Portugal

Portugal CitizenshipResidency & Citizenship

The Portugal Residence Programme or Golden Residence Permit (ARI) is attractive for investors who would like to enjoy the quality of life, great weather and safety that Portugal has to offer but also take advantage of being part of the European Union without being obligated to reside permanently in Portugal. The Golden Residence Permit has been in effect since August 2012 as the Portuguese government looks to generate capital and real estate investment, as well as opening the European door to potential investors.

Portugal

Portugal is a very attractive option for businessmen and executives who wish to work within the EU easily and conveniently while also providing families with a wonderful opportunity in education and lifestyle.

The Golden Residence Permit for Investment is available to all non – EU national investors.

Schengen Visa

The holders of the Golden Residence Permit have all benefits of the Schengen Visa, entitling the holder freedom of movement in the 26 member states. The Schengen Treaty was signed on 14 June 1985 together with subsequent conventions the treaty created Europe’s borderless Schengen Area, which operates like a single state for international travel, with external border controls for travellers visiting the area but with no internal border controls. The borderless zone created by the Schengen agreements currently consists of 26 European countries, namely: 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.

Family Grouping & Portuguese Citizenship

The holders of the Golden Residence Permit for Investment Activity have the right to family regrouping, and may gain access to permanent residence permit, as well as to Portuguese citizenship in accordance with current legal provisions – www.sef.pt.

Family

Family regrouping – in simple terms this means that the family and dependents of the holder of the Golden Residence Permit qualify for residence as well, including:

There are 3 investment options that foreign nationals, either individually or through a company, shall consider for a minimum period of five years to fulfill Golden Residence Permit requirements.
These options are:

What are the Requirements on the Investment Activities?

  • An up-to-date certificate issued by the Social Security.
  • Public deed or promissory share-purchase agreement of the property, with a declaration of an authorized financial institution to exercise its activity in Portugal stating the effective transfer of capital to its acquisition or to execute as a down payment of the promise to purchase in equal or superior value of 500 thousand Euros, and.
  • An up-to-date certificate issued by the Real Estate Registry, which must always be, in the case of contract-promise and where legally feasible, the respective register.
  • Performing an investment activity for a minimum period of five years must be attested by a bona fide declaration signed by the Applicant.
  • Applicants should provide evidence of having invested the minimum amount required, including stocks or shares of companies.
  • Declaration of a financial institution authorized to exercise its activity in Portugal certifying: the effective transfer of capital in the amount of not less than € 1 million, to an account demonstrating the investor is the sole or first holder of capital; or, the acquisition of stocks or shares of companies, and.
  • An up-to-date certificate issued by the Commercial Register, certifying that the applicant holds a share in the capital of a company.

The criteria, is simple and transparent, the Portuguese state is committed to support capital investment in Portugal to attract capital, promote job creation and increase investment in Real Estate.

Who are the eligibility requirements to apply to Golden Residence Permit?

Residence permit shall be granted for performing investment activities to Foreign Nationals who, cumulatively:

  1. Fulfill the investment requirements;
  2. Hold a valid Schengen visa;
  3. Legalize their permanence in Portugal within 90 days of their first entry into national territory;
  4. Meet other requirements under general law; such as:
    1. Applicants must not have been convicted of a crime punishable with deprivation of liberty exceeding one year
    2. Applicants must not be subject of an entry ban in national territory following a removal order from the country
    3. Applicants must not be subject of alerts in the Schengen Information System
    4. Applicants must not be subject of alerts in SEF’s Information Integrated System issued for purposes of non-admission

Residence permit shall be renewed for a period of two years pursuant, provided the requirements remain valid.

What are the Documents required for application?

Acquiring Portuguese Citizenship by Naturalization

Citizenship law in Portugal is regulated by Decree-Law n.237 – A/2006 of 14 December. Where citizenship is by means of naturalization, a foreign citizen can be granted Portuguese nationality if the following conditions are fulfilled:

  1. The applicant is legally considered to be an adult, i.e. 18 years old
  2. The applicant is a resident in Portugal for at least 6 years
  3. The applicant has sufficient knowledge of the Portuguese language
  4. The applicant has not been convicted for a crime which corresponds to a penalty equal to or more than 3 years, accordingly to Portuguese law.

The application shall be made by the applicant or by his legal representative in the Portuguese language to the competent departments of the Ministry of Justice.

