CategoriesInvestment Property Tourism

Portugal: your next travel destination

Portugal has 7 regions, which means that it has a lot to visit and discover, but there are more reasons to make it a good choice and to be on the list of trips to do in life.
The country’s history and culture, gastronomy and wines, are among the main attractions, not to mention the beaches, surfing, golf, the varied landscapes and, above all, the Portuguese people, who are seen as affable, open and sincere.
Many guides, travel writers, bloggers and media outlets around the world who specialise in travel and tourism recognise that Portugal is still a top choice for a holiday. And do you know why Portugal has been in the spotlight? Here we offer several reasons to visit the country.

  1. The cities, Lisbon and Porto
    If you have only a few days, Lisbon and Porto are two very attractive cities, just a few hours flight from most major European cities. Both are bathed by a river that gives them a characteristic and different environment. They are hospitable places with their historic neighbourhoods and streets with tiled façades, to get to know by day or enjoy on a night out, along with examples of modern architecture and urban art, and they also have a really diverse and creative cultural agenda. Lisbon is a city with a special radiance, which comes from the Tagus river and the proximity of the sea. Porto, an ancient city, whose historic centre has been classified as World Heritage, is the point of arrival of the River Douro, on whose valley slopes the famous Port wine is cultivated.
  2. Sun, Beach and Sea
    The presence of the Atlantic Ocean and the climate, with very sunny summers and mild winters make Portugal a holiday destination renowned for sun and sea and walks on the beach throughout the year. In fact, the Portuguese coast is almost a single beach extending more than 850 km and offering a diversity of landscapes that allows you to choose between the rougher and cooler sea in the north and the warm, placid waters of the south. There are large stretches of golden sand for those who love an expansive horizon, and also little coves with orange tinted rocks and cliffs. Of the wide variety of beaches, more than 300 have first rate conditions and earn the accolade of Blue Flag beaches. Nearly 200 are accessible beaches.
  3. Walking and cycling trips
    The Natural Parks and Reserves, Geoparks and Biosphere Reserves recognised by UNESCO have ensured that Portugal is also a destination very appreciated for enjoying outdoor activities, whether they are more contemplative, such as bird watching, or more extreme, like canyoning. In the last few years, following nature trails on foot or by bike has been a good choice for those who like to combine physical exercise and contact with the local culture.
  4. Paths of Faith
    But the paths that are followed are also an encounter with spirituality. The Portuguese Road to Santiagoand the Paths of Fátima are increasingly sought out by those who like walking a purpose, focusing on knowledge, nature and culture.
    Portugal is also seen as an important centre of Marian devotion. The Shrine of Fátima, which celebrated the Centenary of the Apparitions of Our Lady in May 2017, is its greatest exponent, attracting thousands of visitors from around the globe every year.
  5. Surfing
    On the mainland and in the archipelagos of Madeira and the Azores alike, it is easy to see that Portugal offers ideal conditions for surfing. Surfers of all types find on the Portuguese coast the largest number of spots with the least distance between them, where they compete in events from the most important championships in the world, like the Rip Curl Pro Portugal.
    There are perfect tubular waves in Peniche, giant waves in Nazareth [Nazaré], and the longest in Europe in Figueira da Foz. Ericeira, meanwhile, was the 1st Surfing Reserve in Europe and 2nd at world level. So you see, you can come to Portugal a number of times and always get a different wave!
  6. Golf
    In recent years, Portugal has consecutively won the award for best golf destination in Europe and the world, at the World Golf Awards. Something that is not to be wondered at if we remember that the climate of Portugal is gentle throughout the year. In addition, in the Algarve and Lisbon regions in particular, quite a number of courses have won several awards and you will find good challenges there, as well as being able to attend some major events of the sport’s professional tours.
    Many golf courses have been designed by renowned architects like Robert Trent Jones, Rocky Roquemore, Sir Henry Cotton, Arnold Palmer, among others. However, what best defines them is their unquestionable quality and scenic beauty, as they are often in unspoilt areas and have the sea as a backdrop.
  7. World Heritage
    The UNESCO classifications in Portugal portray the history and culture of the country, its people and the peoples that have inhabited the land since time immemorial. Monasteries and convents of historic and artistic importance, outstanding monuments, historic centres, cultural landscapes, which offer some of the most beautiful natural scenery in Portugal, were considered by UNESCO as being a part of World Heritage.
    The list is completed with icons that define a people’s way of being in their moments of celebration, Fado, the Cante Alentejano [Alentejo singing] and the Mediterranean diet. And also with arts and crafts that are part of the Intangible Cultural Heritage, such as the manufacture of rattles, the manufacture of the black pottery of Bisalhães, the art of the Royal Falconry, the manufacture of clay dolls in Estremoz, and celebrations such as the Carnival of Podence and the Community Festivities of Campo Maior.
    A visit to these Portuguese contributions to world history are a must and a good excuse to get to know the country from north to south.
CategoriesInvestment Property Tourism

