Portuguese Golden Residence Permit Program: an overview

If you have been looking into the issue of acquiring a legal residence permit in Portugal via an investment into real estate in the country, you have probably heard some negative opinions about this opportunity. It is likely that you have read that the ‘Golden Visa’ program has been closed due to the COVID-19 pandemic. This information is not correct even though the program has undergone some changes because of the coronavirus crisis.

How can you technically acquire a residence permit in Portugal? What factors do you have to take into account? What are the most recent changes in the requirements? Let us discuss these and other related issues here.

Before we begin, however, please note that we do not intend to claim a monopoly of absolute truth. We provide true facts and give you good advice below but with certain reservations anyway. First, we guarantee the truthfulness of the information only at the moment when this article is written. The situation can change in the near future.

Second, we are providing solely an overview of the Portuguese ‘golden visa’ program, which means that the statements that we make may not appear applicable to every individual case. If your personal situation is non-typical, please contact our experts to discuss it (our e-mail is [email protected]). You can use the information that you will find in this article for developing a general understanding of the program as well as for strategic planning.

Please also bear in mind that we are not prepared to guarantee successful acquisition of the Portuguese legal residence permit if you make some of the required steps on your own or with the assistance of another intermediary. You may want to save some money ‘here and now’ but this desire can bring about serious and costly troubles in the future. If this is the case, you will have to take the full responsibility for the failure of your project. Please remember this when deliberating how to go about acquiring residency in Portugal.

Portuguese Golden Residence Permit Program: general information

To begin with, let us stress that below we are going to discuss exclusively the Portuguese ‘Golden Visa’ program that is officially called ‘Golden Residence Permit Program’ (GRPP). There is also a possibility to acquire a residence permit in Portugal by following the traditional path, that is, via naturalization. The latter path, however, is longer, bumpier, and only presumably less expensive. This is true at least for those who are not looking to purchase economy class accommodations in Portugal that will naturally have many drawbacks.

The main disadvantages of the naturalization opportunity are as follows:

• Rather tough requirements to the candidates.
• Mandatory residence in Portugal during at least half a year.
• Serious tests in the Portuguese language and history (these tests are a pure formality if you apply for residence via the ‘golden visa’ program).
• There is no possibility to add even closest relative into the application for residence.
• Extended time of the application processing.
• No tax incentives apply (this is important if you are planning to do business in Portugal).
• High probability of the application rejection.
• Full citizenship of Portugal can be obtained only after 10 years of permanent residence in the country.

In our opinion, these disadvantages are already sufficient to choose the GRPP instead. The traditional residency acquisition scheme should only be considered as an option if you are extremely low on investment funds.

And now let us quote the advantages of the ‘Golden Visa’ program:

• Portuguese residency is a nice backup option in case the situation in your home country becomes unbearable. We are not talking only or primarily about the COVID-19 pandemic here but also about possible negative changes of the political and business climate in the country where you live at the moment.
• The program offers tax reductions.
• Healthcare is superb in Portugal, which is especially relevant for those who are over 50 years of age.
• You can freely travel within Schengen zone (that is, when the pandemic is over).
• Best European universities will become available to you.
• Living standards are stably high in Portugal.
• You can own real property in the EU.
• The choice of property is large indeed and the prices are diverse.

Portuguese Golden Residence Permit Program: the main steps in the process of acquiring legal residency in the country

We would like to emphasize that the scheme described below ignores the possible force majeur circumstances that may appear due to the COVID-19 pandemic that we have mentioned above several times already. We will discuss such circumstances closer to the end of the article but we are unable to foresee how exactly the pandemic can affect the ‘golden visa’ program organizational and technical aspects.

Step №1: Acquiring the NIF

The Tax Identification Number (Numeros de Identificacao Fiscal in Portuguese) is a key document that is required for both purchasing real estate in the country and opening a bank account there. Besides, it is also necessary when signing contracts, buying certain products, making some types of agreements, and so on. Please note that unless you are an EU citizen, you will need a fiscal representative in Portugal in order to obtain a NIF.  

Offshore Pro Group will be happy to assign a Portuguese fiscal representative to you. If you apply for this service, you will have no problems whatsoever. If you want to find a fiscal representative by yourself, it is fine with us. But we have to warn you that you might put yourself in trouble. We are not going to say that we are the only reliable intermediary that exists but we will provide some figures instead. Ever since the GRPP program was launched in 2012, no application for Portuguese residency has been rejected when our company acts for the client.

The following application documents are required:

• Domestic passport.
• A document that confirms your residence in at home such as a utility bill that you have paid recently.
• The contract with the fiscal representative (see above).

Please note that all the documents have to be translated into Portuguese. There are no document notarization requirements though. 

Step №2. Setting up a bank account

This is an obligatory step if you intend to purchase property in Portugal in 2020 instead of imitating business activities without achieving any tangible results. If you are not going to engage in any business matters in the country, any licensed bank will be suitable. If you are going to do business in Portugal, however, you have to choose the bank more carefully. Please seek our advice on this matter if the latter is the case with you.

