Big Changes to Portugal’s Citizenship Laws

Big news from Portugal… again!

The popular Iberian country has been tinkering with its residency and tax laws for more than a year. It removed the residential property investment option from its golden visa program and ended the Non-Habitual Residence (NHR) tax scheme, which had attracted tens of thousands of foreigners to the country.

Despite this, the country is still facing a long backlog of applications for residency. This includes both those made under the previous system and new ones based on investments in Portuguese equity funds, businesses, or scientific and cultural projects.

That means the normal time between application and approval has stretched from three to six months to nine months to a year. For people hoping to become naturalized citizens of the country after five years of residency, that adds one more year to the wait.

Fortunately, Portugal’s parliament just amended its nationality law. Under the new rules, qualifying time for naturalization starts on the day you apply for residency, not when it’s approved.

It’s not immediately clear why the government made this change. The most likely rationale is to speed up the acquisition of new citizens, who are fully liable for Portuguese taxes. Under the old NHR tax regime, people could get away with paying as little as 10% tax on foreign income for up to 10 years. That made many of them reluctant to become Portuguese citizens after five years. Shortening the naturalization timeline should eventually result in more tax income.

Another Portuguese visa opportunity that hasn’t received a lot of attention is the Highly Qualified Activity (HQA) Visa, also known as a D3.

“Highly qualified” individuals include scientists, engineers, doctors and nurses, lawyers, and senior managers. But Portugal’s main target is information and communications technology specialists.

Portugal is home to a thriving and rapidly expanding technology sector, especially startups and small firms focusing on custom software and digital gaming. The country is keen to bring in skills to reinforce that sector, hoping to make the country one of Europe’s premier tech centers.

To qualify, you should have skills and experience that correspond to level 4 on the International Standard Classification of Occupations. That means a postgraduate degree, a professional qualification, and/or comparable experience.

In addition to skills, applicants also need to have €175,000 to invest in a Portuguese startup or small technology company. The project should have an active link to Portuguese universities. You don’t necessarily have to be actively involved in the project you propose. You can also invest passively in qualifying projects run by others.

Interestingly, there’s no requirement that your project ultimately succeed. It’s enough that it provides an opportunity for locals to learn from working on it.

Unlike other visas, the D3 visa guarantees you a decision within 30 days, and a full refund if you aren’t accepted. It doesn’t require lengthy stays in Portugal, and you can remain a non-tax resident if you choose. You can bring your family with you. The initial visa is for two years, extendable for another three. After five years, you can apply for permanent residency or citizenship.

Despite last year's rule changes, Portugal remains one of the most popular destinations in Europe. I'm currently planning to have a closer look at Portuguese investment funds as an option for those seeking a golden visa in my Global Citizen service. Stay tuned!

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