Portugal For The Investor

Portugal For The Investor

Portugal For The Investor

The Portuguese Golden Visa

The Portuguese Investment Residence Permit, labelled internationally as the Golden Visa, is designed as an investment visa for non-European Union citizens and its issue is contingent on pursuing of investment activities in Portugal.

Since its inception, the Golden Visa has lured hundreds of investors to Portugal, creating a buzz in the real estate market due to increasing demand.

Gold Visas and fiscal incentives for non-habitual residents are widely considered to be amongst the major driving forces behind the growth of some areas of the Portuguese Economy.

Being “flexibility” the key word, Golden Visa holders may reside in Portugal as long as they like and move within Schengen area countries without the typical short tern visas. As for requirements for permanent residence, Visa holders are required to stay in Portugal for as few as seven days per year during the first year and as few as 14 days in the following two-year period.

As technically the Golden Visa is a not a permanent residency permit, the maintenance of the chosen investment is mandatory for the Visa’s validity. Nevertheless, so as long the investment is secured in Portugal, it does not have a fixed expiry date.

Under the right of family regrouping, Visa holders are allowed to for spouses and dependents to travel and reside within the Schengen area. Furthermore, Visa holders may gain access to a permanent residence permit, provided specific requirements for the issue of that permit are met. In the long run, there is the possibility to apply for Portuguese citizenship in accordance with the current legal provisions

Considering that the golden visa requires a) that an investment is made in Portugal and b) the maintenance of the latter, when considering the Golden Visa program one must firstly understand the meaning of what represents an “investment” for visa purposes.

The concept of investment encompasses three types of inbound transactions:

  • The transfer of capital in the amount equal to or exceeding Euro 1,000,000;
  • The creation of at least 10 jobs;
  • The acquisition of real estate valued at Euro 500,000 (minimum).

Foreign citizens can conduct the said investment activities either individually or through a company. According to professional advisors, for the time being, most of these Visas are granted following the purchasing of real estate in Portugal.

It is possible to acquire co-ownership of a property, provided each holding has a value of at least Euro 500,000.

The Golden Visa is not dependent on the individual’s permanent establishment. Visa holders can literally live wherever they want and still be granted a Golden Visa that allows them travel, live or do business within the European Union.

That being said, as long as the chosen investment is sustained for a minimum of five year as of the date the residence permit is issued, the Portuguese Government will not interfere with your chosen location to live.

However flexible the Golden Visa program may be, the fact that it grants permission to travel freely around Europe obviously requires a tight control.

Portugal has a requirement of six years of residency before a foreign can apply for naturalization and allows dual citizenship. A Portuguese passport is a good passport to travel freely within Europe and grants preferential treatment in accessing Portuguese speaking countries.

The Portuguese Investment Residence Permit, labelled internationally as the Golden Visa, is designed as an investment visa for non-European Union citizens and its issue is contingent on pursuing of investment activities in Portugal.

How To Invest?

As previously mentioned, in recent years, Portugal has been through major economic changes. From the uprising from Salazar’s dictatorship, to the economic boom of the 90s, to the European economic crisis of the mid 2000s, to the recent economical investor friendly zone, Portugal has indeed been through a lot.

Despite the hardships, there are some reasons why many world leading companies are choosing Portugal to invest. For entrepreneurs, Portugal provides a good, stable and tax optimized headquarter to structure investment in Brazil or in other Portuguese speaking countries.

Portugal is now a hot spot for investment in real estate. In fact, this is where Portugal now shines after the last financial crisis that lead to a bailout. Real estate prices dropped as a result, but are not on the rise yet. In the first quarter of 2014, 3,500 Portuguese properties were acquired by foreign citizens.

Due to the fact the government took a clear stand in wanting to attract foreign investment through tax policies, double taxation is obviously a big concern. To overcome this issue, Portugal has celebrated over 75 treaties to avoid double taxation and several others to optimize foreign investment.

There are no restrictions or special provisions in force in Portugal as to foreign investment or to profit repatriation. Portugal applies in full the principle of non-discrimination based on the investor’s nationality. It now offers the same benefits as a Dutch company.

Expats thinking about creating a business here in Portugal should know that, whether it is in wine exportation, cork, tourism or a real estate investment agency, the bureaucracy from the past has been substituted by the one-stop-shop mentality.

In fact, it is now feasible to incorporate a company in a couple of hours.

Individual investors may invest into share and asset deals directly. However, to benefit from limited liability, it is best to choose a corporate vehicle. Portuguese law does not foresees the possibility of incorporating a common law partnership. Therefore, the types of companies most frequently adopted in Portugal are private limited quota companies, sole quotaholder companies and joint stock companies.

Private limited quota companies is the most common, simple and financially-sound solution for small to medium enterprises, because there they are not subject to any minimum share capital requirement. Sole quota holder companies are incorporated at the outset by a single shareholder. Finally, the incorporation of joint stock companies requires five shareholders or one corporate shareholder and is suitable for larger investments.

Usually, the choice between corporate vehicles will depend on the complexity of the investment and on the amounts involved. Also, Portuguese company law does not required for a company to have a Portuguese shareholder or director. Accounting standards are similar to American ones.

Corporate taxation has also adapted to the investor friendly mentality that is sweeping the nation and recent reforms turned Portugal into one of the most attractive regions to invest in Europe.

Considering a corporate dividend exemption to avoid double taxation, lower corporate income tax rates (21% in 2015) and the fact that Portugal has treaties/double taxation agreements with the majority of countries in the world, Portugal currently acts not only as a place to live, but as a tax optimized gateway to Europe, Africa and Brazil.

Banking System And Foreign Exchange Rules

No matter how hard the crisis hits, the Portuguese financial system is the most protected part of the economy. Banks are regularly stress tested and inspected, regulation works and the Government and the European Central Bank insure that bank deposits are secured.

In fact, cash is insured when deposit into a Portuguese bank account as a Deposit Guarantee Fund provides compensation up to a limit of Euro 100.000.

Both residents and non-residents may open a bank account in euros or any other foreign currency. Banks are usually open to the public from 08:30 until 15:00, Monday to Friday. The use of ATMs (a Portuguese invention) is extensive and on-line banking is extremely popular.

Where the account holder falls into the tax resident category, Portuguese income tax will become payable on any interest earned from any bank account held in Portugal.

There is no restriction on the amount of currency entering or leaving Portugal, but large sums of money should be transferred through proper banking channels.

On other aspects, property ownership rights in Portugal are well protected and enforced by Courts.

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