Portugal Called to Implement an Eco-Friendly and Affordable Golden Visa Program with a Clearer NHR Tax Framework

Portugal Called to Implement an Eco-Friendly and Affordable Golden Visa Program with a Clearer NHR Tax Framework

Key Takeaways

1. Hugo Santos Ferreira, president of the Portuguese Association of Real Estate Developers and Investors, has proposed revisions to the Golden Visa Program and Non-Habitual Resident (NHR) tax regime.
2. The proposed changes aim to introduce a more eco-friendly Golden Visa Program and simplify the NHR tax regime.
3. According to Santos Ferreira, these revisions would attract more foreign investors to Portugal.

A Sustainable and Eco-Friendly Golden Visa

Hugo Santos Ferreira, president of the Portuguese Association of Real Estate Developers and Investors, has called for reforms to Portugal’s Golden Visa Program and NHR tax regime to appeal to affluent foreign nationals. He suggests that a sustainable, affordable, and eco-friendly Golden Visa would represent an "evolution" of the original program, launched in 2012.

The revised Golden Visa would focus on granting residency for investments in areas such as affordable housing, decarbonization of real estate, the rental market, energy, technology, and innovation. This shift, Ferreira argues, would restore the appeal lost after the discontinuation of the real estate investment option in October 2023.

Changes in Real Estate Investment Options

The removal of the real estate option under the "More Housing" bill, passed by President Marcelo Rebelo de Sousa to tackle the housing crisis, has caused a significant impact on the Golden Visa Program. Under the new rules, foreigners can no longer obtain residency by purchasing property worth at least €500,000.

Santos Ferreira stressed that the 2024 version of the Golden Visa Program would make more sense and align with modern investment trends, helping Portugal maintain its attractiveness for international investors.

Complexity of the NHR Tax Regime

Santos Ferreira also highlighted the growing interest from Brazilians in Portugal’s NHR tax regime. However, he criticized the complexity of the current scheme, stating that it has become difficult for even Portuguese citizens to explain, let alone international investors.

Portugal’s NHR regime, introduced in 2009, provided tax benefits for up to ten years, including low taxes on pensions and wealth. However, in October 2023, former Prime Minister António Costa announced that the NHR regime would end by January 2024, with a transitional period extending to 2025 for some applicants. Despite this, the regime has become increasingly complex and difficult to navigate.

New Alternatives to the NHR Regime

As the NHR tax regime phases out, the Portuguese government has introduced a new scheme under the State Budget Proposal called the Tax Incentive for Scientific Research and Innovation (ITS). This new program, offering tax incentives for a ten-year period, is seen as a replacement for the NHR regime.

Santos Ferreira believes the government needs to invest in clearer mechanisms and consider reverting to the simpler format of previous programs to remain competitive with other European nations offering similar schemes.

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