South Africans looking for an offshore base, visa-free access to Europe and the possibility of dual-citizenship, are increasingly investing in property in Portugal, says migration, wealth and forex specialists, Sable International.
The Golden Visa Programme developed by the Portuguese government, which offers a financially accessible and efficient process, whereby non-EU citizens can obtain Portuguese residence permits and citizenship via investment in the country, remains very popular and in fact during the 2020 Covid crisis has shown no sign of tapering.
By mid-2020, over 8,736 residence permits had been issued since the start of the programme, equating to 14,936 residence permits if the family members of the main applicant were included.
With the visa, applicants and their families can live and work in Portugal as well as travel visa-free throughout the European Schengen Area. “A key benefit of the programme is that applicants don’t need to immigrate to Portugal to hold the Golden Visa.
They only need to spend (on average) seven days a year in Portugal to meet the residency requirements of the programme,” said Andrew Rissik director at Sable International.
“It means you can make a sound offshore investment and secure your family’s future without the hassle of relocating to a completely new country.”
The Golden Visa not only allows the holder to live and work in Portugal, but also affords them the right to visa-free travel throughout the European Schengen Area.
This has been especially attractive to executives wishing to work within the European Union (EU). Through the Portuguese residency programme, South Africans can qualify for permanent residence after five years. Portuguese citizenship (an EU passport) gives you the right to live and work in the EU, which currently includes the United Kingdom.
Rissik said that South Africans are mostly attracted to the prospect of dual residency, visa-free travel in Europe, the option to invest a relatively affordable overseas property, and the great tax benefits.
Getting the Golden ticket
To qualify for the programme, applicants need to make an investment in the Portuguese economy. “There are a few routes available to investors – the most popular are the €350,000 private equity capital investment and the purchasing of property with a value of €500,000 or €350,000,” said Rissik.
“Once you have invested, you will be granted a residency permit, which allows you to enter and/or live in Portugal and travel freely within most EU countries. Your Golden Visa is valid for an initial period of two years and is renewed for a further two years every two years.”
To become eligible for permanent residency or citizenship, applicants need to hold their investment alongside their visa for a full five-year period. “Applicants will have to spend time in Portugal over the course of the visa period; but it isn’t extensive ranging from one to two weeks a year,” said Rissik.
As a resident holder, you are required to spend a minimum of 35 days in Portugal over this five-year period.
Rissik said that most South Africans are attracted by the secure lifestyle. It was voted as the third safest country in the world in the Global Peace Index 2019.
“The tax benefits are also compelling – Portugal has one of the most favourable tax regimes in the EU for foreigners looking to become tax resident. Individuals who are not tax residents only pay tax at source on income derived in Portugal.
“However if one becomes tax resident and spends more than 183 days a year in the country, you are exempt from almost all foreign source income tax under the so-called NHR tax scheme. There’s also no inheritance, gift or wealth tax,” said Rissik.
Covid-19 aside, Portugal has a robust economy, he said. Since the global financial crisis, Portugal’s economy has been transformed from 2008 –2020 to one of the fastest growing in Europe. Portugal has had above-average GDP growth. It has a leading tech hub and a strong manufacturing sector.
In real estate, Portugal was ranked the ‘Hottest’ property market in Europe (Bloomberg 2019), with high affordability, boasting one of the lowest House Price-to-Income ratios in Europe. Forbes’ named Portugal the Most Investible Country of 2020 and ‘Knight Frank’ forecast best price growth in Portugal for 2020-2021 post Covid-19.
“We are seeing a strong uptake for Portugal investments even through Covid, but the high demand also means there are a lot of unscrupulous operators out there selling properties that are bad investments or that do not actually qualify for the Golden Visa,” said Rissik.
“We have been on the ground in Portugal doing property and visas since 2012, and we have the highest number of South Africans invested there.
“You also need to look at all the options, is this this just a Plan B, or do you plan to relocate and start a business or work there or do you want to retire in Portugal – you might find that a Retirement Visa is better for your purposes than applying for a Golden Visa.”