In November, several independent media outlets wrote a pre-mature obituary for Portugal’s ‘golden visa’ programme. They couldn’t be blamed, for there was a strong trigger to this coverage. On 2 November, Portugal’s prime minister Antonio Costa conceded to journalists that the government was doing a re-think on various immigration programmes, including the one on golden visa.Less than a month later, his plans to make any changes to the golden visa regime stand thwarted by his own Socialist Party.
What is the golden visa of Portugal?
Golden visa is an investment-linked visa allotted to affluent investors who make sizeable financial investments. The investment amount starts from €280,000 (around ₹2.4 crore) in real estate, €500,000 onwards in investment funds or €250,000 onwards in art and culture.
The golden visa allows the investor and his immediate family members, full residency rights in Portugal. While this means that the golden visa investors can live, work and study in Portugal for the entire time, the minimum requirement to maintain residency is only a stay of seven days every year. After five years, the golden visa holders are eligible to apply for permanent residency or citizenship of Portugal, at which point in time, they can sell their original investment and earn financial returns from the process. Portugal also permits dual citizenship, along with other tax benefits for golden visa investors.
What has the golden visa delivered for Portugal?
Since its inception in 2012, Portugal has granted its golden visa to 18,479 applicants, including their family members, as per SEF statistics. Portugal has received a direct investment of €6.6 billion over the past decade, and at least 220 jobs were directly created by such investments. Additionally, it would have benefitted from a spurt in economic activity linked to such a direct investment.
Is Portugal the only country that offers golden visa?
There are several countries around the world that offer various types of investment-linked visa. In the US, EB-5 is an example of an investment-linked visa, where investors are required to invest a minimum of $800,000 and fulfil conditions associated with the investment (such as job creation), upon which they can secure a permanent green card, paving the way for a US citizenship. Other European countries, such as Spain and Greece offer their own version of the golden visa program.
North Macedonia and Turkey directly offer citizenship to investors, upon making eligible investments, without any residency obligations, unlike the US or the European golden visa programs.
Why is Portugal looking to end the golden visas?
For a few years now, the European Commission has been coming down hard on golden visa programmes offered by member states. It considers granting of passports against pre-determined investments, without adequate links to the member state, a breach of the EU law. Previously, EU had put Cyprus and Malta on notice over what it saw as “sale” of passports.
Portugal’s Golden Visa program is ,however, different from the ones that were previously offered by Cyprus and Malta. It is a “Residency” based program as opposed to straight citizenship. Nevertheless, it continues to attract scrutiny from the EU. Additionally, investments received from golden visa investors have potentially contributed to increasing median house prices across Portugal, risking pricing out of the local Portuguese residents from the property market. This has the making of a perfect political fodder.
Is Portugal’s golden visa regime really coming to an end?
In the last week of November, Portugal’s parliament was in session to discuss the country’s budget for 2023. During this session, a formal proposal to end to the golden visa programme was tabled. This proposal was opposed by the Socialist Party, the centre-left party that won the last general election. Further, the proposal was also voted against by the centre-right Social Democratic Party (PSD) and the third-largest party, Chega.
This setback certainly delays, if not rules out, any plans to phase out the golden bisa regime at least in 2023. Even if such a proposal were to be brought to parliament again, it is widely expected that the phasing out would be implemented in an orderly manner, with sufficient notice to stakeholders, and protecting the interests of investors who have already entered the system.
To conclude, this is an opportunity for investors waiting on the sidelines, to enter while the door remains open, at least for now.
Omkar Redkar is partner at My Golden Pass.
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