The Portuguese parliament has finally approved the proposal of ending golden visas for real estate investment in Lisbon and Porto, the LUSA press agency reported. This change only affects property investments in Lisbon and Porto.
The draft proposal was previously floated by socialist party State Budget 2020 to release property market in Lisboa/Porto from soaring property prices.
This means from now only property investments in Lisbon and Porto will be closed for golden visas. Foreign investors may only invest in outside these regions such as Azores and Madeira and other municipalities to receive golden visas in Portugal.
Those seeking golden visas investing in companies or capital transfer in Lisbon or Portugal will be unaffected. Similarly extensions of residence permits or residence permits to family members who already invested in the current regime will be unaffected with the new changes.
“The aim is to relieve the pressure of the real estate market in areas such as Lisbon and Porto, ending the possibility of obtaining a Golden visa by investing in real estate in these areas and along the coastline.” said LUSA agency
Ana Catarina Mendes, who proposed this reform said last week: “We do not want to alienate investors but to attract them to other areas of the country”.
The Golden visa (ARI) regime was launched in Oct 2012, requiring €500K property investment in major cities and €350K in refurbished properties, so far has brought 4.5bn euros to Portugal, 90% invested in property sector. Over 8200 residence permits were issued under the regime and biggest investors are chinese, brazilians and turks.
Lisbon and Porto account to more than half of all the property purchases for golden visas. Construction and property developers in Portugal have asked the Government not to kill the “golden goose”, which had already attracted billions in these two major cities putting at risk.
Limits to the so-called ‘golden visa’ regime taking the areas of Greater Lisbon and Porto out of the equation, and the introduction of tax thresholds for incoming ‘non-habitual residents’, who previously enjoyed a 10 year tax amnesty “could spell their downfall”, said Reis Campos of the Portugal’s confederation of construction and real estate
So far, only 17 visas were issued for job creation and 455 visas were issued for capital transfer investments which requires €250K or more
The ARI regime is not applicable to citizens who have Portuguese nationality and to nationals of the EU and the EEA.
It is totally unclear how future investors will react to this new change and its timing the corona virus epidemic will have any effect on the golden visa scheme in Portugal. Due to travel ban imposed on chinese travelers, one can expect a slowdown in the golden visa market worldwide.
“The timing is not right! This decision may lead to slowdown of investments in Portugal, giving a window of opportunity to other Golden visa (GV) schemes. Portugal should not become a victim of their own success” said World Citizenship Council (WCC) a non-profit startup, involved with research and development of Citizenship and Residence by investment (CRBI) schemes.
Greece, Spain, Malta already compete with Portugal offering major incentives to golden visa investors.
Update: The new measure is expected come into force from the start of 2021.
