Obtaining residence permit and Portuguese citizenship by the purchase of real estate
A representative of the Legal Department at iWorld. Author of articles on Migration Law.
November 18, 2021
19 minutes read
The Portuguese Golden Residence Permit Program is the best option for wealthy foreigners to obtain the status of a resident of the European Union. More than 90% of foreign investors choose to participate in the Golden Visa Program for a residence permit in Portugal by the purchase of real estate worth 280 000 EUR. Golden Visa holder has the right to immigrate to the country with their family and to become a full citizen after 5 years of residency.
Since 01.01.2022, changes in the conditions of the program Golden Visa will come into force, which will affect both the minimum amount of investment, and requirements by the purchase of real estate.
The benefits of residence permit in Portugal
Foreign investors who have obtained a residence permit by the purchase of real estate in Portugal, are granted the following resident rights:
- the opportunity to rent out real estate and receive a permanent passive income; the right to sell the property after 5 years without losing residency status;
- no requirements for language skills and knowledge of the history of Portugal;
- permission to cross the borders of the Schengen countries and the European Union without visa;
- the possibility of obtaining Portuguese citizenship in 5 years after obtaining a residence permit by the purchase of real estate;
- no requirements to renunciation of the citizenship of another country;
- the right to conduct business in Portugal on preferential tax terms;
- low requirements to the period of stay on the territory of the state to maintain the status - from 35 days during 5 years;
- the opportunity to immigrate with the family, including children of any age and parents;
- favorable tax system with current benefits (NHR) for new residents for 10 years;
- the possibility to study in European educational institutions at reduced prices.
The program for obtaining the Portuguese residence permit is one of the most favorable in the European Union, it has many advantages over similar options for investment immigration in the EU. Portugal Golden Visa attracts foreign investors with the opportunity to live or have a vacation in a developed European country with a mild subtropical climate and minimal requirements for the duration of stay. Despite the many advantages of immigrating to Portugal, the disadvantages include Portuguese language requirements and territorial restrictions for real estate investments, which will take effect on January 1, 2022.
Portugal Golden Visa Residence Program: program description
The Golden Visa immigration program has been in effect in Portugal since October 8, 2012 and is regulated by Laws No. 305-A/2012, as well as No. 84/2007 and No. 23/2007. A law number 14/2021 was passed in December 2021, according to which the amount of compulsory investment under the Golden Visa program will increase beginning on 01.01.2022, and the number of regions available for investment in real estate will be reduced.
The Government of Portugal offers wealthy foreigners to obtain the status of resident on the basis of making the investment and gives the opportunity to choose one of the following options for investment:
The purchase of real estate
- in developed coastal regions — min. 500 000 EUR*;
- in regions with low GDP or sparsely populated — min. 400 000 EUR*;
- facilities over 30 years old or located in areas subject to renovation — min. 350 000 EUR*;
- the real estate of the underdeveloped regions of Portugal — min. 280 000 EUR*.
*As of January 1, 2022, foreign investors will not be able to buy real estate located in developed coastal and resort areas, as well as Porto and Lisbon to participate in the program Golden Visa.
- registration of a company and creation of 10 or more jobs in Portugal;
- investing min. 350 000 EUR in business and creating 5 jobs*.
*Since the beginning of 2022, the minimum deposit amount will start from 500,000 EUR.
Direct investment in the economy
- the cultural field or artistic production — min. 250 000 EUR;
- in units of investment and venture capital funds — min. 350 000 EUR*;
- the research and development industry — min. 350 000 EUR*;
- deposit in a Portuguese bank — min. 100 0000 EUR**.
*As of January 1, 2022, investment amounts will be raised to 500,000 EUR.
**1.5 million EUR as of 01.01.2022.
The process of obtaining a Golden Visa Portugal is quite fast and takes only 3 to 8 months once the documents are submitted. However, the chosen investment option and personal data of the applicant affects the duration of the procedure and the timing of taking a decision on the migration application. Portuguese investor residence permit is issued for 1 year, after which the resident has the right to repeatedly extend the document for 2 years.
Holders of the Golden Visa receive the rights and obligations on a par with the residents of the European Union states. Residence permit in Portugal gives its owners the right to cross the borders of the European Union and the Schengen area without a visa, as well as stay on their territory for up to 90 days over a period of six months. To maintain the residence permit and be eligible for its extension, a foreign national must stay in the territory of Portugal for at least 7 days during each year of residency.
Together with an investor, their family members can immigrate to Portugal:
- the financially dependent parents of the applicant and his or her spouse;
- minor children;
- children between the ages of 18 and 23 who are enrolled as full-time students in an institution of higher learning.
In addition to the costs of purchasing a residential or commercial property to obtain a Portuguese residence permit by the purchase of real estate, the foreign applicant will be required to pay a state fee for each family member to participate in the Golden Residence Permit Program. In addition, the list of mandatory costs includes payment of health insurance, opening a bank account, obtaining a tax number and taxes on the purchase of real estate.
