The first draft of what could be the new law governing the Portugal Golden Visa contains good measures for investors, even if it would terminate the Golden Visa program
Late on Friday April 14, 2023, the first draft of the new law related to the Mais Habitação (“More Housing”) program was introduced to the Portuguese Parliament. This is the first time formal legal language for the law that would change the Golden Visa program has been made public.
When first presented on February 16 by Portuguese Prime Minister Antonio Costa, the Mais Habitacao proposal focused on addressing the current housing crisis in Portugal, particularly in the larger urban centers. It included the statement to end the Portugal Golden Visa program and even retroactively change how investors in the program are treated and their visas renewed, which caused confusion in the industry.
Following the period of public discussion, on March 30 the Conclave of Ministers approved the final plan for Mais Habitação and last Friday, April 14, the first draft for a new law was made public.
Draft Law Is Better for Investors
The biggest criticism of the initial proposal, prior to the April 14 draft, related to “changing the rules in the middle of the game,” which many attorneys argued was unconstitutional. This related particularly to the renewal of current golden visas, and the adjudication of applications submitted after February 16 and the minimum residency requirement to keep the visa valid. All those items were positively addressed in the draft presented to Parliament.
Although this draft of the law does intend to terminate the Golden Visa program as soon as the law goes into effect, it contains some changes that are positive for investors:
- Renewal of current Golden Visas: the draft completely scrapped an earlier proposed change to renewals related to real estate investments (i.e., visa renewals subject to the property being used by the investor or his/her dependents or by a renter with a long-term lease). It does introduce the idea of Golden Visas being replaced by “Special D2 visas,” but it is unclear what the requirements to qualify for a “Special D2 Visa” would be—a lack of clarity that should be amended with the expected follow-up discussions (with members of Parliament and specialists).
- Required days for permanent residency: one of the great advantages of the Golden Visa is the minimum number of days required to stay in the country to maintain permanent residency (7 days in the first year and 14 days in following years). While the existing D2 visa requires at least 183 days for permanent residency, the draft clarifies that holders of “Special D2 visas” would have the same required number of days as current Golden Visa holders.
- No retroactivity for application of the law: applications submitted after February 16 (the day Mais Habitacao was first announced) will still be considered as well as applications submitted until the day the new law goes into effect.
These measures are important for investors’ confidence in the Portuguese government.
This proposal also mentions an intent to maintain permanent residency for investors who invest to support artistic production or the recovery or maintenance of the national cultural heritage. Encouraged by this, there seems to be some appetite among industry stakeholders for fighting to keep other types of investments (excluding real estate investments) eligible for future applications for permanent residency by investment. Industry members are lobbying for an extended grace period so they can adapt to the end of the existing Golden Visa program. We need to wait for the next rounds of discussions to see if these ideas are going to be considered.
In addition, specialists mention that the legislative process to approve the new law may take at least two months, given the Portuguese Parliament’s schedule. For example, it has been noted it won’t be discussed before May 10, and there are multiple steps the proposal needs to go through before it can be enacted:
- discussion in Parliament,
- being put to a vote,
- being promulgated or signed by the President, and
- publication in Diario da Republica.
Until the new law is published, the Portugal Golden Visa program can continue to receive new applications and the draft indicates those applications will be honoured.
Overall, this first draft takes into consideration important input from the public engagement period by not being retroactive, keeping current the minimum requirement for days investors must spend in the country, and bringing solutions for visa renewals that are more plausible than the ones initially presented.
We look forward to sharing upcoming developments with you.