The document package required for opening a bank account:

• A photocopy of your foreign passport. A valid Schengen visa stamped in the passport is mandatory.
• A proof of your residential address.
• The NIF.
• Documents that describe your financial status. It can be a statement from your employer that indicates your monthly salary or a company registration certificate and a bank statement if you are private entrepreneur.

One more requirement is making a small deposit of 50-300 EUR in the bank. Please note that this deposit is recoverable. 

Step №3: making an official proposal to the property seller  

We are not going to discuss the issue of choosing the right property to buy in Portugal here. This is a topic that deserves a separate discussion and it is too large to dwell on it in this article. In any case, please remember that you can make the best property purchase deal if and only if you hire an experienced realtor.

The stages in the process of making a purchase agreement:

• When you have agreed upon the terms and conditions with the seller, you have to make a security deposit. Normally, the amount of the deposit is 1-1.5% of the property price.
• After that, you will have to make the first deposit against the deal into the bank (usually it is between 10% and 20% of the total amount but sometimes it can be more). As soon as the first deposit is made, the property is taken off the ‘for sale’ list.
• Then your lawyer will have to inspect all the property documentation, which will let you avoid any legal problems in the future.

Legally, the property purchase deal can be funded via a bank loan. If this is the case, a licensed expert will have to appraise the property and his or her appraisal will be used by the bank to determine the amount of the loan as well as its term. However, if you are making the investment in order to apply for a legal residence permit in Portugal, this method will not work! In other words, if you use a bank loan to buy property, you will not qualify for the GRPP!

We would also like to draw you attention to the fact that only an agent holding an AMI license can make the purchase deal on your behalf. This rule guaranties the transparency and the legality of the deal as such agents are licensed, and their activities are monitored, by the state.  

Step №4 signing the preliminary agreement

Many investors who want to acquire residency in Portugal via purchasing real estate there keep full control of the situation while they are choosing the piece of property to buy. When they have made the choice and the preliminary agreement with the seller, they feel relaxed and leave everything else in the hands of the agent. They believe that all the remaining questions are simply technical ones and their participation in solving them is unnecessary. This is wrong attitude, dear clients! You can breathe a sigh of relief only when the deal is officially closed.

Please mind the following:

• When you have come to an agreement on all the aspects of the purchase deal, you sign an interim contract that is called Contrato de Promessa de Compra e Venda in Portuguese. Essentially, it is something in between a declaration of intensions and a final contract. The details of the deal are specified in this interim contract such as the price, the terms and the methods of payment, the date of the agreement, and so on.
• The advanced payment of 10%-20% of the total price is not returnable by default. Three variants are possible here. If the deal is finalized, the advance will count towards the total payment. If the deal is cancelled due to a fault of yours, the seller keeps the advance. If the deal is cancelled due to the seller’s fault, you will have a double refund. Please note that your personal presence is not required at the moment when the preliminary agreement is signed. The agent can sign it on your behalf.
• If you do not speak Portuguese, you had better hire a translator. This will keep you from the ‘small letters’ trouble in particular as the articles of the contract typed in a small font can prove vitally important in certain instances.

Step №5: signing the final contract

The final stage of the property purchase process is largely a formality. Since all the terms and conditions have already been agreed upon, all that remains to be done is to put the signatures on the final contract unless some extraordinary circumstances appear. This fact, however, should not be a reason to relax yet.

Below please find the list of documents that have to accompany the purchase agreement:

• An extract from the registration chamber (its term of validity is 6 months): the property address, its type, and the owner’s data.
• A certificate from the tax inspection/ household registry: the property address, tax registration, number of rooms, and their sizes.
• Real estate certificate: certifying that the property conforms to the constriction standards for buildings erected after 13.08.1951.
• Property passport: real estate certificate, tax certificate, constructors and contractors’ data (they are responsible for the building quality). This requirement applies to the buildings erected after 30.03.2004.
• Release of the pre-emption right: this applies to the real estate pieces of historic or cultural value (formally, the municipality holds the right of pre-emption for such objects).
• Power efficiency certificate: the building must conform to the power efficiency requirements that apply to the building type.
• Temporary registration of property rights: this is not required if you are buying real estate in order to acquire a permanent residence permit in Portugal. This document is issued to the bank that has financed the purchase of the property via a loan. As we have noted above, this scheme is unacceptable for GRPP.
• Property insurance policy.

Other items to pay heed to:

• You have to pay the IMT (Imposto Municipal sobre as Transmissoes Onerosas de Imoveis) – the tax on transfer of property as well as the standard IdS (Imposto do Selo) – stamp duty.
• Before the agreement it signed, the notary public has to read its text to the parties aloud.
• The ultimate transfer of property rights happens at the Cadastre Department and the tax inspection.

Portuguese Golden Residence Permit Program and the COVID-19 pandemic

The coronavirus has brought about notable changes in the real estate prices. Many houses and other pieces of property have become cheaper as the supply currently exceeds the demand. This is one of the reasons (but not the only reason!) why you should not waste too much time before you decide to buy property in Portugal. First, we do not know when the pandemic is going to end. Second, the epidemiological situation in Portugal is considerably better than in the neighboring countries so the risk of catching the coronavirus is going to be very small when you visit the country.

