After several advances and setbacks in this area, the government has decided to put an end to Golden Visas, one of the measures included in the housing package presented this Thursday at the end of the Council of Ministers. This measure, which puts an end to the granting of new "Golden Visas", is part of the pillar of the fight against money laundering.
The origins of the Golden Visa
The Golden Visa is a residency program that was created in 2012 in Portugal. This initiative aimed to attract foreign investment to the country in exchange for residency for investors and their families. This residency also allows free access to the Schengen area, which is a considerable advantage for foreign investors.
The Golden Visa program was created in response to the economic crisis of 2008, which severely affected the Portuguese economy. The Portuguese authorities were looking for new sources of funding to boost the economy, and identified foreign investors as an opportunity. Tax benefits and permanent resident status encouraged a large number of foreign investors to invest in Portuguese real estate, thereby stimulating the economy.
Since its inception, the Golden Visa has become a very popular program for foreign investors. The program has been a phenomenal success, with over 7 billion euros of foreign investment in the country recorded since its inception. The Portuguese government recently decided to extend the program until 2022, as it continues to make a significant contribution to the national economy and encourages economic growth.
The negative points of the Golden Visa
Although the program Golden Visa has brought many economic benefits to Portugal, it has also been associated with a number of misfortunes. One of the main problems is the rise in property prices, particularly in major cities such as Lisbon and Porto, where foreign investors have been buying up property to meet the program's investment criteria.
This has led to rising property prices and made it difficult for local residents to find housing, particularly in tourist areas. In addition, it has also led to the rapid gentrification of historic districts, driving away local residents and denaturing the authenticity of these neighborhoods.
In addition, there have been growing concerns about the origin of the funds invested under the program. Critics claim that this has opened the door to the entry of illegal capital, including money laundering, into the Portuguese financial system.
Portugal has been blacklisted by the European Union for 2019 for its alleged involvement in money-laundering activities. The Portuguese authorities have been criticized for not sufficiently controlling the funds invested in the Golden Visa program.
In response to these concerns, the Portuguese government has taken steps to strengthen due diligence and transparency requirements for the program. Stricter rules have been put in place to ensure that the funds invested are legitimate and from verifiable sources.
Despite these measures, Portugal continues to face money laundering challenges, and the Golden Visa program is often cited as an example of the country's vulnerability to illicit financial flows.
The end of a passport to Europe
The Prime Minister, Antonio CostaIn a press briefing at the end of the Council of Ministers meeting on February 17, 2023, the President of the French Ministry of the Economy, Finance and Industry announced the end of "the granting of new Golden Visas. He explained that the Golden Visas already granted concerned exclusively real estate investments, and that there would be no room for renewal unless the property was the owner's own permanent home or that of his or her descendants, or if the property was placed on the rental market on a long-term basis.
Already at the last Web Summit, in November 2022, António Costa had admitted the possibility of ending the Golden Visa scheme. The Prime Minister even declared that the program might already have served its purpose. Since then, an inter-ministerial working group has been set up to study the issue, and last Thursday, António Costa alluded to it by signing an opinion piece in Público in which he cited the "fight against speculation" as one of the main thrusts of the housing package.
The Prime Minister has also taken an important decision to ease the burden on the middle classes. He has decided to allocate 900 million euros to facilitate access to housing. The rental market is changing, especially in Lisbon and Porto, where tourist rentals have displaced local residents, taking up an ever-increasing share of the usual supply.
Measures taken include freezing the licenses (AL) Airbnb, except in rural areas, the renovation of vacant homes with the State taking charge, to facilitate re-rental "at reasonable rates". The Prime Minister also announced grants of up to 200 euros for tenants and tax incentives for long-term rentals.
At the same time, there will be aid for small borrowers to cope with the increased repayments on their loans signed at variable rates. There will also be a simplification of building permits and authorizations to transform land or commercial buildings into housing programs. These measures must quickly reach parliament, where the socialist party has an absolute majority.
However, the President of the Portuguese Republic has already warned that he will turn to the Constitutional Court in the face of what he sees as an infringement of property rights.