Dec 19, 2023

Professional Views: The Changing Landscape for Foreign Investment in Portugal

Legislative change in the Golden Visa and NHR Programmes


When the Portuguese Government announced in February 2023 the intention to terminate the Golden Visa program, reactions from numerous professionals in the most diverse economic activities, generated the necessary awareness to the fact that there was a country before and after this program was implemented.


In fact, from the real estate sector with all the positive impacts that this sector has in other activities such as tourism, to the financial sector, where Portugal never had, prior to the program, any relevant position in attracting international venture capital investors to Portuguese funds, the Golden Visa program profoundly transformed in many ways the image of the country as a safe investment destination, and attracted investors that would otherwise invest in other countries. Bearing in mind that Portugal was bankrupt in 2011 and intervened by the IMF and the Central European Bank, the creation of the program in that same year represented a major part in the financial and economical recuperation of the country.


The maintenance of the program, despite the adaptation that was introduced depriving direct or indirect investment in real estate, means that it will continue to be a significant contribution to attract international investors to the country, especially in the option of collective investment undertakings, which according to the law, need to invest at least 60% of their size in companies located in Portugal.


The fact that this source of capitalization is available is certainly very good news for the private equity and venture capital industry and consequently to all the Portuguese companies that are supported by these funds. Local Fund managers have reacted to this update to the Golden Visa program, by registering new funds with the Portuguese regulator (CMVM) targeting investments in the start-up sector, renewable energies and tourism, just to name a few, anticipating bright days ahead.  With Portugal maintaining all the characteristics that has made it throughout the recent years a safe environment for international investors. 


Parliament has on the other hand decided to maintain the intention of the Government to limit access to the non-habitual resident (NHR) program, from the beginning of 2024 onwards.


Although a transitional period has been foreseen, allowing applications to the current program still in 2024 if certain conditions are previously met still in 2023, the program as it existed before will no longer be available for those who are not able to meet such conditions.


In any case, Portugal will still concede, from the 1st of January of 2024 onwards, access to a similar program of tax incentives, applicable to those who haven’t resided in the country in the past 5 years and come to the country to develop an activity related with scientific investigation and innovation. Aiming therefore to attract skilled foreign professionals in these sectors, this new version of the NHR will be granted, among others, to university teachers and scientific researchers, employees and managers of entities recognized as innovation and technological centers, certified start-ups and also to highly qualified professionals as defined through ministerial decree.


Therefore, and although not as broadly as before, Portugal shall still maintain a special taxation program available for those aiming to relocate to the country and are connected to the mentioned scientific investigation and innovation areas.

This special taxation program, along with the anticipated focus of the Golden Visa investment into Portuguese collective investment undertakings, opens the door to a wide array of opportunities, especially in the R&D sector, with the country providing the necessary instruments for foreign capitalization of local companies and the attraction of skilled professionals into them.


Filipe Eusébio, Ana Bruno & Associados


SEF Migration to AIMA


As indicated, in light of the recent legislative changes relating to the Golden Visa and the restructuring that took place within the Immigration Authorities (and also the relatively recent political events in Portugal), we believe it is important to provide an additional level of clarity on the current standing of the regime/program and what we believe or know, especially looking into the future.


From that perspective, it is important to note that the former Portuguese Immigration Services (“SEF”) have been abolished and a new agency (“AIMA”) has been created as of the end of October 2023. This new agency will be responsible for processing residency applications and has the mission of resolving the existing delays and to modernize and implement new methodologies enabling for such applications to be streamlined. 


Of course, to those that are still in the initial stage of their residencies (e.g. have not yet received a validation of the application, have not done biometrics or have done biometrics but are still waiting for the final approval), the last couple of years have been quite difficult, since the processing times have been completely misaligned with what are the applicable legal timeframes and to what could considered reasonable. Accordingly, the transition of the competences to deal with residencies to “AIMA” is in our view positive and this new agency and the supervising bodies within the Government structure have set ambitious targets for the development of its duties in the short term.


On this note, we can report that we have been able to establish an initial institutional contact with AIMA two weeks ago and we were positively surprised with the level of awareness regarding the existing inefficiencies and, in addition, we were advised that a number of changes would be implemented very soon by AIMA to overcome these inefficiencies and the delays. We can also report that the communication with AIMA has been more prompt comparing with what existed with the previous entity, SEF, which to us is also a good indicator. This different stance could also be seen last week with news that the Government has approved a Regulatory Decree (still to be approved by the President) that will in principle bring a number of simplification measures to residency applications and that is bound to expedite these processes. 


In any case, even though these are very positive news, we have to be cautious since we cannot control the process in its entirety and for that reason, the normal and continuous approach of exerting pressure with AIMA, should continue to be adopted, whilst we will endeavour to put in place a productive communication channel with AIMA.


João Cunha Vaz, Edge International Lawyers