Portuguese Investor Visa Changes explained for 2023

With ongoing confusion around the availability of ‘golden visas’, the centre of the debate has been that the European Commission (EC) has lodged challenges against some member countries offering these citizenship or residency by investment schemes. Leading private wealth management firm Chase Buchanan review 2023 so far, with the latest thoughts regarding the Portuguese Investor Visas changes.

A golden visa means that investors can apply for permanent residency or full citizenship by contributing to a country’s economy, often coupled with non-refundable government donations, property purchases or charitable donations.

The EC has raised security concerns around the potential exploitation of such programs linked to tax evasion and organised crime. The debate has, thus far, prompted countries, including Ireland and Cyprus, to suspend or terminate their programmes.

Chase Buchanan, the global expat wealth management specialist, provides the latest updates on the status of the popular Portugal investor visa programme and advises how it may change in the coming weeks.

The Status of the Portuguese Investor Visa

In February 2023, the Portuguese government announced that it intended to close the golden visa programme to new applicants. The primary reason for the announcement was less related to EC pressure, and more because severe domestic housing shortages have been deemed as partly caused by large-scale foreign investors taking advantage of the scheme.

However, there is a significant possibility that the terms and investment routes available will be amended instead of terminating the scheme altogether.

A further development on 20^th June saw the governing Socialist Party submit a proposal to retain the golden visa but with several reforms. This bill has since been approved and is due to be presented in Parliament, with the most major adjustment being that foreign expats may still be able to apply through the venture capital investment route.

A few points of clarity:

• New applications are technically being accepted until a revised law becomes legislation.
• Any existing visas are unaffected and will be renewed according to the original terms.
• Pending applications will be redirected to the D2 Entrepreneur Permit – this permit requires a similar physical residency period of seven days a year.

However, some of the original investment options, such as buying a home worth €500,000 or more, making a capital transfer of €1.5 million, or purchasing a refurbishment property for €350,000 or above, will no longer be available.

Changes to Investment Routes for Portuguese Residency

The Portuguese visa scheme is officially called the Golden Residence Permit Program. It offers non-EU citizens a five-year residency visa in return for investment. After five years of residency, expats become eligible to apply for full citizenship, although additional criteria apply.

Successful applicants can relocate with family members, work, live and study in Portugal and throughout the Schengen Zone, and enjoy the quality of life available. Eligible family members include a spouse or legally recognised partner, children under 18, older children who are financially dependent and in full-time education, and the parents of either adult.

While the outcome of ongoing debates is yet to be verified, it appears most likely that investors will still be able to apply but with fewer investment options. In the past, the most-used option had been property investment – around 76% of the 12,000 approved applicants did so, bringing 16,600 family member dependents with them.

Should the reforms follow, the most expected path, investors will be able to qualify for the permit through:

• Investing €500,000 or more into venture capital funds for at least five years.
• Investing the same value in public organisations or private entities involved in research activities to benefit the Portuguese tech or scientific sectors.
• Generating at least ten full-time jobs or investing €500,000 in a Portuguese business that will create at least five permanent jobs for three years or move.

It is also important to note that the Entrepreneur Visa remains unaffected. Expats looking to open a business, relocate a company, or launch a new branch in Portugal can apply. Applicants can also be self-employed, entrepreneurs or professionals.

Eligibility for Portuguese Tax Residency

One of the common mistakes expats make is to assume that residency automatically infers that they will become Portuguese tax residents. The investment visa has a minimum physical stay requirement of seven days a year in the first 12 months and 14 days a year in the   next two years.

However, foreign national residents living in Portugal for the minimum period will not be categorised as tax residents. They will more likely continue to be liable to declare and pay taxes against their worldwide income in their original country of origin or where they spend the most time.

To be considered a tax resident in Portugal – irrespective of your residency status – you will normally need to live there for at least 183 days of the year. Tax laws were introduced in January 2015, and mean other factors, such as maintaining a primary residency in Portugal, can indicate you are eligible for tax residency, even if you do not meet the minimum stay requirement.

Tax residency is important to understand because it is entirely possible to retain Portuguese residency status, or even citizenship, but be a tax resident elsewhere. If tax efficiencies are one reason for your visa application, you should seek independent advice to ensure you comply with the tax residency rules.

Considerations when applying for a Portuguese Investor Visa

The current period of flux is somewhat unique. Still, resolutions are expected soon, clarifying whether the investor visa will remain and exactly how the conditions and requirements will change if so.

Voting is expected to take place in Parliament in late July, but this is unlikely to provide final answers. Even if the proposed reform is accepted in its entirety, it will take time to proceed and is very unlikely to be ratified before the parliamentary break during the summer.

If the proposed amendments to the investor visa are voted in, the earliest this will take effect will be roughly mid to late September, based on educated estimates. It is also possible the proposal will be rejected and subject to further revisions or forwarded to the Constitutional Court for assessment.

Any expats currently applying for residency by investment are advised to maintain contact with the Serviço de Estrangeiros e Fronteiras (SEF) to request updates or instructions if their application is being redirected to the Entrepreneur Visa application department.

Chase Buchanan is a highly regulated wealth management company who specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, UK and the USA.

Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.

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