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5 Reasons to Invest in Portugal

1. A Stable Political Climate

Portugal not only has the oldest borders in Europe but also a mature and consolidated democracy grown from a strong community spirit. It was not always this way, there are still people alive today who remember long years of dictatorship that lasted from around 1932 until the Carnation Revolution in 1974.

That year, on the 25th of April, the Portuguese military, backed by the people, overthrew the authoritarian regime in a peaceful revolution that put an end to 40 years of darkness.

Since then, Portugal has gone from strength to strength, committing wholeheartedly to the European Union and building new relationships with nations from around the globe. Economically, the gross national product rate has been steadily rising since 2014 thanks largely to a considerable contribution from the tourism industry. Despite recent events and rumours of a global recession looming on the horizon, the Portuguese government's overall perspective remains positive and forward-thinking.

2. A Positive Social Environment

Portugal was voted the third safest country in the world by Global Peace Index. The Portuguese people’s resilience and ability to adapt helped them deal with the recent crisis as proactively as possible, keeping a strong, united front against adversity.

On the other hand, they are also extremely welcoming to visitors from overseas, with many communities living happily alongside each other. The warm conviviality of the Portuguese comes from a pride in their country and a love of sharing their home with guests, wherever they come from.

3. A Mature Tourist Industry

When compared to other tourist destinations, Portugal is still considered affordable with a very pleasant climate and good access to and from most countries in Europe.

Portugal is well known as an established tourist spot, but recent years have seen its popularity grow exponentially, with a marked increase in the number of visitors and new foreign residents. This is especially true, where new infrastructures have been put in place to accommodate the rising number of visitors arriving during the high season.

The hospitality industry is extremely important to the Portuguese economy and the warm welcome of the locals is often singled out as one of the main reasons that make people want to come back to Portugal... or never leave at all!!!

4. A Premium Real Estate Location

Recent studies state that Portugal has been showing robust growth in real estate investment in recent years, with increased demand and property prices.

This is concentrated on the shoreline, mostly because of the favourable conditions it offers in terms of accessibility, services, and lifestyle. The highest demand is for luxury properties, a demand that shows no signs of stopping.

Projections indicate that the Portugal will continue to enjoy these trends, provided that there are no major negative changes in normal market conditions and macro-economic climate.

So today, investing in Portuguese real estate remains a safe bet, with property prices rising steadily and supply still unable to meet demand.

5. Tax Benefits for Foreign Investment

Following the global recession, Portugal soon learnt the importance of foreign investment to the recovery of its economy after the global recession and issued a range of targeted tax benefits, including tax exemptions for gifts or inheritances to spouse, ascendants or descendants.

Two tax regimes were designed to be particularly appealing for those who invest in property in Portugal - the Non-Habitual Tax Residents regime (NHR) and the Golden Visa Program.

The NHR regime is a hugely beneficial tax regime granted for 10 years and available to any individual who becomes a resident taxpayer for Portuguese Personal Income Tax (PIT) and who has not already been taxed in Portugal in the previous five years. To be considered as a tax resident under Portuguese domestic rules, the individual is required to:

(i) Spend more than 183 days in Portugal during the relevant fiscal year; or

(ii) Have a home in Portugal, on 31 December of that year, that qualifies as a habitual residence

The benefits provided in the NHR regime include:

• Passive Foreign-source income (e.g. pensions, dividends, interest, rental income) is fully exempt in Portugal and this exemption applies irrespective of the taxation applicable at source (i.e. it is possible to achieve double non-taxation of this type of income)

• Active Foreign-source income (e.g. from employment and self-employment) resulting from “high value-added activities” may also be fully exempt provided specific conditions are met

• Portuguese-source income resulting from “high value-added activities” is subject to a flat rate of 20% (instead of the general progressive tax rates)

The high value-added activities are identified in a statutory list and include software developers, academics, researchers, tax advisors, senior company personnel and, in certain cases, board members, CEOs and CFOs. After an individual register as an NHR in Portugal, they can request a certificate of residence from the Portuguese tax authorities. This document can then be sent to the tax authorities of the individual’s foreign source of income and that should enable them to be exempt from tax in that jurisdiction unless a withholding tax applies.

The Golden Visa Program grants access to the Golden Residence Permit (“GRP”), a special residence permit aimed at attracting new investors to the Portuguese economy. This regime opens the possibility for non- EU nationals to apply for a Portuguese residence permit and freely circulate within most of the European countries (within the Schengen Area). The GRP welcomes international investors into a long term relationship, enabling the applicant to claim Portuguese nationality under certain rules. The GRP is granted to non-EU nationals carrying out an investment over a minimum period of 5 years, subject to certain conditions, including but not limited to:

- Acquiring real estate located in Portugal worth at least EUR 350,000 per investor (reduced to EUR 280,000 if the property is located in a low-density area i.e. regions having less than 100 inhabitants per square kilometre or a per capita GDP of less than 75% of the national average);

- Transferring capital of at least EUR 1.000,000; or

- Creating at least ten jobs.

After being granted a GRP, the investor is free to circulate in any of the European countries that are part of the Schengen Area, whilst being required to spend only 7 days in Portugal in the first year, and 14 days per each of the following two-year periods. The process of obtaining the GRP is usually simple, requiring documents to prove the investment and an interview with the local Portuguese Foreigners and Borders Service (SEF – Serviço de Estrangeiros e Fronteiras). Although the GRP is an individual residence permit granted to the investor, they can also request a residence permit for close relatives (e.g. spouse, children, parents…) without them being required to make any further investment themselves.

Work with a professional to get started!!!...

You’re about to embark on an exciting journey – moving to Portugal!!!!… There’s a lot of information on the internet, but it’s always best to check with reputable professionals, to ensure you’re making the right choices for your personal situation.

If you need help with relocating to Portugal, our team of experts can help.

Infinite Solutions specializes in assistance with residency and property investment in Portugal. Get in touch to schedule a free 30-minute consultation.

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