Portugal Golden Visa financial implications of socialist governance

Residencies & citizenships 🛂 Portugal Golden Visa đŸ‡”đŸ‡č
#1

I haven’t seen any discussion on this so thought I would throw it out there.

For those interested in the ARI visa, the premise is that you invest money into Portugal in exchange for a path to residency or citizenship.

Portugal’s largest party is currently the socialist party. I don’t know exactly the politics of Portugal but I do know that socialists generally like to take money from those who have it (either through taxation or redistribution) and redistribute it to those that don’t, as well as the idea of elimination of private property. In that sense, it is not totally compatible with the idea of a golden visa investor or private investor.

Is this something to be concerned about in the next 10 years and if so would it make sense to avoid citizenship and focus on permanent residency in Portugal due to these types of concerns? Or to look to another country altogether?

#2

I think you have been listening to American politics too much. European socialism is not the threat to private wealth that you think. No EU country could expropriate private property without giving you the market price for your property. US eminent domain is less restrictive on the US Government than the EU rules are on EU member states.

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#3

Good to hear some perspective on this. Thanks.

#4

I would also add that you were describing communism, not socialism.
The first one was about abolishing private property (in the context you mentioned it).

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#5

That is not exactly what I was describing. I appreciate your thoughts.

#6

The question is does it allow Mexicans to own those :slight_smile: It is kind of normal for foreigners to have various restrictions in place.
And you were not putting an equal sign between socialism and charity, right?

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#7

Hi Mario,
I am not here to debate the merits of socialism.

My entire point was for someone choosing residency or citizenship in a country, it would behoove them to select somewhere where their capital or investments will not be taken by the government. It doesn’t necessarily have to be in the form of seizing property outright. It can take the form of excessive taxation of assets or investments which can have the practical effective of a seizure.

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#9

Thank you!

#10

What is the entire point of ARI but to bring money into the country? In some ideal sense sure, you put your money in and make a bunch of money and pay no taxes. That said, some can argue - quite sanely - where the PT GV is almost too generous. Sure PT is getting access to capital, but it’s paying pretty dearly for it in terms of potential long term costs on the social infrastructure (imagine you move there at age 50 then lean on SNS and everything else). Granted it’s a low-delta bet that many ARI folks are going to actually stay and hit those services very hard, but.

Think about it another way. Would you pay EUR350k for a passport if you could buy it flat out? If that deal were on the table, I bet there’d be a queue out SEF’s door. Which is of course why it doesn’t work that way.

I kind of thank you for bringing it up because I keep losing sight of that. I quibble about 10k here or there. The alternative question is, would you pay the tab flat out if it were an option? Hell, in this format, at least you would get to book a massive capital loss, and you arguably get to write off the lawyer fees too as part of the investment costs.

I know that’s not really what you’re asking. I’m responding to a tiny piece of it.

There is always the possibility that the EU dissolve and Portugal turns into a banana state. Or that you get hit by a bus tomorrow. There is only so much you can worry about.

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#11

I agree with your point that taxation of residents is the very premise of the ARI program and I don’t really take issue with that as things stand now. In fact, the ARI program seems pretty self-sufficient in that most applicants are paying fees and taxes but not taking any public resources because they don’t live there.
Ultimately some of them may live in Portugal full-time and use societal resources but one would assume they would be less likely to need social benefits or assistance in general, so its not a bad program from the standpoint of the PT government and citizens, as it is likely these ARI applicants will be net-positives to the economy.

I meant this thread more as due diligence on the more broad point you mentioned of Portugal becoming a banana republic in the future or otherwise significantly changing their laws in some way that would make citizenship highly undesirable. Probably unlikely but perhaps worth discussion.

Maybe, maybe not. When you start thinking in that direction you have to weigh the relative minimal cost of something like a D7 visa. Sure, you have to live in country, but if that is your goal anyway then why not wait and save the money. I don’t know that I would be ready to part with 350,000 for citizenship but I am sure that many would do so.

#12

On a technical point, when someone says ‘I want socialism’ and points to a Nordic country, what they actually mean is, ‘I want social democracy’.

Real socialism is brutal, bloody, and nasty. It offers limited provision for any kind of private property - eg. Mao-era China and the Soviet Union.

Communism doesn’t exist. It’s a theoretical, post-socialist framework in which the state has ‘withered away’. Except this never happens. It engorges and becomes greedy.

