Recently, Portuguese proposed amendments for the Golden Visa scheme which is expected to enter into force in 2021. The amendments involves a limitation on the real estate investment option in high density areas.
However there is ambiguity around the final changes in the programme and time period to amendments put into practice, we are hoping to clear up the subject for you with the following information.
Thus, we will point out several topics we regard as crucial about the amendments.
- What has been proposed?
- What is the reason behind this proposal?
- When the amendments will be implemented?
- Is Golden Visa coming to an end?
- Which investment options will be left out of the Golden Visa Programme?
- Will the investors who got or applied for their Golden Visa be affected by the changes?
- Will the changes impede the Portuguese citizenship applications?
1.What has been proposed?
The Portuguese Government proposed a draft State Budget Law 2020, which is being considered by the Portuguese Parliament. In the course of the discussions, several parties proposed changes for the draft before it is approved. The socialist Party proposed some amendments for the Golden Visa Programme.
This draft is not introducing any literal amendments to the existing Golden Visa scheme. It solely permits the government to make amendments on the rules which is not finalized yet.
Thus, Portugal Government will be given authority to implement the amendments on the Portugal Golden Visa Program. If it is adopted, the final legislation will not be implemented straightaway. Amendments on the programme can only take place after the publication of the final regulation.
2.What is the reason behind this proposal?
In the high density areas like Porto and Lisbon, the property prices have been increasing significantly making harder for Portuguese families to look for housing in those cities. And some political parties aim to underline this problem with proposing amendments on the Portugal Golden Visa Program. However the amendments proposed on the program does not directly pointing out the root of the matter at hand.
In 2018, 242.091 properties were sold and 1.332 golden visas were granted in total which means Golden Visa investors constitute only 0,55% of the Portugal’s property market.
The reason behind Lisbon and Porto’s being a hotspot for the investors is the cities’ being very touristic with high occupancy rates. Also, it should be noted that EU citizens constitute the majority of the investors in those cities. When it is combined with the NHR tax residency program, thriving start-up scene and the rental market, investors go for the real estate option. In a nutshell, it wouldn’t be accurate to conclude that fast growing Portuguese property market owes its success to the Golden Visa.
List of main foreign investors in Portugal:
- • 21% French
- • 18% UK
- • 18% Brazil
- • 9% Germany
- • 7% China
3.When the amendments will be implemented?
As the Portuguese Government is authorized by the parliament to change the Golden Visa scheme, in the case of an approval, the final regulations will not be implemented immediately.
For an legislation proposal to become a law, it should be first discussed and voted at the Parliament, then approved by the president and finally published as a law.
When a legislation published into law, the regulations have to be operated in practice so officials are able to follow it.
However it wouldn’t be sensible to give an exact date, it could be said that it takes at least a couple of months. It is not expected to taken place until the end of 2020.
4. Is Golden Visa coming to an end?
No, the proposal introduces only changes on the investment options for acquiring the Golden Visa; it doesn’t end the programme.
5. Which investment options will be left out of the Golden Visa Programme?
The real estate investments in major cities like Lisbon and Porto will not be qualifying for Golden Visa anymore. Property acquisition in low density areas is still a valid investment option for the visa.
There is an uncertainty around the future of the 350.000 Euro real estate investment option that requires renovation. It is also not clear if the capital investment route to Golden Visa will be affected.
6.Will the investors who got or applied for their Golden Visa be affected by the changes?
No, the investors who already attained or applied for their visa will not be affected by any potential changes. The changes will be implemented after the law published.
7. Will the changes impede the Portuguese citizenship applications?
The amendments if applied have only effects on the Foreigners Act. However the Citizenship Act will remain the same. So there will be no change about the citizenship route.
8. Is this related to pressure from the European Commission?
It is possible that the proposed changes were partly related to the pressure from the European Commission on all the European residency and citizenship by investment programs. Other programs, including the UK Golden Visa also went through similar suspensions due to European Commission. However, another significant factor playing a role in the changes is certainly the socialist policies of the current government.