If on the street sentiment is so negative, can we expect even more delays and stalling from the SEF ?
The Portuguese Can No Longer Afford To Live in Portugal (Or Even Survive)
To be fair, the complaints could have been from my city and others on the American west coast. Even the foreign money. The party seems to be over. They’re just mad because they came in late ('60s.)
The article makes some fair points, but it is disingenuous. On one hand, she writes that foreigners buy houses and never live In Portugal while in the next paragraph stating that foreigners “enjoy the same services”, same benefits and roads and services as Portuguese. Which is it? And to state that those with a golden visa “don’t pay or pay less tax than the general population…” This is a fantasy of epic proportion unless you consider the fees of thousands and thousands of euros along with VAT, IMI, IMT, AIMI or IS not to be a “tax”. Of course, none of this is true but it certainly makes for a good story.
As Donn noted, this same issue afflicts every major city today. No where in the world can the general population afford the most prime real estate locations. We saw this in my city about 10-12 years ago. All of the city center dilapidated properties were acquired and redeveloped at much higher prices which priced out many people including myself. As a resident of the city, it makes me proud that the city is booming as it brings investment and growth and jobs where they did not previously exist.
Same in my city to Mumbai .You cant live i city center .Cost is higher them most of country
The average person does not know these things. And when the average person is paying 48% tax rates and sees someone with more money paying less than that they get upset.
Most people only see snippets of the picture. Often they only see the snippets they want to see. This is understandable because there is so much to know and people can only know or pay attention to so much.
She probably does reflect the opinion of some people on the street. And frankly it is true that there is no obvious benefit to her, only negatives. We can argue all we want that it is benefiting her but if so it’s third hand and marginal. But it’s nothing really new, other than maybe in scope and scale, and no worse so than any number of other places.
This is part of why if I purchase some property in lisbon I’m hoping to build a new building and/or more units. While in aggregate me buying an apartment or existing building does increase the likelihood of new housing being built, it’s a lot easier to point to something I funded to be built than just bought
The article really expresses more of a typical frustration with the economic imbalance of Portugal with respect to other more industrialised countries of Europe, Asia, and America. The author raises many valid points, but fails to offer a single concrete solution, blaming everyone from the government to the investor for the poor overall economic outlook. The unfortunate reality is that Portugal really does not have well-developed industrial, financial, or high-tech sectors (though some trend to develop high-tech is emerging). The traditional agriculture, fishing industry, and limited maritime trading are hardly enough to sustain the country at the level of desired prosperity and public service. And so, the tourism is one of the key industries that brings the much-needed revenues, along with construction financed by the influx of foreign cash. This does create a large service sector that will employ many, but it will not yield the high salaries desired - a phenomenon that is replicated in just about any other country.
It is important to remember that Portugal was in dyer financial need during the last crisis of 2008 - 2012 and had to be propped by wealthier countries of EU, much to the chagrin of the population in those countries who felt just as victimised by having their taxes spent elsewhere in the EU. The GV programme was introduced to help with the infusion of much-needed funds during that time and was hailed as one of the more ingenious solutions. Now, with the last crisis drifting deep into memory, it is easy to forget the benefits and just concentrate on the perceived negatives. Nothing new, but rather sad.
What is more concerning to me is that she is more interested in pivoting further towards socialism. Again, this is not new, yet every time any country tried to implement such political and economic system, it always resulted in failure - just one look at modern Latin and Central America would be sufficient, not to mention the former Soviet block. Too bad that we just don’t seem to learn from the lessons of history.
Portugal seems also to have a history of
(a) dissipating wealth through poor choices - Portugal was once arguably the wealthiest country in Europe as the leader of the Age of Discovery, but managed to squander it all without ever investing in itself, hence all the wonderful palaces and monasteries like Mafra and Alcobaca but a lack of industry. It’s not clear how much this has changed.
(b) corruption and wealth concentration - while GV was a great notion, has it really done much besides enrich a certain small segment of the population? This seems to be a common theme, just as is the dissonance between rich Lisbon and the poor rural areas that has existed since forever. And there are a lot of entrenched interests wanting to see that money flowing in certain directions and not others. Not so long ago, the list of available funds pretty much focused on the same sets of real estate investments that people were pouring money into directly anyway, just through a fund vehicle, and all that almost certainly going into the same few pockets of leading developers. And how many of them hewed to the “only 60% in portugal required” line and kept the rest offshore? If you’re a working stiff, you’d be bitter too.
It’s not that other countries don’t have their problems, of course. And this is just from the history I’ve learned so far, and I have a lot to learn.
A turn towards socialism is an understandable consequence of imbalanced societies - the have-nots wanting to pull from the haves. And people like her not having concrete answers… hey, it is hard.
I don’t endorse it, but I get where it comes from.
