The end of Portugal's Golden Visa—for real this time?
This is a companion discussion topic for the original entry at https://nomadgate.com/portugal-golden-visa-ending-for-real/
So my take from all of this is —— no one really knows yet. Sit tight everyone and wait out the process. This still has a comment period of 30 days, then it has to go to parliament, then depending on the outcome, potential lawsuits happen. No one knows where it will end up. We did the GV fund (and later also bought property separately) because we love PT and want to eventually move there and wanted to also use the family reunification option. I’m hopeful that it will ultimately be found unconstitutional to not allow a cessation of renewals but they could find ways to end that too if they really want (ex making the fees so extraordinary that you “choose” not to renew). Everything at the moment is pure speculation so don’t get too worried yet over this proposal.
If you haven’t invested yet, I would put a hold on your plans. Clearly the government has fundamentally revised their position on the GV and if it were me at this point, I would not invest.
Since Portugal will end its GV program and will not issue any new visas moving forward, what does this mean for people with pre-approvals?
Any input is welcome.
Yes, we’re ready, just waiting for Visas… I don’t think D7 Is an option for us because I don’t think we have qualifying “passive” income. We were planning to run the property as the AL it’s been for more than a decade and live in the owner’s apartment….
Don’t know. However given how many people are in this situation, and by virtue of the fact they’ve made a sizeable investment these people have money, I would expect to see multiple legal cases should they be impacted. Likewise if renewals are impacted.
Here’s a document prepared by Prime Legal based on the announcements yesterday. It contains the direct quotes about the changes to the GV program that were made yesterday, as well as their analysis.
GV Amendments 2023.pdf (658.5 KB)
Here are the relevant quotes from the announcements:
The related and exact words of the Prime Minister were: “Two particularly important measures to combat real estate speculation - the first, the elimination of golden visas, or rather, the elimination of the granting of new golden visas. As for the golden visas already granted, their renewal, in the case of exclusively real estate investments, will only be renewed if they are the owner’s own or permanent home or of his descendant or if the property is placed, on a permanent basis, on the rental market.”
Later, within the clarifications requested, the Prime Minister said: “Meanwhile, a new immigration law for foreigners came into effect. This law already regulates in a very innovative way the granting of residence permits for special purposes, for the purposes of studies, investment, highly qualified, seasonal workers, for various circumstances. This regime must be the rule regime, not justifying, nowadays, what is the exceptionality of the golden visas. In fact, what we can see is that of the approximately 11,000 Golden Visas granted so far, more than 9,000 through real estate investment. Very low rate, not to say almost zero in job creation, and very low contribution to other activities. There are some gold visas that are active in the field of cultural patronage. What will happen (one thing is a decision not to have new ones, another thing is what happens to those currently granted). Those already granted, at their end, are subject to evaluation. If it is exclusively for real estate, there will be renovation, if the real estate investment is for permanent own housing, for descendants, or be placed on the rental market (and there we do not place the restriction of being placed on the affordable income market, it is purely and simply placed in the rental market). There are others that were granted for other purposes and, in this case, looking at the current law, it is possible to convert them depending on what the concession counterparts were, namely, in the area of cultural patronage, so there will be no disruption there, there will be a reclassification of the legal figure.”
Also questioned about the scope of the program termination, the Minister of Finances replied that: “The elimination regarding Golden Visas is general, regarding the entire model that is known because the assessment that is done even of the recent changes that have been made regarding the limitation to real estate were not sufficient regarding the continuation of the mechanism. And it has the following characteristics: (i) on the one hand, we are talking about new applicants, new candidates for golden visas, the system will close and will remain active in renewals under certain conditions and what Mr. Prime Minister referred is that under the new legislation regarding the entry, stay and exit of foreigners that there are mechanisms that allow this mobilization, namely, for investment purposes, which are carried out, namely, in the cultural areas and others that I mention. But the assessment we have so far of the use of the instrument is rather residual in other purposes than real estate and that is why this additional step is taken”.
I’m copying part of their analysis here:
At this moment, naturally, everybody is surprised, full of questions and uncertainty reigns in the face of statements that are contradictory, alien to the topic under discussion (lack of accessible habitation) and demonstrating a lack of technical knowledge about the legislation in question. In this sense, it is important to look rigorously at the objective data and proceed with caution.
- It is important to underline that the Government does not have legislative competence to approve changes to the Golden Visa program. The competent body is the assembly of the Republic, which should then receive a proposal with the content of the measures announced above, for voting.
- It is expected that now there will be 1 month for public hearing, followed by the sending of the final proposal to Parliament for discussion on March 16th, where it should take 15 to 20 days for approval. After this, the diploma must be sent to the President of the Republic who may react as follows:
- Direct ratification and in this case, the proposal will be published in the official journal, subject to a transitional period not yet disclosed;
- The President does not accept the proposal as it is, and returns it to the Parliament for amendment or;
- The President accepts the document but requests the evaluation of the Constitution Court to confirm if any fundamental rights or principles are being jeopardize by the new legislation.
- The governing party holds the parliamentary majority and therefore can effectively approve the measures announced above without further amendments if they wish so. However, it is common for all parliamentary parties to present proposals for alternative wording, in addition to being able to still be reflected in the letter of the law to be proved, measures or amendments to the advanced measures due to the period of public hearing, essential to the process for that the legislator knows the reality of the facts and had repercussions on the final version of the law subject to voting.
