A property purchase in Portugal will no longer confer residency rights, but foreigners seeking a “golden visa” can still plough their money into investment funds that are now expecting a boom in inflows.
The Portuguese government tightened the rules after initially announcing in February 2023 that it would scrap the “golden visa” scheme, which has been blamed for worsening the housing crisis.
The scheme, offering wealthy non-EU citizens who invest in Portugal the right to live in the country, has attracted 7.3 billion euros ($8 billion) since its launch in 2012. However, about 90 per cent of that money has been spent on property, prompting complaints about rising house prices.
Placing money in investment funds has been a variant of the Portuguese scheme since 2015. This is now expected to be its main investment channel. Other options include donations for cultural or research projects.
Lawyer Vanessa Lima from Prime Legal stated:
“Real estate has always taken the focus away from the other options. The main type of investment will (from now on) be in funds – there is no doubt.”
To be entitled to participate in the visa programme, applicants must transfer €500,000 into one or more eligible funds. Portuguese stock market regulator CMVM, which certifies funds, stated that it could not provide a list of those eligible to invest under the golden visa. Lima estimated there were about 40, although some may not yet be open for investment.
Pela Terra’s Alex Lawry-White characterised the changes as a “correction” to regulations that have caused problems such as rising house prices.
The new regulations are wind in our sails. The golden visa programme should have the community… at the centre of its focus.
Contributing at least €250,000 to cultural projects or €500,000 to scientific research or the creation of 10 jobs can also help secure a golden visa. Applicants must authorise a criminal record check and prove no outstanding debts.
Some lawyers believe the exclusion of property investment will make Portugal less attractive to investors who will turn to other countries’ golden visa schemes. Neighbouring Spain is among those countries where property investment is still allowed.
According to Nuri Katz of advisory firm Apex Capital Partners, the fact that qualifying funds only need to invest 60 per cent of their cash in Portugal will further reduce the benefits of the scheme for the country.
Lawyers and advisory firms have long complained that the golden visa process is slow and bureaucratic, and some wanted more clarity on the new rules, which ban both direct and indirect property investments.
Portugal will hold early elections in March after the government has failed in its duties following a series of scandals. Lawyer Raquel Cuba Martins claimed:
“We’ve already had [application] withdrawals because of legislative instability and the lack of certainty. [Others] prefer to invest now and start the process rather than wait for a change a new government might make.”