Once the application is received, it will be sent to the “Conservatória dos Registos Centrais” department, within the Ministry of Justice for evaluation. If the application has not been properly completed or fails to comply with any of the other Ministry of Justice requirements at the time of application, the process will be rejected within 30 days, and the applicant will be given 20 days to respond / clarify. If the application is accepted, the competent services will make internal enquiries, and consult with other entities (which my take up to 120 days) and a decision will be made, within a maximum of 45 days, which will then be submitted to the Ministry of Justice.

The final decision will be communicated to the “Conservatória dos Registos Centrais”, for registration. The applicant will be able to request a Portuguese citizen card as well as a Portuguese passport.


The portuguese tax system for non-habitual residents

EU & Non EU Nationals

For more information, please contact us and rest assured that all serious inquiries will be handled professionally as our firm is aligned with one of most notable firms in Portugal to process all applications.

The Decree-law of 23 September 2009 created the status of non-habitual tax resident both for non-residents who plan on establishing permanent residency in Portugal, and for temporary residents.

  1. Beneficiaries: Persons who become tax resident in Portugal and who, in the previous 5 years, have not resided in Portugal.
  2. Advantages: Those enjoying non-habitual resident status benefit from a special 20% tax rate on certain Portuguese income and a tax exemption on foreign income.
  3. Temporal application: A taxpayer who is deemed to be non-habitually resident acquires the right to be taxed as such for a period of 10 years consecutively starting from the year of registration as a resident in Portugal (since he is deemed, over this period, as residing in Portugal). At the end of this 10-year period, the taxpayer will be subject to tax in line with the traditional income tax rules applicable to Portuguese individuals (“Imposto sobre o Rendimento das pessoas Singulares”; “IRS”).

To benefit from the scheme applicable to non-habitual residents, the taxpayer must cumulatively meet the following conditions:

  1. he becomes resident for tax purposes in Portugal, in accordance with the criteria laid down in the IRS Code;
  2. he has not resided in Portugal in the 5 years before registering with this scheme;
  3. when registering as a resident in Portugal, he requests to be registered (with the tax authorities) as a non-habitual resident.

A person is regarded as being resident for tax purposes in Portugal where, over the course of a calendar year, he meets one of the following conditions:

  1. he has stayed in Portugal for more than 183 days, whether consecutively or not, or
  2. on 31 December of that year, he has a home in Portugal under conditions which demonstrate his intention to maintain it and reside in it as his place of habitual residency; or
  3. he is part of a household one member of which is resident for tax purposes in Portugal.
  1. At the time of registration, taxpayers will be required to declare that, in the previous five years, they did not satisfy the conditions to become resident in Portugal (according to Circular No. 9/2012, a simple declaration to that effect is sufficient).
  2. If there is any doubt or evidence that that declaration is not truthful, the tax authority may request additional evidence.
  3. In that case, the tax authority may request a foreign residency certificate or documents attesting to the existence of close personal and economic ties to another state.
Income earned in Portugal
  1. Income in Category A (income from employment) and B (income from entrepreneurial and professional work) of the IRS are subject to a special tax rate of 20%, provided that it comes from high added value activities – activities which are defined in Order No. 12/2010 of 7 January (see Annex).
  2. Other income (included in other categories of the IRS) are subject to tax in accordance with the general taxation rules applicable to habitual residents and, therefore, subject to the progressive tax rates applicable to Portuguese income (up to a maximum rate of 46.5%, in addition to which, on any taxable income exceeding €153,300, a supplementary tax of 2.5% will be imposed).
Income earned abroad
  1. Elimination of international double taxation through the application of the exemption method: if certain conditions are met, income earned abroad will not be taxed in Portugal (it will however be counted for accounting purposes together with income earned in Portugal which does not qualify for the special 20% rate in order to determine which of the progressive tax rates applies to the total income).
  2. Circular No. 2/2010 provides that income in categories A and B earned abroad, to which the exemption method does not apply (because they do not meet the qualifying conditions) are to be taxed at the special rate of 20% where this income is derived from a high added value activity.
Conditions governing the application of the exemption in respect of Category A income (paid work)

It is sufficient that one of the following conditions is met:

  1. such income is, in effect, subject to tax in the other Contracting State in accordance with the Convention for the elimination of double taxation entered into by Portugal with that state, or
  2. where no such convention exists, the income is, in effect, taxed in the other country, territory or region, provided it is not considered as having being earned in Portugal

If such income is not taxed in the source State, it will benefit from the preferential 20% tax rate.

Note: a non-habitual resident can always opt for the tax credit method to be applied, in which case he is obliged to include his income for tax purposes.

