Fiscal & Legal
Wealth Management and Fiscal InformationThe importance of taking trustworthy professional advice when buying a home, especially overseas, is crucial. Be well prepared, time spent on research to gather information will pay dividends in the end. Each client has a different purpose for making a property purchase and some will be more au fait with the Portuguese system than others. Beware! There is a lot of conflicting advice given on various websites and some information may be out of date. For that reason, I would advise my clients to consult the experts. At Laws Property Portugal, our expertise is in the property market, and we will listen carefully to a client’s requirement to find the appropriate home. When it comes to matters fiscal and legal, we will be pleased to put you in touch with the relevant professionals, be it for mortgage advice, visa and residency requirements, support to open bank accounts through to legal support to assist with all your conveyancing needs. Building the right support team will pave the way to a smooth transition, particularly when making the move to a foreign country. The Portuguese government are currently offering various incentives to encourage foreign investment. These options are outlined in brief below.
Portuguese Non-Habitual Residence Regime (NHR)
This special tax regime was unveiled in September 2009 as part of a plan to stimulate growth in Portugal and to attract high level professionals and investors. Some alterations were made to the regime in 2012 but the main benefits still apply.
The core principle is for an individual to gain tax benefits if he/she takes up residency for 10 consecutive years. To qualify for this, the individual must not have been a tax-paying resident in the country for any of the previous 5 years. There are some circumstances where a salary or self-employed income earned in Portugal may be subject to a flat rate tax of 20%.
Non-Portuguese income, including self-employed income, real estate income (rentals), capital income (interest & dividends) and capital gains on property, will be exempt from Portuguese personal income tax if the source country has the right to tax that income under the terms of a Double Tax Treaty (DTT).
Originally the rate of tax paid was 0% but following much international pressure, the NHR regime requires applicants to pay a flat rate of 10% on all their foreign pension income. This still provides a great incentive as the rate is significantly lower than that of most other home countries including Portugal’s own standard tax rate of between 14.5% and 48%. There is, however, a requirement that 183 days per year are spent in Portugal.
Portugal Passive Income Residency Visa – D7Due to Portugal’s stable political and social environment, clear and transparent tax rules, good infrastructure and an excellent quality of life, individuals and families are seeking residence in the country. Obtaining the D7 visa provides residency status to non-EU citizens who intend to locate to Portugal and who have a reasonable regular passive income.
D7 Visa RequirementsA successful application will depend on proof of regular income which may be derived from a pension, rental, dividends or some categories of investment income. The minimum income may vary depending on the number of dependants that the main applicant wishes to include. These are the current minimum requirements:
- Main applicant – 100% of the minimum wage – €7,980 per annum
- Spouse of parents – 50% of the current minimum wage each – €3,990 per annum
- Dependent children – 30% of the minimum wage – €2,394 per annum
- The right to live, work and/or study in Portugal
- Visa-free travel throughout the Schengen Zone
- The option to take employment or start a business
- The right to apply for NHR
- Qualification for permanent residency including education and healthcare
Golden Visa Residence Permit Program
The Portuguese Government has recently released some amendments to the Golden Visa Permit regulations. This program was originally set up to give potential non-EU foreign investors an opportunity to take up residency in Portugal through investment.
It is necessary to comply with one of the following:
- Investment in real estate with a minimum value of €500,000
- A cash deposit or investment through bonds or stocks – minimum value €1,000,000 or by creating a new company with at least 10 employees based in Portugal
- A real estate investment of €350,000 where the property dates back more than 30 years, or is in a location designated for ‘urban recovery’
- The transfer of a sum equal to or greater than €350,000 to use in scientific research
- The transfer of a sum equal or greater than €250,000 for investment or support of artistic production, or the maintenance or recovery of cultural heritage
- A minimum investment of €350,000 for the acquisition of units of investment or venture capital funds dedicated to the company’s capitalization
- A sum greater than €350,000 for the creation or reinforcement of Portuguese companies
By complying to one of the above criteria, generous advantages and benefits can be derived from the Golden Visa Scheme such as low minimum stays during the first 2 years. The scheme is extendable to family members giving freedom to travel to all European countries that are members of the Schengen area. Additionally, there is the possibility of permanent residency after 5 years and citizenship after 6 years. The scheme also provides no limitation on investment and gives access to all Portuguese public services, including health and education.
The purpose of the above information is to show the residency options available. An expert from the Sovereign Group will be able to identify the most advantageous path for each client to follow and will provide expert guidance throughout the process. In addition, for clients seeking wealth management, they can assist with tax solutions to maximise the benefits of relocation.
Shelley Wren – Head of Business Development in Portugal
Mortgages in Portugal
With interest rates currently from 0.6%, borrowing money to partly fund a purchase can be advantageous. Contact us for more information as we have recommended companies who will provide a quick, reliable and efficient service.
It is important to contract the services of a legal representative with whom the client can build a good relationship. Again, we can provide the names and contact details of those solicitors/lawyers who have built a trusted reputation for efficiency, good communication and the ability to respond quickly to questions. I have always advised clients to do their homework first and a meeting with a legal representative in Portugal is the best way to start a property search. They will be able to give information on the process and detail expected expenditure.