Portugal's golden visa investment nears €1bn

Photo: PedroSimoes7

Since its launch in 2012, around 1,500 residency permits have been issued through the scheme, bringing in €950 million of investment. This has helped to boost confidence in the country, with areas such as Lisbon seeing increased interest from overseas.

The majority of buyers have come from China (80 per cent), followed by Russians, as High Net Worth Individuals are required to stump up a minimum of €500,000 in real estate investment to qualify for a visa.

With the success of the scheme, it came as no surprise that the welcoming country was considering extending its tax exemptions for foreigners. The current Non-Habitual Residents Tax Regime (NHR) is a 10-year scheme that gives foreigners living in Portugal (for whatever length of time) a flat tax rate of 20 per cent, exemption from foreign income tax and 100 per cent gift and inheritance tax exemption for relatives and spouses.

Henley & Partners announced in October that it might be extended to also take into account CGT and investment income tax. Now, though, the country has ruled not to implement any changes for another year.

"As a follow up on the seminar we had last month on the Non Habitual Residents Regime, the draft of the law that will amend the Personal Income Tax Code has not incorporated the Proposal of the Commission regarding capital gains and other types of income, therefore, in principle the regime will not be updated for 2015," OPP Connect reports officials as saying.

While the picture may not be immediately positive for investors or expats, though, the decision arrives just as new figures indicate an increasingly favourable outlook for the country.

The RICS/CI Housing Market Survey for October shows that sales continued to rise in October 2014 - the 15th month of growing demand in a row. At the same time, values have steadied, with values across Portugal remaining broadly unchanged in each of the past three months - bolstering confidence in the market's future.

RICS Senior Economist Josh Miller comments: "The ongoing improvement in sales market activity appears to have gained added momentum recently, while prices have now remained more or less stable for the past few months. Although this comes as a positive development, a sustained period of economic growth and strong job creation will be essential if a genuine recovery in the housing market is to emerge."

CI Spokesman, Ricardo Guimaraes, says: "Current market sentiment largely points to stabilisation, but there is some variation at the regional level, with confidence higher in Lisbon than in Porto and the Algarve. The banks are seen as a key factor in potentially extending the market recovery across the country."

Capital Gains Tax may not be waived for foreigners for at least another year, but Portugal's Golden Visa has given the country a passport to leave recession territory and head towards recovery.