- 1 Portugal Golden Visa
- 2 Example of the Benefit of a Portuguese Golden Visa
- 3 The Basics of a Portugal Golden Visa Explained
- 4 What Benefits does the Golden Visa Provide?
- 5 What is the Schengen Area?
- 6 How to Invest into Portugal’s Golden Visa Program
- 7 Non-Habitual Tax Rules for Golden Visa
- 8 Non-Habitual Resident
- 9 Golden Visas to Reduce or Modify Tax Responsibilities
- 10 Interested in Expatriation from the U.S.?
Portugal Golden Visa
Portugal Golden Visa: When it comes to the Golden Visa program, the Portugal Golden visa is one of the most popular of the 11 different visa programs for US expatriates. By way of brief background, a Golden visa is an investment type of visa which is used to acquire visa, permanent residence and/or citizenship in a different country through investment — Portugal is one of the more common Golden Visa (although new proposed changes could take away some of the its current luster). Oftentimes, the visa is used as an intermediary step or alternative for someone who is expatriating from the United States and may have dual-citizenship in another country but prefers the tax benefits of a Golden visa location, with residence in a 3rd or 4th country.
Example of the Benefit of a Portuguese Golden Visa
Without getting into too much complicated tax jargon, here is a typical scenario:
- Denise is a dual citizen in the United States.
- Her other country of citizenship does not follow the worldwide income rules, but rather residence-based tax.
- She plans on giving up her US citizenship and expatriating.
- By structuring her tax planning and income sourcing, by obtaining a Golden visa she may be able to minimize or avoid tax.
The Basics of a Portugal Golden Visa Explained
Let’s take an introductory look at the Portugal Golden Visa Program.
As provided by the Portuguese Government:
- The rules governing the granting of Residence Permit for Investment (ARI/Golden Visa), in force from 8 October 2012, enable third country nationals to obtain a temporary residence permit to conduct business activities with visa waiver to enter national territory. The beneficiaries of ARI/ Golden Visa are entitled to:
Residence visa waiver for entering Portugal;
Living and working in Portugal, on condition that they stay in Portugal for a period of 7 or more days, in the first year, and 14 or more days, in the subsequent years;
Visa exemption for travelling within the Schengen Area;
- Applying for permanent residence (pursuant to the Aliens Act – Act number 23/2007 of 4 July with the current wording );
- Applying for Portuguese citizenship, by naturalization, provided all other requirements set out by the Nationality Act are fulfilled (Act number 37/81 of 3 October, as amended);
What Benefits does the Golden Visa Provide?
Overall, Portugal has a nice lifestyle for many expatriates and there are many benefits to obtaining a Golden visa — especially for US taxpayers who are expatriating from the United States and will no longer be subject to worldwide income and reporting rules. With the Golden Visa from Portugal, they can travel throughout certain areas without obtaining a additional country-specific visas (Schengen Area). They can also apply for citizenship if that is their end-game.
What is the Schengen Area?
The Schengen Refers to various countries in Europe in which a person can travel with their Golden visa (before obtaining a passport if that is desired). This makes travel around Europe easier, presuming that the 26 countries identified in the Schengen area are locations are person wants to travel to. If the person intends on remaining in these other countries for any extended length of time, then additional visa requirements may apply.
- Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland.
How to Invest into Portugal’s Golden Visa Program
- All third country citizens who conduct an investment activity, as an individual businessperson or through a company set up in Portugal or in another EU Member State and who, in addition, are stably settled in Portugal, provided these citizens fulfill the quantitative requirements and the time requirements set out by the relevant legislation, may apply for a Residence Permit for Investment, by one of the following routes:
- Capital transfer with a value equal to or above 1 million Euros; (PDF)
- The creation of, at least, 10 job positions; (PDF)
- The purchase of real estate property with a value equal to or above 500 thousand Euros; (PDF)
- The purchase of real estate property, with construction dating back more than 30 years or located in urban regeneration areas, for refurbishing, for a total value equal to or above 350 thousand Euros; (PDF)
- Capital transfer with a value equal to or above 350 thousand Euros for investing in research activities conducted by public or private scientific research institutions involved in the national scientific or technologic system; (PDF)
- Capital transfer with a value equal to or above 250 thousand Euros for investing in artistic output or supporting the arts, for reconstruction or refurbishment of the national heritage, through the local and central authorities, public institutions, public corporate sector, public foundations, private foundations of public interest, networked local authorities, local corporate sector organizations, local associations and public cultural associations, pursuing activities of artistic output, and reconstruction or maintenance of the national heritage; (PDF)
- Capital transfer of the amount of 350 thousand Euros, or higher, for the acquisition of units of investment funds or venture capital fund of funds dedicated to the capitalisation of companies, capital injected under the Portuguese legislation, whose maturity, at the moment of the investment, is, at least, of five years and, at least, 60% of the investments is realized in commercial companies with head office in national territory; (PDF)
- Capital transfer of the amount of 350 thousand Euros, or higher, for constitution of a commercial society with head office in the national territory, combined with the creation of five permanent working jobs, or for the reinforcement of the share capital of a commercial society with head office in national territory, already existing, with the creation or keeping of working jobs, with a minimum of five permanent jobs, and for a minimum period of three years; (PDF)
- Family reunification. (PDF)
*Portuguese, EU and EEE nationals are not eligible for the ARI/Golden Visa scheme.
What does This Mean?
It means that in order to qualify for a Golden visa the applicant must meet certain requirements. as with any Golden visa the concept is by investing into the foreign country an applicant has a more streamlined and direct opportunity to apply for a visa. There are various options available depending on what works best for the applicant, and it generally requires the transfer about least 500,000 to $700,000 USD invested into Portugal.
Non-Habitual Tax Rules for Golden Visa
For most expatriates, the goal is to avoid or minimize tax. And, after expatriation from the US, a person typically wants to take a break from paying tax. US persons are used to paying tax on worldwide income and reporting their global assets. If a person becomes a resident of Portugal, then they can apply to be an NHR (Non-Habitual Resident) and/or remain a Portuguese resident (Which can be beneficial if the majority of the income is not sourced in Portugal).
Reside in Portugal Less than Half the Year
Nearly all income generated outside Portugal is tax-free and the Taxpayer pays tax on income earned in Portugal Only.
Reside in Portugal More than Half the Year or Habitual Residence
Worldwide income at progressive rates.
This is one of the best parts of becoming a resident of Portugal. With Non-Habitual Resident (NHR) Status, the expatriate pays minimal tax on foreign sourced income, unless it involves certain pension income – and a flat tax on Portugal-sourced income.
But, for the first 10-years, you can opt-out of several types of income (and avoid inheritance/gift/estate tax).
Golden Visas to Reduce or Modify Tax Responsibilities
In conclusion, when a US person expatriates from the United States and has citizenship in another country, sometimes obtaining a Golden visa can be a method for ultimately reducing or avoiding certain taxes. it is important that the expatriate evaluates their tax situation before obtaining a Golden Visa — noting that not all Golden visas operate the same.
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