Immigration Law
Golden visa
On the 6th of October 2023, the President of the Republic of Portugal approved the legislative amendments regarding the Residence Permit Programme for Investment Activity, commonly known as Golden Visa.
The Golden Visa Programme remains in force. The only investment modalities that have been deleted concern the €1.5 million capital transfer and the acquisition of real estate.
Therefore, it is still possible to apply for a Residence Permit by Investment, through one of the following options:
Capital Transfer
a) € 500,000.00 for the acquisition of shares in non-real estate collective investment undertakings, which are incorporated under Portuguese law, whose maturity, at the time of investment, is at least five years, and at least 60% of the value of the investments is realised in commercial companies based in national territory.
b) € 500,000.00 invested in research activities carried out by public or private scientific research institutions, integrated in the national scientific and technological system or €400,000.00 if in a low population density area*.
c) € 250,000.00 in investment or support to artistic production, recovery or maintenance of national cultural heritage, through central and peripheral direct administration services, public institutes, entities that integrate the public business sector, public foundations, private foundations with public utility status, intermunicipal entities, entities that integrate the local business sector, municipal associative entities and public cultural associations, which pursue attributions in the area of artistic production, recovery or maintenance of national cultural heritage or € 200,000 if in a low population density area*.
Business
a) Creation of a minimum of ten new jobs or eight new jobs in a low population density area*.
b) € 500,000.00 for the incorporation of a commercial company with registered office in Portugal, combined with the creation of five permanent jobs, or to increase the share capital of a commercial company with registered office in Portugal, already incorporated, with the creation of at least five permanent jobs or the maintenance of at least ten jobs, with a minimum of five permanent jobs, and for a minimum period of three years.
*A low population density area is defined as less than 100 inhabitants per square kilometre or with a GDP per
capita of less than 75% of the national average.
The above-mentioned investment options will be evaluated every two years in relation to their impacts on scientific and cultural activity and on the promotion of foreign investment and job creation. And they may not at any time be aimed directly or indirectly at property investment.
Portuguese Residency and Citizenship
Although the concepts of nationality and residence in Portugal are interconnected, they cover different aspects of an individual’s relationship with the country.
Having Portuguese nationality means being legally recognized as a citizen of Portugal. The acquisition of nationality is generally based on criteria such as ancestry, birth on Portuguese territory, marriage to a Portuguese citizen, or a period of continuous residence in the country.
Once someone obtains Portuguese nationality, they enjoy a range of inherent rights, including the right to live and work in Portugal without restrictions, access to public services, the right to vote, and participation in the country’s political life. Additionally, holding Portuguese nationality also offers advantages within the European Union, such as free movement and residence among the member countries.
Residence refers to the act of living legally in Portugal, either temporarily or permanently, without necessarily possessing Portuguese nationality. Foreigners can reside in Portugal under different visa categories, such as work, study, or family reunification visas. Residence grants individuals the right to stay in the country for a specified period and to enjoy certain public services and economic opportunities. However, residence does not grant all the rights associated with nationality, particularly regarding political rights and mobility within the European Union.
Advantages of acquiring Portuguese nationality
Acquiring Portuguese nationality can offer several significant advantages to individuals who wish to become Portuguese citizens. These advantages go beyond the official recognition as a citizen of Portugal and can impact various aspects of life, from international mobility to access to services and social benefits.
Among these advantages, the freedom of movement within the European Union stands out. As a Portuguese citizen, you can reside, work, and study in any EU country without the need for a visa or residence permit.
Portuguese citizens also have access to healthcare and education services in Portugal, participation in elections and political rights, access to social benefits and support programs, and, depending on the situation, the ability to pass on nationality to their descendants.
However, acquiring nationality can be a complex process, subject to specific requirements, making specialized legal guidance essential to ensure the success of the process.
Dual Citizenship in Portugal
The possibility of dual nationality in Portugal allows citizens to hold two nationalities simultaneously. This means that a person can be both a Portuguese citizen and a citizen of another country at the same time.
Portugal permits dual nationality in certain situations and based on specific criteria, such as descent, marriage, or a period of residency in the country.
It is important to check the specific requirements for obtaining dual nationality in Portugal. Dual nationality facilitates free movement and residence within the European Union, providing citizens with additional advantages in terms of rights and opportunities.
Challenges in acquiring Portuguese nationality
Acquiring Portuguese nationality is a significant process for those who wish to enjoy the benefits of being a Portuguese citizen. However, this process is not without its challenges. Here, we will examine some of the most common challenges faced by those seeking Portuguese nationality.
Residency requirements: One of the challenges is meeting the residency requirements set by Portugal. This usually involves legal residence in the country for a specific period, which can vary depending on the basis for acquiring nationality.