- Changes to the other immigration programs (D7, D2 or Digital Nomads) were not addressed, but if some of the measures mentioned above are approved, it is necessary to make a formal amendment to the law in force and this could lead to a new wording with impact also in the so-called standard residence permits.
- The Government wants to ensure the renewal of ongoing processes, however subject to additional conditions in order to use Golden Visas to repair housing problem.
- The Government used with some interest the concept of “reclassification of the legal framework”, which is a new concept that seems to emerge to protect the rights of investors.
- Unusual emphasis was given to cultural heritage in this context, and it is expected that there is something to develop here, despite this being already a viable option of investment under the current regime.
Based on the above, at this stage we believe to be fair to do the following assumptions:
- Expectedly, in the next, at least, 45 days, the current law remains in force.
- At this point, nobody knows – neither the Government nor the Parliament – what the exact content of the final amendments to the law will be.
- There is a significant risk of definitive and total termination of the Program in a medium- short term.
- There is no certainty as to the entry into force of the amendments to the law.
- The door to legal alternatives was opened, which will allow the continuity of the immigration and foreign investment flow to Portugal, either through new programs, orthrough the requalification of ongoing processes under a different framework.
- There is a willingness from the Government in adopting measures that interfere with the property right – constitutionally guaranteed – and with the principles of legal protection,given the possible adoption of measures with an impact on ongoing processes.
- Several reactions may arise, including a rush to anticipate the submission of processes, so that they are covered by the laws in force; alternatively, the massive presentation of legal proceedings against the State and even preliminary injunctions to avoid these specific amendments; the renegotiation of ongoing investments for adequacy to other types of residency programs or even the massive withdrawal of ongoing processes with requests for compensation from the State.
There’s more to it, so I recommend reading the full PDF, it’s only a few pages long.
I asked them if there were any official documents available anywhere that detailed the proposals, and apparently it’s only these slides for now:
mais-habitacao-final.pdf (1.5 MB)
My current take is that all new GV applications will be halted by the end of the year at the latest (quite possibly sooner). Renewals will continue in general, although it sounds like there may be restrictions on residential real estate (must be rented out or a primary residence) and other paths may be renewed as they are or rolled into new similar program(s) that entirely excludes (residential) real estate from new applications.
There’s a number for you… 723,000 vacant dwellings ! Some more focus on those would probably be highly beneficial …
No one in their right mind would invest in the real estate sector in Portugal right now. Government mandates, rent caps, rent increase caps, extreme tenant protections , loss of short term rental rights, loss of residence rights for investors. I fear this is going to backfire in an epic way.
Likely that housing is not where people want to live, or needs renovation, etc. It’s the same as when people in the USA complain about building more housing when there is so much empty housing in the USA
It’s all condemned, or in places people don’t want to live
Of course it needs renovation, but plenty of people will live in the inner 'burbs of Lissabon where these buildings are, but it cannot be if the law allows 1 sibling to hold out against the majority of his counterparts for “a few dollars more”, while the building is boarded/bricked up and slowly moulders away for decades…
My lawyer got back to me and seems very sure existing applications won’t be impacted. Especially our non-real estate investment (we took the cultural heritage path.)
Of course, nobody can predict the future, but that seems to line up with the analysis you posted. It would be an extreme break in precedent for the closure of the GV program to apply to applications already under way.
Sure it can. It’s one of the reasons there’s so much boarded up housing. There are semi-finished hotels all over the country where the funding dried up, but because the owners want the property marked to book not market they don’t put it on the market… don’t think this country works like you think it should.
We purchased a long-term rental property at the 280k level last year. Our applications were submitted in late September 2022. There has been no further movement on the application.
Has anyone received any guidance from their attorneys or have any read on whether we should be OK? Waiting to hear back from mine.
Most EU contrives require a person to be tax resident to claim a permanent habitation - this will kill many birds w one stone. People have to live in the country to get that which deals w one EU gripe. Alternatively they can be forced to moce Air BnB to long term rental which helps the RE market at the margin but is such a useless yield especially the prices at which many GV investors bought that many may just give it up, also helping w the EU. Oh well.
All patronising aside, I’m referring to existing properties owned by families and bequeathed to the next generation who would rather disagree over a sale value for years than achieve a quick sale…
Sure it doesn’t work the way I think it should, but if were talking about 723k buildings but the pollies are “posturing” about “the damage” 10k GV’s are doing, then I as a future Portuguese will surely lead opinion back to real culprits…
Hmmm… yes, that is my fear too. I’d rather not be doing two tax returns if I can avoid it…
In regards to the AL license for short term rentals. Are they restricting that for all property owners or just for those getting a GV?
When we took possession of our apartment in OCT 22 in Porto city centre, I was informed that Air BNB licences were already stopped and long term rentals was the only way forward.
Not sure if that was the starting point to this new regulation or just a rule that was put forth in Porto city centre
Open to interpretation
After one year of waiting for pre-approval now the program is ended. Easily the worst investment I’ve ever made.
What rational investor would put money in Portugal after this nonsense?
AFAIK AL licenses are up to the neighborhood government essentially, and many have stopped granting licenses long before this