Is this the end of an era for the Golden Visa?

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The Golden Visa has been attracting foreigners wishing to settle in Portugal for almost a decade. But, after facing roadblocks from politicians, law enforcement and locals, the government’s arm has been twisted to change its agenda.

In this article, we explain what the Golden Visa is, what are the changes and the opposition it faces.

A brief introduction to the Golden Visa

Introduced in 2012, Portugal’s Golden Visa program is a fantastic way for non-EU citizens to obtain one-year residency. By buying property in Portugal for € 500,000, transferring € 1 million to a Portuguese bank account or investing in businesses and research, foreign nationals can live, work and study in Portugal with a visa for them- themselves and their families.

Since Brexit, UK nationals can only stay in EU countries for 90 days out of a 180-day period. This makes the Golden Visa an ideal choice for Brits who wish to stay longer on the continent.

The Golden Visa also offers the possibility for foreigners to apply for citizenship after only five years of residence. This is a much shorter period of time than other popular destinations for expats, such as Greece and Spain.

The SEF (Serviço de Estrangeiros and Fronteiras), Portugal’s Immigration and Borders Service, said the Golden Visa program has issued nearly 10,000 visas since 2012. This has generated an estimated investment of 5.3 billion euros in the country.

Expats can also claim a Golden Visa other than by purchasing a house for € 500,000. From 2015, the purchase of real estate worth € 350,000 to renovate will also do the trick. This could go as low as € 280,000 for properties in less popular areas.

One of the downsides of obtaining a Golden Visa through the purchase of real estate is the additional fees. Spending € 500,000 on a property is already a huge financial commitment and a family of four can expect to face € 50,000-100,000 in additional fees, taxes and legal fees.

What are the changes to the Golden Visa?

From next year, the Golden Visa will no longer apply to residential properties in Lisbon, Porto and high density coastal areas; this includes large parts of the Algarve.

The changes were due to go into effect in July 2021, but restrictions from the coronavirus pandemic have caused delays. The date is now scheduled for January 2022.

Once the changes are made, only properties classified as “tourist” will continue to benefit from the Golden Visa program. There are a few exceptions, such as properties located in areas with low population density. Tourist properties must be purchased with the intention of being used as a vacation home and not full time occupancy.

The Portuguese government hopes that changes to the Golden Visa program will encourage international investment in low density areas. He hopes to inspire countries like China and Hong Kong to continue investing outside of the big cities.

Skeptics

The Golden Visa has been the subject of criticism since its inception. One of the main points of discussion was the potential risks of tax evasion and money laundering from international buyers.

Critics suggest Portugal has been blinded by the prospect of foreign investment and an influx of wealthy citizens without sufficient regulation.

Portuguese politician and former MEP Ana Gomes condemned the plan to open the door to international organized crime. She called the Golden Visa a “installment sale of citizenship.”

The European Commission has already addressed this issue in other countries. In 2020, Cyprus, Malta and Bulgaria were all instructed to end their installment citizenship programs. Cyprus was eventually forced to withdraw its program, while Malta and Bulgaria continue.

The Golden Visa program was suspended in July 2015. An investigation titled Operation Labyrinth accused some of the program’s top officials of corruption – by accepting payments in exchange for Golden Visas from Chinese investors.

The two most accused personalities were the head of the SEF, Manuel Jarmela Palos and the Portuguese Minister of the Interior, Miguel Macedo. Both men were later acquitted, but Macedo therefore resigned from his post.

Additional concerns in Portugal relate to the overvaluation of property prices for foreign buyers. Some real estate agents have been in the crosshairs for deliberately raising property prices in order to attract Golden Visa applicants.

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