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Gold Visa investment fell by half in 2015

seasidevillaGolden Visa investment in 2015 was half that of the previous year with a spend dropping to €466 million, according to data from the Foreigners and Borders Service (SEF).

Precisely, in 2015 the Permits for Investment Activity involved a spend of €466,259,798 representing a decrease of 49% compared to €921,314,178 in 2014.

Of the total, €418 million resulted from non-EU foreigners buying property for €500,000 or more. The year before the total for property was €840 million.

The slowdown in investment has been blamed to Operation Labyrinth which started in November 2014 and led to changes in the Golden Visa rules which added further bureaucratic steps to the detriment of applicants.

Last year, 766 foreigners were granted Golden Visas, less than half of the 1,526 assigned in 2014.

Since the programme started, 2,635 visas have been issued for the purchase of property, 149 for the transfer of capital and four by creating at least 10 jobs.
 
In February 2015, the former deputy prime minister, Paulo Portas, presented changes in the rules which extended foreign investment to areas such as urban rehabilitation and science projects, all of which came into force on June 30th, 2015.

The Foreigners and Borders Service suspended the process from July 1st as the old laws and the new laws caused a legal confusion that was only sorted out by July 16th when the Passos Coelho government approved amendments to the new law. These came into effect on September 3rd last year.

Operation Labyrinth which started in November 2014 led to the arrest of five of 11 defendants accused of corruption, a process that culminated in the resignation of the Minister for Internal Affairs, Miguel Macedo who claimed he had done nothing wrong, but later was arrested and questioned.

The current Socialist government has no plans to call a halt to the programme which offers already wealthy foreigners a tax free living in Europe and the right for themselves and family to travel freely within the Schengen area.

While the rest of Portugal's resident population pays for the fiscal ineptitude of previous governments through the strict application of income tax brackets, foreigners keen on a European lifestyle without the inconvenience of paying tax on their overseas incomes, welcomed the scheme as too good to be true, until they hit the bureaucratic insanity of a system that currently has a backlog that will take 5 years to clear with 4,000 applicants in the queue.  

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Comments  

-5 #22 DaveT 2016-02-12 09:03
If this 'money moving around the economy' is such a good idea (Perry, above) then why not extend the scheme to all taxpayers?

Let's set a flat rate of 5% and see how foreigners flock here, the economy booms while maybe the hospitals close, civil servants go unpaid (not all bad news then) and schools shut down.

My egalitarian bent is totally in tune with Ed's who has long been a critic of the Golden Visa scheme.

All residents should be treated equally, not as Orwell wrote 'some are more equal than others'' which seems to be the Portuguese sickness.

If top end property was becoming cheaper then more people could have afford to buy it, thus freeing lower price homes. This artificial rigging of the top end of the property market has fixed pricing levels in Lisbon especially and benefited estate agents and sellers, many of whom then export the capital raised. Just thoughts.... I see the Golden Visa figures have slumped this January, mainly due to the inability of Portugal's SEF to run anything more complicated than a playgroup
-5 #21 Ed 2016-02-12 08:56
Reis Campos at the Confederação Portuguesa da Construção e do Imobiliário reports that the government has so far earned €120 million in direct tax revenues from the Golden Visa scheme. He does not report how much it has cost to run nor why it is being run so badly.
-5 #20 TerryP 2016-02-09 10:22
C'mon, you all know where Ed is coming from. Why do you think these schemes are so popular.
If I retired and invested my drug-funded millions in an offshore account in a zero tax regime, I then could draw as much as I wanted tax-free while living on my Golden Visa registered in Portugal. I could spend some time here and the rest of the year tax free in Cyprus, Greece or Malta.... while seeing the delights of Europe, maybe Paris in the Spring, Munich in October...
-5 #19 Bruce 2016-02-07 20:09
At last someone else speaking sense, Phillip had got it!
-5 #18 Boondog 2016-02-07 16:26
Quoting Philip Perry:
Boondog if you are not here more than 183 days then you are not resident for tax. That applies to anyone. You do not need a Golden Visa for that. So your Chinaman would, I am sure, still pay tax in China on his 5 million. The Golden Visa only affects tax in Portugal - not other countries.


Ahh so....
-5 #17 Philip Perry 2016-02-07 16:23
Boondog if you are not here more than 183 days then you are not resident for tax. That applies to anyone. You do not need a Golden Visa for that. So your Chinaman would, I am sure, still pay tax in China on his 5 million. The Golden Visa only affects tax in Portugal - not other countries.
-5 #16 Boondog 2016-02-07 16:20
Quoting Philip Perry:
Boondog - What are you talking about? The Golden Visa scheme does not allow people to not pay tax. It gives them access to a residence permit. If they come here and earn money they will pay tax like everyone else. Get your facts right. The Non-Habitual Residence scheme is something totally different and is designed to stop people paying tax twice. So it is also not a 'tax free' scheme.

and the Non Habitual residence scheme, according to Neville de Rougement,
"The non-habitual resident regime represents a major step forward in making Portugal a tax free jurisdiction for individuals in receipt of pension income. Individuals who declare their foreign income here can also benefit from this preferential regime such as business and professional income, interest, and dividends."

It therefore seems both Golden Visa and NHR schemes can be used to pay zero tax on worldwide income.
-5 #15 Boondog 2016-02-07 16:16
Quoting Philip Perry:
Boondog - What are you talking about? The Golden Visa scheme does not allow people to not pay tax. It gives them access to a residence permit. If they come here and earn money they will pay tax like everyone else. Get your facts right. The Non-Habitual Residence scheme is something totally different and is designed to stop people paying tax twice. So it is also not a 'tax free' scheme.

Oh, I thought that Golden Visa people when moving here paid no tax on their worldwide income.

goldenvisa-portugal.com states- "With the Golden Visa does the investor need to pay taxes in Portugal on his worldwide income?

No. If the holder of the golden visa does not stay in Portugal form more than 183 consecutive days, he/she will not be required to pay taxes for income generated outside of Portugal.

So if I was a Chinese person with a 5 million income pa from my factory in China, I could move to Portugal and pay zero tax on my income.

I thought this was what the fuss was about.
-5 #14 Philip Perry 2016-02-07 16:02
Boondog - What are you talking about? The Golden Visa scheme does not allow people to not pay tax. It gives them access to a residence permit. If they come here and earn money they will pay tax like everyone else. Get your facts right. The Non-Habitual Residence scheme is something totally different and is designed to stop people paying tax twice. So it is also not a 'tax free' scheme.
-5 #13 PeterH 2016-02-07 15:59
I agree with Ed that schemes that treat one class of property owner differently than another can not be a good premise on which to run a tax system. As we have seen, there is one set of rules for the rich and another for the rest of us so the Golden Visa scheme and the non-habitual residence scheme for retirees is nothing new. However, remember the offshore ownership scandal. Portugal spent years encouraging the offshore ownership of properties to avoid IMI on sale. When enough people were in the net, the government changed the rules and taxed offshore companies at eye-watering rates. Many were forced to 'buy' their properties from their own companies thus giving the government and councils a boom year for IMI, CGT and stamp duty. This money of course was wasted, but that was no surprise.

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