(‘Communist Party’ is therefore an oxymoron.)

I only mention this because it kinda irks me that socialism gets such an easy ride - when it’s such a violent and bloodthirsty ideology that strips away basic property rights.

Whereas social democracy is just a subset of capitalism, with a free-market economy and relatively high taxes to fund social security programmes.

And if you buy into that idea, then you (should) still want/need to attract businesses and foreign talent, so that you can raise revenue off them in some way. Even if it’s via sale of property rather than income tax.

I suspect that Portuguese officials assume that investors will eventually settle/spend more time in Portugal and start paying tax after the 10-year mark.

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#13

Good point. Although truth to be told, there are different types of socialism as well, but I suppose you never had any firsthand experience with them :slight_smile: As with everything in life, nothing’s black and white.
I do remember the decentralized, self-managed system of the '80s in one of the European countries. Good times. Different times. Not everybody’s cup of tea, for sure.
Sorry for the digression.

#16

It’s not a digression. A lot of us don’t know what socialism is, we haven’t lived it. Books just aren’t the same thing really. A lot of us don’t get social democracy either. It’s a whole field of study, after all, these governance models. Talking about it can make us better people. And if people are looking to live in a place, it’s good to know how it operates.

(Ok, many people do move somewhere without bothering of course.)

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#17

The third and fourth largest political parties are the Communist and Left Bloc. The largest party being the Socialist party. While many countries in Europe are trending more conservative, Portugal has moved to the left in the last 2 elections. From what I have read and heard, this success of the Socialist Party is due in part to relaxing of austerity but also more “capitalist” real estate practices such as elimination of caps on rent and making evictions more simple. The latter stimulating huge real estate development booms and economic growth in the country, including lower unemployment and a surge in migration.

My takeaway is that there is not any immediate cause for concern, but this question was intended as a step in due diligence. In the United States there is not much focus on European politics. I have started to get more knowledge of this but it helps to have some context from those who live it.

#18

Barcelona’s Latest Affordable Housing Tool: Seize Empty Apartments
Fill vacant rental units with tenants or we will take over your properties, the city is warning landlords.

This week, the city’s housing department wrote to 14 companies that collectively own 194 empty apartments, warning that if they haven’t found a tenant within the next month, the city could take possession of these properties, with compensation at half their market value.

https://www.bloomberg.com/news/articles/2020-07-16/to-fill-vacant-units-barcelona-seizes-apartments

#20

@CMRoxburgh
A Radical Plan to Stop Rising Rents by Seizing Apartments From Landlords

According to a recent survey, about 47 percent of Berliners support the idea of expropriating major housing companies. Nearly 44 percent of Berliners oppose the idea, and just over 9 percent are undecided.

(A Radical Plan to Stop Rising Rents by Seizing Apartments From Landlords)

#21

If you always wanted to know something about socialism but were afraid to ask, here’s your chance - ask me.

#22

I will ask. What is the best system of governance from your perspective? Communism, Socialism, Capitalism?

I know it can be subjective depending on one’s motivations and internal drive.

#23

As you quite rightly noted, there would be no universal answer for the ‘best’ system, as each system is able to generate certain benefits for an individual human being or for a society as a whole but then may fail in some other aspects quite miserably. And even if you take the same single human being, he/she may enjoy or value different benefits at different points of their life.

However, I will attempt to provide an ‘aggregate’ answer from my own standpoint - and my vote goes to a Capitalism system enhanced with some strong social security elements (i.e. some elements of Socialism if we may call it that way).

#24

As a baseline, I favor systems of government and economic philosophies that do not commit mass murder, and I do not care for authoritarianism.

One of those labels is associated with unmatched cruelty and death in the last century. Another label fostered unprecedented innovations, launched a golden age of science and technology, and improved the standard of living for almost everyone on Earth. I know which system I prefer, and which system I fear.

Folks with different biases might repeat all the same words but swap the labels around. To hint at my biases, I would not have fared well under the economic and social program of the Khmer Rouge, or Stalin, or Mao.

Whatever I might selfishly favor in theory, a balanced system seems like the most stable and peaceful solution. Any extreme ultimately leads to bad outcomes. I’m watching the drama in Chile with concern, and hoping that the pendulum does not bury itself in the opposing wall.

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