.

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(2) “D7” visa for people wishing to live in or retire to Portugal.

If you wish to live in or retire to Portugal, the application process is much simpler and
there is no requirement to buy a property, the requirement being that you can
demonstrate that you have / are entering into a lease of a property for the next twelve
months. You do however need to spend over 183 days a year in Portugal to qualify for
this.

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A. The length of time you would need to stay in the country to qualify for these benefits,
depends on the type of Visa you would apply for:

- “Golden Visa” – one week in your first year, and then a total of 14 days in each
two year period thereafter
- “D7 Visa” – a minimum of 183 days a year, with a minimum of 18 months in the
first two years

Once you have respected the requirements for a five year period, it is then possible to
apply for permanent residency or nationality, provided all applicable regulations have
been respected.

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B. Tax implications
- “Golden Visa” – usual property taxes applicable in-country
- D7 Visa – due to your residence in Portugal, you would be subject to the

Portuguese tax regime. However under the D7 shceme you can become a “Non-
habitual resident” which would confer significant benefits in the first ten years,

namely, your pension would only be taxed at 10% p.a., and any income derived

from your activity in Portugal would only be subject to 20% tax. Other revenue
from investments, rental properties and various other sources would be exempt
having already been taxed overseas. After ten years, you would then become
taxed as any other Portuguese citizen.
- A more detailed explanation of the criteria for the D7 scheme is attached as a
schedule.

C. Current indicative prices of some properties in Portugal that would qualify under
the scheme:
- A 20 m2 beach apartment approximately 30 minutes by car from Lisbon for
€280,000; this would include a 5% rental guarantee from the developer
- A three bedroom, three bathroom villa of 135m2 in Madeira for €500,000
- A two or three bedroom apartment in a five star Algarve hotel for €540,000,
offering a 4% guaranteed rental return and 12 weeks a year owner’s usage

The investment needs to be retained for a minimum period of five years

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D. Rental possibilities
- Certain developers are offering rental guarantees on the properties they are
selling
- Given the popularity of Portugal as a holiday destination, there are property
management companies that would rent out and service the property if required

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Current Considerations relating to Portugal’s Golden Visa scheme

While the Portuguese scheme is one of the most beneficial ones for non-EU investors,
there is a problem with its implementation. The government department that handles
Golden Visa applications is now accepting visa applications online and people are
receiving their approvals based on the submissions made. However, there remain a
significant backlog of applications some dating back as far back as 2021 for an
appointment with SEF (the Portuguese government body) to issue the Biometric card
including ones which have already been pre-approved. This has naturally been
attributed to Covid. However the backlog remains and there is no certainty as to
timing that one give to one’s clients.

The Portuguese government under reported pressure from the EU and domestic
political considerations due to the programme driving up local property prices, has
been discussing closing down the scheme.

However, in the recent Budget statement in November 2022, the government
approved the extension of the scheme for a further year, so applications can still be
submitted in 2023.

The D7 scheme is initially overseen by the Consulates in the country of the applicant,
and the handling process is considerably simpler. This is however limited to those

looking to actually reside in Protugal, although is is suggested by some sources, that
because visa holders can travel within the EU without showing their passports, that
the time constraints of the scheme can be overlooked.

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Schedule – Criteria for Portuguese Visas

In order to obtain a D7 visa, it is necessary for the applicant to demonstrate that he has:

- Long term stable income via a pension or other regular income (this would include
rental income from a property, dividend income, royalties etc), which exceeds the
local minimum wage of €1,000 for the applicant, and a further €500 for a spouse and
€300 for any children;

- a Portuguese bank account would need to be established and he equivalent of one
year’s revenue deposited into the account;

- private medical health cover;

- a clean Criminal Record;

- a rental agreement in place for a property in Portugal for the next 12 months. [This
can be dated 60 days after the date of the application.]

- The applicant would need to obtain a NIF – a tax residence certificate which means
you must live in Portugal for more than 183 days (this doesn’t need to be
consecutive) for 12 months, or if you lived in Portugal for less than 183 days, that
you have bought property during those 12 months

For a D7 Visa, the applicant would need to spend a minimum of 6 months each year in
Portugal during the first 2 years, amounting to a total of 18 months in the two years.
However, we are advised that it is quite common for people to end up travelling a lot
within Europe and, despite it being in the legislation, “people aren’t typically chased for
spending less than 183 days”.

A significant advantage of the D7 application is that this is handled by the consulate in
the applicant's country. The application is in two stages – first, submitting the
application for a temporary or full time D7 visa, and, secondly, once this has been
approved, a meeting at the Consulate for Biometric screening for the visa document.

This D7 route has proved popular with other European countries where Double Taxation
Agreements exist, with overseas pensions currently only being taxed at a base rate of
10% in Portugal, and 20% income tax on other income they earn while in Portugal.

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frenchtax@da-tax.co.uk

+44 (0) 7922 878 989

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