According to Portuguese legislation, a tax resident is an individual who resides in the country for 183 days during the year or has a residential property in the country for personal use. The tax on personal income in Portugal ranges from 14.5% to 48.0%, on real estate from 0.3% to 0.8%, on the transfer of property from 5 to 7.5%, on dividends from 0 to 35%, on inheritance and gifts from 0 to 0.8%.
The Portuguese government offers new residents the Non-Habitual Resident (NHR) program. Such residents are exempt from taxes for 10 years on income earned in other countries. Other benefits of NHR status include a flat rate of 20% on income earned in Portugal. The tax rate on foreign pensions is 10% for new residents and 0% on wealth, gifts and inheritance. To qualify for NHR status, one must be financially independent, invest in the Portuguese economy or start a new company in Portugal.
New residents of the country in the status of Non-Habitual Resident (20%) and non-residents, who were not taxpayers in Portugal in the last 5 years (25%) have the right to pay income taxes under the preferential scheme. The amount of tax on income from rental property and investment deposits is 28%. This tax regime is valid for 10 years from the date of assignment of tax resident status and provides exemption from the obligation to pay taxes on income received outside Portugal.
A foreigner may lose the opportunity to renew their residence permit if they cease to meet investment requirements, for example, when selling a property earlier than 5 years after purchase. Also, the resident status can be revoked due to violations of the laws of Portugal and other Schengen countries.
Conditions for obtaining a Portuguese residence permit through real estate
Potential participants of the Golden Visa migration program must fulfill the investment conditions, as well as meet a number of requirements that are put forward to applicants. Citizens of states outside the European Union are entitled to obtain a Portuguese residence permit under the Golden Visa Program.
To maintain residency status and be able to extend your residence permit a foreigner must be in Portugal for at least 7 days a year. When immigrating to Portugal, an investor has the right to retain his first citizenship and to hold two passports at the same time.
Based on practice, the main reasons for refusal of residence permits in Europe when purchasing real estate include the provision of false information, lack of confirmation of the legality of investment funds, as well as problems with the law.
As of January 1, 2022, amendments to the migration law of Portugal will take effect, according to which there will be territorial limits on the purchase of real estate for participation in the Golden Visa program. Under the innovations, investors will not be able to acquire residential and commercial property and land in the coastal regions, Lisbon and Porto. In addition, the Government of Portugal plans to raise the minimum amount of investment under the program. These changes in legislation are actively discussed by immigrants from CIS countries and encourage them to apply before the end of 2021 under the more favorable current conditions of the program.
The criteria that must be met
- The age of the main applicant must be 18 years old or older.
- Successful completion of Due Diligence.
- No criminal convictions or problems with the law.
- Health insurance.
- Absence in the sanctions lists of the European Union, the USA, Canada, and the UK.
The required documents
The list of documents that an investor will need at all stages of the procedure for obtaining a Golden Visa Portugal, includes:
- valid international passports of the investor and spouse;
- proof of the legality of the source of investment funds;
- taxpayer number from the country of residence;
- real estate purchase contract;
- health insurance;
- certificate of no criminal record for the main applicant, spouse, parents, and children over 16;
- proof of financial dependence for relatives 18 to 65 years old;
- birth certificates of children.
How to get a residence permit in Portugal by the purchase of real estate
The procedure for obtaining a Portuguese Golden Visa by investment in real estate includes the following mandatory steps:
- Consultation with a migration lawyer
Foreign investor can start preparing for the process of immigration to Portugal on their own, or entrust this issue to experts in the field of international law. In this case, the applicant will be able to consult with lawyers about the important points of drawing up documents, the selection of the investment object and learn about the nuances of participation in the Golden Visa program of Portugal. Also, experts can assess the chances of the candidate for approval of the migration application and determine the possible risks of rejection.
- Preparing the documents
The applicant for the Golden Visa must collect a package of documents to submit to the Portuguese migration agency (SEF - Serviço de Estrangeiros e Fronteiras). The foreign investor will also need to obtain a Portuguese Tax Identification Number (NIF - Número Identificação Fiscal) in person or through a trusted person in Portugal, which is necessary for the subsequent opening of an account at a local bank.
- Making an investment
The Golden Visa Program applicant chooses an investment option and determines the most suitable property. Investment funds obtained legally must be transferred directly to an account in a Portuguese bank.
- Submitting an application at SEF
The full package of documents of the investor and their family members is submitted online to the Portuguese migration agency (SEF) without the need for personal presence of the applicants. The applicant also needs to pay the state fee for the processing of the migration application. The authorized agency reviews the application and thoroughly verifies the submitted documents within 90 days.
- Obtaining a residence permit
If the SEF makes a positive decision on the migration application, the foreigner and his/her family members will need to come to Portugal to submit biometric data and pay for the production of a plastic residence card. The issued residence permit is valid for 1 year with the possibility of multiple renewals for 2 years.
