We have to be straightforward and say from the outset that Portuguese ‘golden visas’ are not available to foreign investors into real property any longer. It does not mean, however, that ‘golden visas’ to Portugal are totally unavailable.
Foreign nationals can still qualify for legal residence in Portugal and citizenship of the country after a few years if they invest in funds as well as scientific and cultural projects. In addition to that, Portugal has started a Digital Nomad Visa Program. The Program allows foreigners who earn their money remotely from other countries to obtain legal residence in Portugal on these grounds. The Digital Nomad Visa is valid for 1 year and it can be extended.
Dangerous investments
The Portuguese ‘golden visa’ program was launched in 2012 and the conditions of legal residence acquisition have been altered more than once since that time. First, real property located in Lisbon and Porto was extracted from the program. Then the popular tourist region of Algarve followed. For a couple of years, a foreigner could qualify for a ‘golden visa’ by purchasing property in an underdeveloped region of Portugal.
In February 2023, however, the Prime Minister Antonio Costa announced new changes to the ‘golden visa’ program. He said that ‘nothing could justify keeping this visa regime’ as the opportunity to invest into real property in Portugal thus acquiring legal residence there had sent property prices rocketing. Portugal was facing a housing crisis. Public protests took place and the activists blamed the national authorities for letting ‘rich foreigners buy houses for half a million euros and become legal residents of Portugal’. They said it reminded them of the colonial style.
Over the last ten years, the European countries granting ‘golden visas’ to foreigners have earned around 25 billion dollars in foreign direct investments. Portugal has been one of the largest beneficiaries of the ‘golden visa’ program. Since the program was started in 2012, Portugal has earned 7.3 billion euros. According to statistics, citizens of China, Brazil, South Africa, and the USA constitute the largest portion of applicants for ‘golden visas’. Around 90% of all investments that foreigners bring to Portugal has been made in real property.
New reality
Now investments into real property in Portugal cannot make a foreigner qualified for a ‘golden visa’. This does not mean that a foreign national cannot buy real property in Portugal at all. He/ she can, but it will not be enough to become a legal resident of the country. You still can ‘buy’ Portuguese legal residence but you have to put money in an investment fund or finance local scientific and cultural institutions. Investments can be made into several funds but their total amount has to be at least 500,000 euros. You can find detailed information about the investment options in Portugal if you visit the International Wealth website.
Experts agree that real property has largely distracted the foreign investors’ attention from other routes to Portuguese residence. Now, since the real property option is gone, various Portuguese funds are going to see a growing number of foreign investors knocking on their doors. Without doubt, this is good news for the funds.
CMVM, the Portuguese stock market regulator that certifies the funds, cannot currently provide an exhaustive list of funds that can accept investments in the framework of the ‘golden visa’ program. According to unofficial estimates, the number of such funds is around 40 in Portugal even though some of them may be not open for investments thus far.
There is an agricultural investment fund in Portugal, for example, that is among those organizations that hope to benefit from the recent changes to the Portuguese ‘golden visa’ program. The fund is helping to restore almost a thousand hectares of arable land in the region of Alentejo and additional investments would be highly appreciated.
Another fund that invests into international schools in Portugal is already witnessing an increase in the number of foreign investors. ‘The wind is blowing into our sails’, said a representative of the fund.
Equivocal expectations
According to some experts, 80% to 90% of all foreign investments made in the framework of the ‘golden visa’ program are going to be made in various funds. It is believed, however, that because the real property option is unavailable to foreign investors anymore, the total amount of investments that the program generates is going to become lower in all likelihood. ‘People are going to put money into funds not because they want to invest into the Portuguese economy but because they want to obtain golden visas’, an expert said.
Besides investment funds, foreign nationals can put money into cultural projects (250,000 euros) or scientific research (500,000 euros). Another route to legal residence in Portugal is creating at least 10 new jobs in the country. If this condition is met, the amount of investment is irrelevant. All applicants for ‘golden visas’ have to bring police clearances from their home countries and prove that they have no outstanding debts.
Some less optimistic experts believe that the deletion of the real property option from the list of options available to foreign investors is going to divert their attention from Portugal to other countries offering similar opportunities. Spain, for instance, also administers a residence-by-investment program and foreigners are entitled to buy property there to qualify for a golden visa. Moreover, the required investment amount is the same – 500,000 euros. We have to note, however, that the housing situation in Spain is exactly opposite to the housing situation in Portugal. There is a shortage of property in Portugal while there is excess of property in Spain. Many houses are not lived in there.
There is one more issue that worries some experts. In accordance with the law, the Portuguese investment funds are obliged to make only 60% of their total investments in Portugal. Thus, 40% of the money that a foreign applicant for a ‘golden visa’ brings may end up outside the country.
Brief history of European ‘golden visa’ programs
European ‘golden visa’ programs appeared after the financial crisis of 2008. At that time, more than 10 European countries including Portugal made an attempt to plug their budget deficits by offering legal residence to foreigners in exchange for investments and investments in real property in particular.
In the absence of common European rules, the requirements to foreign investors differed greatly. In Latvia, it was enough to invest 50,000 euros in real property to qualify for residence, in the Netherlands, the minimum investment amount was 1.2 million euros, and in Portugal, a foreigner could buy a house in a remote region for 350,000 euros thus qualifying for a residence permit. In most cases, the foreign investor could live and work in the host country for 3 to 5 years and then apply for citizenship by naturalization. According to statistics, 132,000 people acquired EU citizenship between 2011 and 2019.
However, the reputation of some of these programs was rather ambiguous. First, the European authorities believed that the programs provoked an upsurge in housing prices. Second, they were very much worried about foreign criminals obtaining legal residence in the European Union. After all, the applicants brought documents from foreign countries. Who could guarantee that these were trustworthy documents?
Thus, the European Commission called upon the countries issuing residence permits to foreign investors to cut this practice. In response, Ireland has closed its residence-by-investment program, Cyprus has been forced to close its program, Greece has doubled the required investment amounts, and Portugal has taken away the opportunity to qualify for residence by purchasing real estate in the country.
This said, however, residence-by-investment opportunities are still available in some EU countries including Portugal. True, the prices have gone up in some places, and some routes to European residence are closed but some other routes remain open. With some expert assistance, acquiring legal residence in the EU is quite possible for people from other parts of the world.
