The Portuguese Confederation of Construction and Real Estate is delighted for its members as the amount spent on real estate under the Golden Visa scheme is predicted to reach €2 billion next year.
The scheme to lure already wealthy foreigners to Portugal already has attracted €750 million in investment in real estate and a tax exemption for foreign retirees has attracted 3,000 families to Portugal in an attempt to replace the tens of thousands of young workers who have left the country to pay tax elsewhere.
The Confederation wants the scheme altered to attract people to other parts of the country than the Algarve and Lisbon areas, forgetting perhaps that other areas have proportionally fewer properties over the €500,000 threshold.
Besides the Golden Visa scheme, the Confederation praises the tax exemption for foreign retirees, "These are two good examples of incentives that harness the potential of Portuguese real estate as a key to boosting economic growth," said the Confederation in a statement released today.
The vast majority of investors are Chinese, some 77% of the total, followed by Russians and Brazilians. Once the property is purchased for €500,000 the non EC owner has access to the rest of Europe and is under no obligation to actually live in Portugal, the majority do not.
But despite the results, the Confederation wants to evaluate these two mechanisms in order to "ensure that the positive effects of these instruments can reach the whole of the country," and suggests that there should be a "greater coordination with local authorities and regional development commissions to attract investment to other regions.”
The Golden Visa scheme is shifting higher end real estate but by offering give away tax incentives those moving here are not contributing to the efforts of the local taxpayers to get the country out of the debt trap into which it has been led.
Many buyers immediately let their new properties and move elsewhere in Europe using their Golden Visa status to their own, but not the country’s advantage.
In June, news hit the public that the police were investigating fraudulent use of the Golden Visa scheme with officials involved in handing out the visas being in cahoots with real estate agencies in the top-end areas in Lisbon, Cascais and the Algarve.
Implicated were senior executives in the Ministries of Justice, Internal Affairs, the Security Information Service, the Foreign and Borders Service (SEF) and the various real estate companies.
The Judicial Police have been investigating those it suspects of involvement in kickbacks and money laundering for several months, in coordination with the Central Department of Investigation and Penal Action although nothing has been heard of progress in the last month.
The scheme is far from the reality of the working taxpayer who rightly questions a government which is helping out the high end real estate sector and is attracting the already rich that may not choose to live here and pay little tax should they choose to do so.