Portugal’s Tourism

For those who arrive in Portugal in 2024 without any previous connection with the Portuguese territory, the previously existent NHR program is no longer available.
The known NHR is still applicable for those individuals that:

  1. On December 31st, 2023, meet the conditions to qualify as residents for tax purposes in Portuguese territory;
  2. Become residents for tax purposes until the end of 2024, and who prove, for the purposes of their registration as a non-habitual resident, that one of the following eligible tests is met:
    1. Promise or work contract, promise or agreement of secondment concluded until December 31st, 2023, the performance of whose duties is to take place in national territory;
    2. Lease agreement or other agreement granting the use or possession of real estate in Portuguese territory signed until October 10th, 2023; or
    3. Reservation contract or promissory contract for the acquisition of a right in rem over real estate in Portuguese territory signed until October 10th, 2023;
    4. Enrolment or registration for dependents in an educational establishment in Portuguese territory, completed by October 10th, 2023;
    5. Residence visa or residence permit valid until December 31st, 2023;
    6. Procedure, initiated until December 31st, 2023, for granting a residence visa or residence permit, before the competent authorities, in accordance with the legislation in force applicable to immigration, namely through the request for an appointment or actual appointment for submission of the application for a residence visa or residence permit, or by submitting the application for the granting of residence visa or residence permit.
    7. Being a family member of the applicants in any of the situations mentioned above referred
CategoriesInvestment Property

NHR Framework 2024

For those who arrive in Portugal in 2024 without any previous connection with the Portuguese territory, the previously existent NHR program is no longer available.
The known NHR is still applicable for those individuals that:

  1. On December 31st, 2023, meet the conditions to qualify as residents for tax purposes in Portuguese territory;
  2. Become residents for tax purposes until the end of 2024, and who prove, for the purposes of their registration as a non-habitual resident, that one of the following eligible tests is met:
    1. Promise or work contract, promise or agreement of secondment concluded until December 31st, 2023, the performance of whose duties is to take place in national territory;
    2. Lease agreement or other agreement granting the use or possession of real estate in Portuguese territory signed until October 10th, 2023; or
    3. Reservation contract or promissory contract for the acquisition of a right in rem over real estate in Portuguese territory signed until October 10th, 2023;
    4. Enrolment or registration for dependents in an educational establishment in Portuguese territory, completed by October 10th, 2023;
    5. Residence visa or residence permit valid until December 31st, 2023;
    6. Procedure, initiated until December 31st, 2023, for granting a residence visa or residence permit, before the competent authorities, in accordance with the legislation in force applicable to immigration, namely through the request for an appointment or actual appointment for submission of the application for a residence visa or residence permit, or by submitting the application for the granting of residence visa or residence permit.
    7. Being a family member of the applicants in any of the situations mentioned above referred
CategoriesInvestment Property

INE report on real estate trends in Portugal

INE reported that by the end of 2021, the annual rate of price change had increased in seven out of eleven Greater Lisbon area municipalities with over 100,000 residents, with increases in Setúbal (+9.8%), Loures (+3.0%), Almada (+2.2%), and Oeiras (+2.1%) exceeding the rate of change seen at the national level (+1.9%).

Municipalities in the Porto Metropolitan Area, including Maia (+10.5%) and Vila Nova de Gaia (+8.1%), also saw greater year-on-year growth than Portugal. For example, “the acceleration was less expressive” in Lisbon (+0.4%) and Oporto (+0.9%).

Additionally, the high demand for high-end and luxury products has persisted in previous years, and this trend is expected to continue. 

Supply may continue to fall short of demand for various reasons, including slow licensing processes in most National City councils and increased difficulty in obtaining construction credit.

House prices in Portugal have been volatile because of the coronavirus pandemic, creating an ideal buying environment for foreigners in 2021. 

A recent article in The Portugal News reported that Portugal’s general cost of living would increase by 13.8% in 2021.

In addition, PWC has ranked Lisbon as the sixteenth most appealing city to make Real Estate investments in 2022. Not only have home values rise, but so have rental profits. 

CategoriesInvestment Property Tax Regime

Economic Implications

The rise and fall of Portugal’s real estate market are not distributed uniformly across the country and its islands. Starting in the ever-popular Algarve, 2021 saw a massive 16.5% increase in bank valuations across the board.

In March of 2022, the inflation rate in Portugal hit 5.3%, a level not seen in Portugal for nearly three decades. Medium-term, this escalation will affect home prices, which have been steadily rising since the troika left the country.

Some foreign buyers are willing to pay twice as much as a Portuguese for a property in Portugal. No signs indicate that the rising cost of buying a home in Portugal will slow down anytime soon. 

With 1,355 euros per square meter (euros/m2) in the fourth quarter of 2021, the median price of a Portuguese family home reached a new all-time high. This is an annual growth rate of 14.1% and a quarterly growth rate of 12.2%, as the Portuguese National Statistics Institute (INE) reported. 

