PORTUGAL’S RETURN TO BEING A GLOBAL VILLAGE
*Article by Chitra Stern
Why are people moving to Portugal? Why is Portugal trending? The increase of tourism in what I used to call “Western Europe’s most undiscovered country” has helped foreigners discover what a delightful country this is – the “California of Europe”. There are several good reasons to move to Portugal right now – good weather, lower cost of living, welcoming people, great connectivity to the rest of Europe as well as the Americas and the Middle East are some of the reasons. However, there are some structural reasons too.
There are currently 480,300 foreigners living in Portugal, according to the Portuguese Services for Foreigners and Borders – or the Portuguese “Home Office”. This represents nearly 5% of the population but what is impressive is the speed at which it is growing. The last 3 years have seen an enormous growth as Portugal’s reputation and fame for its temperate climate, welcoming people and authentic culture. In fact, the number of foreigners obtaining residence in Portugal increased by 14% between 2017 and 2018.
The high quality of universities and Masters courses in English in some universities give foreign students a great chance to spend a few years in Portugal. The number of foreign students, especially Brazilians, studying here has increased several-fold in the last years.
Over the last years, Portugal has announced an impressive array of residence programs balanced across different areas to bring foreign direct investment and talent into the areas of real-estate, hotels, art, culture, agriculture, tech startups, tech skills and green technology.
The authorities have been reporting this steady increase of foreign residents for the last years and at one point, did feel the strain as the number of residence visas issued started to slow down thanks to the huge demand for residence permits. However, the government has applied strategic changes in order to cope with the greater tourism numbers as well as the greater influx of residents. The Minister of Internal Affairs recently announced that the Home Office’s opening hours would be extended to help give foreigners a better service. Most of the arrivals are students, workers, researchers and foreign investors and this influx is seen as much needed by the country by most Portuguese, who are welcoming in nature. Growth of immigration from Brazil and Cape Verde have been the highest but there is also an increase from the UK, France, Italy, India, Nepal and Venezuela.
The Golden Visa…
As one of the steps to solving the country’s economic crisis earlier on this decade, Portugal announced its “Golden Visa” program in late 2012. An investor bringing in €500,000 to invest in real estate could receive a residence permit for him/ her and spouse and dependent children. This program alone has resulted in 7,150 authorizations of the real estate Golden Visa for investors from China, Brazil, Turkey, South Africa and Russia – in order of numbers of residence permits issued.
What is less known is that the Golden Visa also applies to several other categories of investment too such as the transfer of capital of €1 million to a Portuguese bank account, investment €250,000 in a cultural or arts project, investment €500,000 in a small or medium-sized company to help increase its capital and creation of a company with a minimum of 10 jobs. However, by far the most popular program and the easiest has been the real-estate for which 94% of the permits have been issued to-date.
In total, there has been a staggering inflow of €4.6 billion into Portugal for the Golden Visa program since the December 2012 (as at 30 June 2019).
… and numerous other residence programs
While it was on a roll, Portugal did not stop there. In more recent years, the government has announced a number of other Residence Programs, including the Non-Habitual Residence Program, Startup Visas, Tech Visas and Green Visas.
Another successful program for Portugal has been the Non-Habitual Residence Program, or the “NHR” as it’s commonly referred to, has an attractive flat rate of 20% tax payable by foreigners living here. It also confers the benefit of paying 0% taxes on “passive” income occurring outside of Portugal. There was a big influx of French investors and residents, especially, when this program was announced.
The Startup scene in Portugal started to burgeon thanks to various government initiatives which started back in 2011. The then mayor of Lisbon, and today’s Prime Minister, António Costa, kickstarted one of the first state-financed incubator Startup Lisbon. As the spirit for startups spread thoughout the country, first as a necessity, and then as a viable trend, the ecosystem for entrepreneurs also started changing. New measures and procedures have been passed to enable the easier set up of Private Equity and Asset Management firms in Portugal.
In 2016 the National Strategic Public-Private Think Tank for Entrepreneurship, Startup Portugal, was launched by the Government with 3 objectives: to create and support the national ecosystem of entrepreneurship, to attract investors for startups and to accelerate the growth of Portuguese startups in foreign markets. Every year since, Startup Portugal has been announcing new initiatives and evolving the ecosystem of entrepreneurship in Portugal. As part of Startup Portugal, the Startup Visa was announced as a new residence program for Portugal. TAP, the national carrier, has started a new direct flight from Lisbon to San Francisco to connect the Portuguese ecosystem to Silicon Valley.
The Startup Visa is a residence program for non-EU/ Schengen founders of tech businesses. This visa program is executed by a government entity set up under the Ministry of Economy to help companies become competitive and innovative. The Portuguese government helps the business set up in a community of entrepreneurs in one of the “national network of incubators” (Rede Nacional de Incubadores) – numbering around 150 – throughout the country located in various regions. The genius of incubating new companies in these existing sub-ecosystems of the incubators is that the incoming startup’s chances of survival increases several-fold as the newcomer will benefit from the cluster’s information and modus operandi.
Portugal, like the rest of Europe, has an aging population with a low birth rate. The Tech visa was put in place to ensure that startups and larger companies could bring in highly qualified and specialized staff needed for the growth of these companies. This move increases the availability of staff beyond Portugal’s highly talented pool of programmers and engineers to help the growth of relocating companies as well as shared service centres that are moving to Portugal.
To keep up with the green movement and to encourage more capital to finance environmentally-friendly projects, the Green Visa was announced earlier this year. It is similar to the Golden Visa except that instead of real estate, the investor qualifies for residence and ultimately Portuguese citizenship if an investment of €500,000 or more is made in environmental development projects including organic agriculture, renewable energies or ecotourism.
Bucking the trend
While many countries are creating unfriendly atmospheres for foreigners, Portugal is going the other way. The Portuguese government sees the positives of immigration and the need for it – to attract capital, talent and workers in growth sectors. With this movement of capital, there is also a movement of people, cultures, food and art – creating a cultural melting pot in this small country. Unlike what one immediately thinks, many of the investors in the Golden Visa Program actually live in Portugal and contribute to the local economy. They are also bringing new businesses and ideas with them – which benefits the country. There are still several areas in Portugal that need investment and by no means is the job done. One could argue that we are going back to the times of The First Global Village that Portugal was in the Era of the Discoveries and subsequent years of trading and exchanges of ideas, goods and people. It is an amazing time to be here in Portugal and long may this spirit continue.