E-Residency
In an effort to encourage foreign investment and business development, Portugal is in the course of introducing the National Entrepreneurship Strategy to encourage the development of the technology and innovation business sectors.
It is proposed that foreign individuals who are not Portuguese resident will be able to access government online services to establish and manage Portuguese registered companies with no requirement to be physically resident or present in Portugal as is currently the case. By following the online procedure it is intended that entrepreneurs investing in Portugal can incorporate a company, obtain a tax identification number and complete tax filings online.
The streamlined service is designed to reduce the current bureaucracy and provide an inexpensive and fast service to encourage economic development. Other proposals include the introduction of an English language service and an easier migration service.
The government is taking as its model a similar service that was introduced and operates with success by Estonia from 2014
Non-Habitual Residence
It is expected that the 2020 Budget might introduce tax changes to the Non-Habitual Resident Program. as well as introducing stricter rules on the popular Golden Visa citizenship program.
Currently, individuals who are non-habitual resident in Portugal enjoy tax exempt status for ten years on their foreign source income including pension income, dividends and other non-Portuguese income from employment. It is widely recognised that the present tax exemption is unsustainable and Portugal has come under pressure from the EU. It seems likely that a modest tax of 10% will be introduced, which is considerably less than income tax charged elsewhere in Europe.
Golden Visa Citizenship
Also expected in the Budget are stricter rules on real estate investment to the popular Portuguese citizenship program.
The Portuguese Citizenship Program has enjoyed considerable success and has significantly increased inward invest into Portugal, particularly in real estate. The main centers of Lisbon and Porto have benefited the most and attracted the majority of the foreign investment leading to a significant increase in property values to the detriment of locals caused by rising rents and purchase prices. It is estimated that these two areas have attracted about 65% of the investment under the program, an investment in the region of €4.8billion.
With the intention of allowing the market to cool in Lisbon and Porto, foreign investment in those cities will be an ineligible investment under the citizenship program. The government wishes to encourage investment elsewhere in Portugal and, particularly, to encourage investment in enterprise, leading to the creation of employment and the regeneration of neglected urban areas.
Commentators consider that these changes to the investment rules are unlikely to go down well with investors looking for citizenship, who may see such investments as high risk, lacking the relative security of real estate investments.
Investment in Alternative Assets
An increasing number of investors in the Portugal Investor Program are taking the opportunity to invest in options other than the conventional investment of €500,000 in residential property.
The last three years has seen a boom in interest in alternative investments with the number of applicants investing increasing three fold and now make up 1 in 4 of all applicants.
A study by the Banco de Portugal has revealed that the decline in the working population has been reversed by an increase in migration to the jurisdiction providing a positive boost to the Portuguese economy and economic activity, rejuvenating an otherwise ageing population.
The impact of new residents has had a noticeable effect despite their small numbers. The Portuguese Statistical Office found that most new residents engaged in economic activity whether as employees or in their own business. The incoming residents were led by nationals of Brazil, UK and Italy.
For more information about Citizenship and Residence services in Portugal, or elsewhere please contact Simon Huxford: s.huxford@rosemont-mc.com or request or Citizenship and Residence e-brochure.
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