The data also shows that in many urban centres, like the Greater Lisbon and Algarve areas, foreign buyers spent over twice as much as Portuguese buyers on a home. Let’s delve deeper into what 2022 holds for the Portuguese real estate market. 

Even though the Russian invasion of Ukraine has created a lot of uncertainty, the Portuguese economy is still expected to grow shortly. 

The Bank of Portugal predicts that the country’s GDP will expand by 4.9% in 2022 (up from 4.9% in 2021) before slowing to 2.9% in 2023 and 2.0% in 2024, closer to the estimated long-term growth rate. 

As economic activity rises, more people can find jobs, and the unemployment rate falls. Over the long term, these effects will fade, but they will be partially counteracted by rising wage and price pressures as the Portuguese economy makes greater use of its resources.

CategoriesInvestment Property

For Investors coming to Portugal

There’s a D2 visa in Portugal, also called Immigrant Entrepreneur Visa, and it’s to grant residence authorization to foreigners who have conducted investment operations or who can demonstrate that they have financial resources in Portugal, including financing obtained from a Portuguese financial institution and who have the intention of conducting investment operations on Portuguese soil.

The real estate market in Portugal is expanding quickly. Property values are increasing because of a shift from older, more expensive construction methods to more modern, less efficient, but more desirable ones. 

Our econometric models show that the Portugal Residential House Price Index will average around 190.98 points in 2023 and 193.27 points in 2024.

Investing in a rental property in Portugal could be a wise choice. It is worthwhile to do so now, as there is greater demand for lodging than supply, especially in Lisbon and Porto. The high returns from tenants during the busy tourist season also make renting out property a good option.

This environment, which the conflict in Ukraine has exacerbated, is reflected in the pronounced increase in construction prices, causing a slowdown in industrial activity, a reduction in supply in the medium term, and a subsequent increase in the prices of already-built homes. 

CategoriesInvestment Property

The 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…

CategoriesInvestment Property

Portugal Property Market Continues to Strive

Portugal property prices were expected to decrease, however dueto positive steps by the country the property industry has not only been sustained but continues to rise.

Apartments are clearly favoured among foreign investors in the Algarve. Property used for holiday rentals are among the most interesting and popular real estate in the Portuguese market with many investors purchasing to see a return on their investment. Across the Algarve places such as Albufeira, Vilamoura, Quinta do Lagoand Vale de Lobo are some of the more popular locations for those looking to invest.

There are no restrictions on foreign property buyers in Portugal and transaction costsare fairly low typically 6% of purchase price. Since 2012, non-European investors have also been entering the Portuguese property market in increasingly large numbers due to the introduction of the Golden Visa, which enables property investors to obtain residence permits.Between October 2012 and June 2016, foreign investors obtained over 3,400 residency permits.

The total cost of the residential property acquired by these investors amounted to approximately €1.9 billion, the average amount invested by the buyer was about €580,000.

Analysts are positive about the Portuguese property market going forward due to its proven record of resilience and relatively low property prices. It didn’t suffer through a housing bubble prior to the 2008 crisis and its housing prices stayed afloat during the recession, Portugal’s current market boasts prices that are particularly attractive when compared to others within the European market.

If your ready to learn more about buying or investing in Portugal, we look forward to helping you throughout the process.

CategoriesInvestment Property Tax Regime

The Non Habitual Tax Regime (NHR)

The non-habitual resident (NHR) regime is open to anyone who has the right to reside in Portugal (an EU/EEA/Swiss citizen or a holder of a residents permit who has not been a tax resident of the country during the previous 5 years. 

Under this regime, the following taxation rules apply:
    • Foreign-source self-employment or sole trader income derived from an eligible occupation (see below), royalties, capital gains and investment or rental income will be exempt from Portuguese tax as long as they may be taxed in the source country either under a double taxation agreement or under the OECD model tax convention. In addition, such income must not be deemed Portugal-sourced under applicable Portuguese law, and must not be sourced from a blacklisted tax haven.
    • Foreign-source employment income will be exempt from Portuguese tax as long asit is liable to tax (at whatever rate) in the source country either under a double taxation treaty or under the OECD model tax convention, and is not deemed Portugal-sourced under applicable Portuguese law.
    • Occupational pension income will be exempt from Portuguese tax as long as it is liable to tax in the source country under a double taxation treaty or it is deemed as not being Portuguese-source income under applicable Portugueselaw.
    • If your occupation is eligible (see below), Portugal-source employment or self-employment / sole trader income will be taxed at a flat rate of 20%, while other Portugal-sourced types of income will be taxed at the normal rates applicable to resident taxpayers, the calculation of the applicable marginal tax rate taking into account all income, including exempt income.
    • In Portugal there is no wealth tax or capital duty, and an inheritance or a gift received by a spouse, descendant or ascendant is tax exempt. Inheritance or gifts received by other individuals will be either not taxable under territoriality rules, or else may be subject to a flat 10% stamp duty.
If you are interested in learning more about the NHR and purchasing a property in the Algarve do not hesitate to get in touch.