The Portuguese Golden Visa Saga Continues

Portuguese Golden Visa

Back in February the Portuguese Prime Minister, Antonio Acosta, announced that the residential version of Portugal’s popular golden visa, which leads to EU residence, would be rescinded. Residence visas through financial or commercial investment, digital nomadism, or retirement would be unaffected.

The core problem with the residential golden visa was that it was perceived to be squeezing ordinary Portuguese out of their own housing market. The numbers certainly bear this out; Portuguese housing costs have nearly doubled in the last decade.

A related but unquantifiable problem was that EU authorities in Brussels were becoming increasingly concerned that golden visa programmes were allowing potentially unsuitable people to become EU residents.

In terms of the Portuguese government process, however, this is not something the Prime Minister can change unilaterally. Only parliament can approve the final revisions.

Since Acosta's announcement, a wide range of industry associations, property developers, constitutional lawyers, regional governors, and public groups have pushed back against the bill.

Objections from self-interested real estate agents and property developers are easy to understand. But it turns out that regional governments of some parts of Portugal had come to depend on the economic activity spurred by the golden visa programme. The government of the semi-autonomous island of Madeira, for example, outright rejected the bill and said it would not enforce its provisions in areas under its jurisdiction.

One of the most contentious parts of the original submission was to cut off the programme as of February 16, voiding all applications submitted after that date. Given that many potential applicants only submit the visa application once a property deal has been concluded, this threw property transactions across the country into instant turmoil.

Under pressure, the government has now agreed to allow the programme to continue as is until final legislation is passed and promulgated. Applications currently in the pipeline will fall under the existing rules.

Another problematic aspect of the proposals was that property-based golden visas not yet issued would be converted to D2 entrepreneurial visas. When holders of current golden visas apply for renewal, they would also be converted to the D2 visa. The problem is that these visas require 183 days of annual presence in the country.

Again, the government has backtracked. Applications in the pipeline will remain subject to the seven days a year presence test, as will renewals for current visa holders.

Finally, visas for investments in “cultural assets” will continue to be available. This is a broad category that has often been applied to applicants who propose to acquire and renovate run-down properties in more remote areas.

Under pressure, the government has now agreed to allow the programme to continue as is until the final legislation is passed and promulgated.

In other words, there is still time to initiate a golden visa application under the residential option.

One of the key reasons for the shift in attitude is a realization that appreciation of property prices and rental costs isn't as closely linked to the golden visa programme as many had argued. Even though Lisbon and other popular areas were already excluded from the programme, housing costs in those areas continued to rise. This is probably an indirect consequence of the Golden Visa program, which has led to millions around the world thinking about Portugal as a potential residential option.

But the key dynamic appears to be the power of Portuguese domestic business interests that have grown around the visa programme. They were careful to take the high road in their arguments, appealing to constitutional considerations to argue that the government could not renege on agreements already concluded with existing and prospective visa holders.

Interestingly, Portuguese president Marcelo Rebelo de Sousa, whose office is nonpartisan, criticized the bill as being no more than a political ploy by the ruling party to try to attract voters concerned with the state of the housing market. That appeared to put the government on the back foot, encouraging them to negotiate the latest changes to the bill.

The text of the bill before parliament proposes to end the residential golden visa provision on the date the law takes effect. According to Portuguese legal sources, that's likely to be at least a month away.

That means there is still time to initiate a residential golden visa application. But the clock is ticking.

Ted Baumann is International Living’s Chief Global Diversification Expert. He's traveled to nearly 90 countries and is a dual citizen of the United States and South Africa. Ted has been published in international research journals, as well as in media outlets such as Barrons, Forbes, and Cheddar. Learn more about Ted Baumann here.

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