How to buy property in Portugal
The process of acquiring real estate in the framework of the Golden Visa Portugal program can be divided into several main stages:
- Selecting the property
A potential immigrant should choose a residential or commercial property in Portugal to invest in. To consider several options and choose the most suitable, a foreigner can personally visit the country or find an object remotely. The best option would be to contact a reliable real estate company. Then the investor enters into a preliminary agreement and makes a deposit of 10% of the total value of the property.
- Checking the property
In order to avoid problems with the property, it is worth using the services of lawyers and check the documentation of the selected object, as well as to exclude debts. At this stage, the seller must provide for the verification of the technical passport of the chosen object, extracts from the land registry and tax inspection, certificate of energy conservation and opinion of the Portuguese Institute for the Protection of Historical Monuments (in the case of the sale of an object older than 30 years).
- Making the deal
After successful due diligence, the investor pays the state stamp duty and title deed tax (6-8% of the value of the property). The parties conclude a contract of sale, and the remaining amount is transferred from the escrow account in a Portuguese bank to the seller's account. Next, the new owner of the property must register with the Land Registry and the Portuguese Tax Service, obtain a house book and a certificate of registration, as well as conclude contracts with the utilities.
The object of real estate acquired to participate in the Golden Visa Program, is allowed to rent, and sell after 5 years of residency with the preservation of status. A foreign investor may purchase any residential or commercial property that meets the cost conditions of the migration program.
Other options for obtaining a Portuguese residence permit
Among the options for obtaining a residence permit in Portugal, the most popular is the investment program "Golden Visa". Wealthy foreigners can invest in Portuguese business and create jobs in the country, buy real estate or make a direct investment in the state economy.
Another way to obtain the status of a Portuguese resident is to apply for a D2 visa, which is suitable for entrepreneurs, freelancers and independent service providers from third countries. By obtaining the D2 visa, the foreigner receives a residence permit in Portugal, along with the right to move freely within the Schengen area.
In addition, it is possible to obtain a residence permit for foreigners with a stable source of income outside of Portugal - visa D7 for financially independent persons. The main applicant must have a steady monthly income over 665 EUR. Sources of income, suitable for registration of the Portuguese residence permit, are dividends, wages, pensions, interest on deposits and other. The disadvantages of this type of residence permit may include the need to stay in the country more than 183 days per year and a low probability of approval of the application.
The advantages of the investment program for real estate, compared with a residence permit for the financially independent persons, are:
- minimum period of compulsory stay in Portugal;
- the opportunity to receive a passive income from the rental of real estate;
- no Portuguese language requirements;
- high probability of application approval.
Extension of residence permit
To extend the residence permit in Portugal, the foreign investor and all their family members are required to stay on the territory of the state for at least 7 days per year. Also, in order to obtain the right to continue residency, it is necessary to maintain the investment conditions under which the Golden Visa was issued.
Initial resident status is issued for 1 year, after which the residence permit can be renewed for 2 years an unlimited number of times. To extend the residence permit, it is necessary for residents to submit an application and a package of documents electronically, and then submit the original documents and biometric data. The residence permit extension procedure takes on average 1 month.
Portuguese citizenship for real estate owners
After 5 years of residency, foreign nationals are eligible for both a permanent residence permit and a Portuguese passport. The requirements for obtaining citizenship and permanent residence permit in Portugal are the same:
- maintain residence status for 5 years;
- not to violate state laws and not to have a criminal record;
- stay in the country for at least 7 days during each year of residency;
- pass the Portuguese language test (A2).
The advantages of owning a Portuguese passport are:
- the right to visit 187 countries without visas;
- the ability to retain a second citizenship;
- the right to live, work and do business in any country of the European Union;
- preferential taxation system;
- the right to use the educational and health care systems.
In order to obtain a permanent residence permit or citizenship, the resident and their family members have to submit a package of documents and an application to the Portuguese migration agency (SEF). Applicants should confirm compliance with the investment conditions of the Golden Visa program and fulfillment of all legal requirements. The process of obtaining citizenship by real estate in Portugal takes from 6 to 12 months.
Immigration program Golden Visa Portugal is one of the most advantageous options for obtaining the status of a resident and citizen of the European Union. More than 90% of foreign investors choose the option of Portuguese residence permit on the basis of real estate purchase.
Portugal Golden Residence Permit Program allows you to become a EU passport holder after only 5 years of residency in Portugal, provides the right to dual citizenship and has many advantages compared to similar migration programs of other European states.
An important part of the process of obtaining a Golden Visa is a professional legal support for immigrants. In order to draw up the necessary documents correctly and take into account all the details of the migration laws of Portugal, it is worth contacting experienced lawyers.
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Author: Alexey Nosovsky
Author: Alexey Nosovsky
Author: Alexey Nosovsky
Author: Alexey Nosovsky
Author: Alexey Nosovsky