Conditions governing the application of the exemption in respect of category B, E, F or G income, (professional income, entrepreneurial income, income from land, capital income and capital gains)

It is sufficient that one of the following conditions is met:

  1. such income is liable to be taxed in another Contracting State in accordance with the Convention for the avoidance of double taxation entered into by Portugal with that state;
  2. where no such convention exists, it is liable to be taxed in the other country, territory or region, according to the OECD Model Tax Convention on Income and on Capital, provided that such income does not come from a territory classified as a tax haven by Portugal and is not considered as having been earned in Portugal.

It is not necessary, in this scenario, that such income is actually subject to tax abroad, but they could potentially be.

Where income is not taxed by the source State, it will be able, however, to benefit from the preferential tax rate of 20%.

Conditions governing the application of the exemption in respect of category H income (pensions): the special case of foreign retirees

It is sufficient that one of the following conditions is met:

  1. such income is taxed in the other Contracting State in accordance with the Convention for the avoidance of double taxation entered into by Portugal with that state, or
  2. it is not considered as having been earned in Portugal.

IMPORTANT: This scheme appears to be very attractive for foreign retirees whose pensions are from States which, under the Convention for the avoidance of double taxation entered into between Portugal and the state, grant the exclusive right to tax pensions to the state in which the pension recipient resides (e.g. United States, Switzerland, Luxembourg, Malta, Spain, etc.) → Double non-taxation, namely, the income is not subject to tax in the source state and is exempt in the state of residency.

In practice, this device can often result in the income not being subject to tax in either the source state or Portugal, since the majority of tax treaties entered into by Portugal, based on the OECD model, provide that, in respect of private pensions, the taxpayer may be subject to tax only in the state where he resides. Only public pensions are, in principle, subject to tax exclusively in the state of the paying agency.

Example: The tax convention between France and Portugal grants the exclusive right to tax private pensions to the state of residency. Persons resident for more than 183 days in Portugal who were not resident for tax purposes in Portugal in the previous 5 years may therefore benefit from being non-habitual resident in Portugal. In these circumstances, private pensions from France will not be subject to tax in France and will, moreover, be exempt from taxation in Portugal.

Order No. 12/2010 high added value activities
  • 1 – Architects, engineers and similar technicians:
    • 101 – Architects;
    • 102 – Engineers;
    • 103 – Geologists.
  • 2 – Artists, actors and musicians:
    • 201 – Theatre, ballet, cinema, radio and television performers;
    • 202 – Singers;
    • 203 – Sculptors;
    • 204 – Musicians;
    • 205 – Painters.
  • 3 – Auditors:
    • 301 – Auditors;
    • 302 – Tax Consultants.
  • 4 – Doctors and dentists:
    • 401 – Dentists;
    • 402 – Analysts;
    • 403 – Surgeons;
    • 404 – Ship’s doctors;
    • 405 – GPs;
    • 406 – Dentists;
    • 407 – Stomatologists;
    • 408 – Medical physiotherapists;
    • 409 – Gastroenterologists;
    • 410 – Ophthalmologists;
    • 411 – Orthopaedists;
    • 412 – Otolaryngologists (ENT);
    • 413 – Paediatricians;
    • 414 – Radiologists;
    • 415 – Doctors specialised in other areas.
  • 5 – Teachers:
    • 501 – University professors.
  • 6 – Psychologists:
    • 601 – Psychologists.
  • 7 – Liberal, technical and related professions:
    • 701 – Archaeologists;
    • 702 – Biologists and experts in life sciences;
    • 703 – Computer programmers;
    • 704 – Computer consultancy and programming activities related to information and computer technology;
    • 705 – Computer programming activities;
    • 706 – Information technology consultancy;
    • 707 – Management and operation of computer hardware;
    • 708 – Information services activities;
    • 709 – Data processing, hosting and related activities; web portals;
    • 710 – Data processing, hosting and related activities;
    • 711 – Other information service activities;
    • 712 – Media activities;
    • 713 – Other information service activities;
    • 714 – Scientific research and development;
    • 715 – Research and development related to natural and physical sciences;
    • 716 – Biotechnology research and development;
    • 717 – Designers.
  • 8 – Investors, Managers and Administrators:
    • 801 – Investors, administrators and managers who foster productive investment, where they are attached to projects which are eligible, and employed under contracts which confer tax benefits entered into in accordance with the General Tax Code, approved by Decree-Law No. 249/2009 of 23 September;
    • 802 – Senior business executives.

Economic Citizenship

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