Language barriers: For some applicants, language can be a challenge, as knowledge of the Portuguese language is a requirement in some cases for nationality applications.
Proof of an effective connection: Some processes require the applicant to demonstrate a genuine connection to Portugal. Collecting the necessary documentation to prove this connection can sometimes be challenging.
Bureaucracy and processing time: The process may involve submitting various documents and waiting for the competent authorities to review them.
It’s important to highlight that, with the appropriate professional guidance and support, it is entirely possible to overcome these challenges and achieve the goal of acquiring Portuguese nationality.
Avoiding opposition to acquiring Portuguese nationality
To acquire Portuguese nationality by choice, it is essential to meet certain criteria and avoid circumstances that may lead to opposition in the process. Among the reasons that could obstruct the acquisition are the following:
a) Lack of Effective Connection: It is necessary to prove a strong and effective connection to the Portuguese national community.
b) Criminal Conviction: If there is a definitive conviction with a prison sentence of 3 years or more for a crime punishable under Portuguese law, nationality may be denied.
c) Holding Public Office or Non-Mandatory Military Service: If the individual holds public office without a predominantly technical character or has rendered non-mandatory military service to a foreign state, this may be grounds for opposition to the acquisition.
d) Risk to National Security: Participation in activities related to terrorism, as defined by the law, represents a danger or threat to national security or defence, becoming a reason for opposition.
Some exceptions apply in cases of marriage or de facto union, when there are common children with Portuguese nationality, or when the marriage/de facto union has lasted for at least six years.
It is important to be aware of these conditions when seeking to acquire Portuguese nationality.
Tax
End of the Special Tax Regime for Non-Habitual Residents (NHR)
The State Budget unveiled on the 10th of October 2023 anticipates the termination of the special tax regime for Non-Habitual Residents starting from January 1st, 2024.
The 2024 State Budget, presented to Parliament by the government, affirms that the Portuguese government will no longer accept new registrations under the NHR tax regime for individuals who become tax residents in Portugal in 2024.
The tax benefits of the NHR Tax Regime will continue to apply to the following individuals:
Taxable persons who have acquired the status of NHR within the allotted time frame.
Individuals who establish tax residency in Portugal by December 31st, 2023.
Individuals holding a valid residence visa until December 31st, 2023.
Key Advantages of the NHR Tax Regime:
Return Programme covers emigrants who have been out of Portugal for three years
The Return Programme covers “emigrants who left Portugal at least three years before starting work in Portugal”.
Created in 2019, the Return Programme was only intended for those who came with a work contract, to launch their own business and for those who moved to the interior, by increasing the support granted by the IEFP.
From 2023 onwards, this programme will cover emigrants who “start working in mainland Portugal between January 1st, 2019 and the end date of the Return Programme”, i.e. until 2026, as well as “emigrants who have left Portugal at least three years before the start date of the work activity being applied for”.
Research grant holders are also covered, as well as “emigrants and their family members who are unemployed at the time prior to submitting the application”.
Reduced withholding tax for mortgage loan holders
Mortgage loan holders will retain their monthly IRS withholding tax reduction, ensuring financial relief for eligible individuals.
Individuals with housing loan contracts for their primary residence, who are employed and earn a gross monthly salary of up to 2700 EUR, have the opportunity to request a reduction in their withholding tax.
Since this reduction is optional, taxpayers must inform their employers of their intention to avail themselves of this benefit.
By doing so, they can enjoy a decreased IRS rate, just below the bracket that aligns with their monthly income within the context of their family situation, providing immediate financial advantages.
Cryptocurrency taxation in Portugal
In Portugal, a progressive and forward-thinking approach to cryptocurrency taxation is in place, designed to promote sustainable investment practices and foster technological advancement.
Effective from January 2023, capital gains resulting from the sale of cryptocurrencies held for a duration of 365 days or more are exempt from taxation. This means that investments made in cryptocurrencies held for the long term are not subject to any capital gains tax. However, capital gains arising from the disposal of cryptocurrencies held for less than 365 days are subject to a tax rate of 28%.
It’s important to note that this tax exemption extends to Non-Fungible Tokens (NFTs) as well, recognizing their unique nature within the crypto landscape. Furthermore, the transfer of cryptocurrencies between wallets, addresses, or personal accounts is considered a non-taxable event, meaning such transactions are exempt from taxation.
It’s noteworthy that Portugal has implemented an “exit tax” mechanism within its IRS Code.
This mechanism pertains to taxpayers changing their tax residency to another jurisdiction. The loss of resident status within Portugal and the cessation of related activities are treated equivalently to a taxable disposal of cryptocurrencies.
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