The list of funds now has more of a spread of things that might actually create better jobs, but it’s been a long time coming. What I hope is that still more of these kinds of funds will come in and attract money, and that they will be able to attract talent both from within and without that will be able to effectively deploy the 10s of millions in startups and SMB to bring the innovation and industry that will drive the change that needs to happen. Sending EU funds is nice but it’s not enough because it’s just money without knowledge. Giving the younger generation reason to stay is what’s needed. I don’t even think it’s about the money/salaries, it’s about hope for progress.
But it’s also going to take more investors who are willing to take risks instead of just expecting S&P-like returns and/or capital preservation (which no doubt is where the drive into real estate comes from).
Non-dictatorial government is hard. And there ain’t a ton of practical experience with it running around there. WIP.
Very-well put, and I entirely agree.
My only hope is that with programmes aimed at digital nomads and NHRs, many would ultimately would consider setting a shop in Portugal. Money attracts money, prosperity garners more prosperity, and economic boom boosts morale. Portuguese have been asleep at the helm far too long (though Salazar did manage to stabilise and prop the economy considerably in the recent history at the expense of a dictatorial regime). The benefits of these new programmes will take few years to deliver tangible results, and the patience will be hard to muster. Hopefully sensible decisions will prevail rather than a quick “nationalisation” of someone else’s assets that will wreck the entire progress.
Articles like this should be taken with a pinch of salt. The Portuguese governments have done a very good job over the past 40 years - bringing Portugal up from poverty to having admirable public education and health, social cohesion, crime statistics and equality of income. And success of tech based startups - per capita Portugal is one of the most successful countries in the world at creating successful start ups. All but a vocal minority realize that - they don’t want a wholesale change in government direction but rather just tinkering around the edges.
And most realize that the primary drivers in property price have been the easy money policies coming out of the EU and USA (including of course the benefits that Portugal has received from the EU).
But the GV has certainly had some impact on property prices (some estimates are that 1 out of 5 home sales last year in the Porto and Lisbon areas were for GV purposes), and a number of people do buy and leave residences vacant. And the Non Habitual Resident Tax program does mean that most GV investors pay little or nothing in Portuguese tax whilst they do benefit from at least some services. Which is why the government curtailed the property component of the GV at the end of last year and turned the emphasis to VC investment.
Unfortunately, as many funds invest in residential property, which goes against the spirit of the legislation and the intent of the government, this has not alleviated the problem, and there is naturally some public (and government) dissatisfaction around this. On the positive side, prices seem to be dropping rapidly with both the curtailment of the GV program and the rise in rates, so this problem may be temporary.
And I very much doubt that this is the cause of slow SEF processing times though;- visa applications processing times for the UK and USA are no better and this seems to be a global problem now.
Interesting perspective. Thanks for sharing. I do understand that Spain has a digital nomad visa but it specifically restricts people applying to living in more rural, interior towns. I think Portugal would benefit from exploring such an approach as it helps rebuild smaller towns and also reduces pressure on housing in large cities. In part I think Portugal is a victim of its own success in modernizing, rebuilding, educating and updating the country, as well as you note of creating a tech hub, and now the tourists/new residents are coming and need places to stay. Its inevitable that “success” will bring higher prices, and now the wages need to follow.
After reflection, I have to agree with Gavin.
We see these articles and because they’re published,it’s easy to assume they reflect some large segment of the population. But Portugal has many voices, and not all of them necessarily say anything.
Their history is several hundred years of decay and decline after the Age of Discovery. The Industrial Revolution and the Enlightment passed them by and/or were rejected by the noble classes and/or the Inquisition. They haven’t had a significant middle or merchant class for centuries - various factors caused much of that to be effectively outsourced to the English. There were just peasants and nobles, just by different names over time. It’s all pretty depressing to read about, truthfully - I’m literally choking my way through it. Fado exists for a reason.
There is a middle class now. Not everyone’s in it yet, but how can you expect that when 50 years ago the line of thought from the government was that education was wasted on the poor who should be happy with their lot on the farm? But people can aspire to it now. I have a good friend in Lisbon. His family was from the eastern border, and he was born before the Revolution. Now? He’s solidly part of that middle class. Nothing fancy, but he can afford a house and a nice car and motorcycle. His son expects to have a multinational career - from Portugal. His daughter will have a good career - in Portugal. Sure, he deplores the corruption and the other things that are wrong, but he is proud of his country and what they’ve accomplished. He and his friends are proud to know that people want to move to Portugal now.
But is he out writing articles about it? No, he’s too busy living it.
So what we do see published is likely skewed. People write about the negatives, so rarely the positives. It’s hard to adjust for that.
Thanks for that insight.
I think you might be referring to NHR. I am not a fan of this scheme and personally think its use should be much more limited. If the government is trying to attract people such as crypto millionaires to generate untaxed capital gains, then I say so even with more conviction. For one, its not necessary. Portugal is already attracting immigrants in large numbers. Why do they seek to attract those who only have the intention of avoiding taxes?
More anti immigration rhetoric, blaming them for rising housing prices.