As of this day, 18,091 coronavirus infection cases have been confirmed in Portugal. 599 people have died. We grieve with the friends and relatives of the latter and we pray for those who are fighting the virus and going through some hard times. However, if you compare these figures with those for other countries of the world, you will see that the statistics for Portugal is far from terrible. The numbers below show how many people have been infected and how many have died of coronavirus-related diseases in each country:

• The USA: 644,188/ 28,579.
• The neighboring Spain: 180,659/ 18,812.
• Italy: 165,155/ 21,645.
• Germany: 134,753 / 3,804.
• France: 106,206/ 17,167.
• Great Britain: 98,476/ 12,868.
• China: 82,341/ 3,342.

These figures clearly show that Portugal is combating the epidemic much more successfully than many other countries of the world and European countries in particular. What does this information entail? That there is no reason to panic and to freeze your investment projects that are aimed at Portugal. There are no compelling reasons to worry too much about the coronavirus situation in the country. At least, this is what the situation looks like today.

We have to acknowledge the fact that the offices of SEF (Servico de Estrangeiros e Fronteiras, Stranger and Frontier Service) were closed on April 3 and they will remain on quarantine until July 1, 2020. However, there are several reasons not to be overly concerned about:

• The information that the ‘golden visa’ program is going to be completely terminated has not been proven true yet. The current hysteria about this issue can be compared to the one that appeared after February 5 this year when the GRPP was supposedly cancelled for Lisbon, Porto, and seaside cities.
• The time that remains until July 1 can be used efficiently to choose the appropriate piece of property to buy and to prepare the documents. You do not have to travel anywhere in order to do that thus you do not have to expose yourself to any risks.
• If you are currently in Portugal and your visa expires before the date indicated above, you are not going to turn into an illegal resident of the country. Your permission to stay in Portugal will be extended.

Now let us say a few more words about the ‘golden visa’ program and your chances to participate in it. Once again, the real estate prices have gone down in Portugal. It has not been a drastic fall but the decrease in prices is quite noticeable anyway. This means that investing into real estate now would be a wise move to make.

The SEF closure is only temporary and the offices are going to re-open after two and a half months in all likelihood. We will venture to suggest that the prices will start going up after that. If you have prepared a sure case by July 1, you will be able to strike a good deal without too much delay. Our experts will be glad to tell you what exactly you can do to prepare for the purchase while you are staying at home.

Before we conclude, let us briefly discuss your perspectives of obtaining legal residency in Portugal via purchasing some real estate there in 2020. There is still a good chance that you can be successful at that. Probably, it is going to take more time under the current conditions but it is still possible to acquire residency with the GRPP. Moreover, it makes very good financial sense. At least, it makes better sense than before as the prices are currently lower. Thus, it would be wrong to claim that COVID-19 has shut the door on your investment plans.

Speaking about the long-term perspectives, we would like to point out that sooner or later the situation in the world will be back to normal again and the economy will start recovering. When this happens, the real estate prices will begin to grow again and you might go punching the air because you have missed the train. If you come onboard now, you can save a pretty sum of money while acquiring the right to legally reside on the territory of the European Union.

As far as the coming ‘closure’ of the golden visa program is concerned (some new restrictions are scheduled to take effect in January 2021), the future is still uncertain. According to the insider information that we have, we can assume (even though we cannot be 100% sure) that the changes to be introduced may well remain on paper only. They may well be shoved under the rug. The reason for that is the budget deficit that Portugal will inevitably experience when the present-day crisis comes to an end. The Government is going to need all the money that it can get hold of and the ‘golden visa’ program has been bringing a considerable amount of income to the Portuguese state budget since it was first launched back in 2012. So we doubt very much that the conditions will become less favorable for foreign nationals who are after Portuguese legal residence at the beginning of next year.

Please contact our experts by writing to [email protected] and find out how you can start preparing for applying to the Golden Residence Permit Program that Portugal is still running. We will gladly discuss with you the strategies of acquiring legal residence in the EU that will serve your purposes best of all.

We wish everybody to be in good health!

Can I obtain a legal residence permit in Portugal via the ‘golden visa’ program right now?

No, you cannot as SEF offices are closed until July 1. However, you can discuss the tactics of your future actions with our experts and start collecting the necessary application documents.

I would like to acquire Portuguese residence via investment but I do not have 500,000 EUR. Is it still possible for me?

Yes, it is. There are actually eight different investment options that you can choose from. Some of the options require investing lesser sums of money such as establishing a company in Portugal and creating minimum ten new jobs, for example. Our experts will gladly advise you on this matter.

I would like to acquire residence in Portugal via investing into real estate there. How should I choose the right piece of property to buy?

You can browse the catalogues and try to find the suitable property yourself but in this case, you run a serious risk of ultimately buying an illiquid house or apartment. We recommend that you apply for our assistance in the matter as we have a back office in Lisbon and our Portuguese specialists know the real estate market in the country very well.