After several advances and setbacks in this area, the government has decided to put an end to Golden Visas, as one of the measures included in the housing package presented this Thursday after the Council of Ministers. This measure, which puts an end to the granting of new "Golden Visa", 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 significant advantage for foreign investors.
The Golden Visa program was created in response to the economic crisis of 2008, which significantly affected the Portuguese economy. The Portuguese authorities sought new sources of funding to revive 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, thus stimulating the economy.
Since its inception, the Golden Visa has become a very popular program for foreign investors. The program has been phenomenally successful, 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 provide an important 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 several misfortunes. One of the main problems is the rise in real estate prices, especially in major cities like Lisbon and Porto, where foreign investors have been buying property to meet the program's investment criteria.
This has led to an increase in real estate prices and has made it difficult for local residents to find housing, especially in tourist areas. In addition, it has also led to a rapid gentrification of historic neighborhoods, driving away local residents and distorting the authenticity of these areas.
In addition, there have been growing concerns about the origin of the funds invested under the program. Critics say this has opened the door for illegal money, including money laundering, to enter the Portuguese financial system.
In 2019, Portugal was placed on the European Union's blacklist for its alleged involvement in money laundering activities. Portuguese authorities have been criticized for not adequately monitoring 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 after the Council of Ministers on February 17, 2023, the President of the Republic announced the end of "the granting of new Golden Visas. He explained that the Golden Visas already granted, concerning exclusively real estate investments, he also indicated that there will be room for a renewal only if it is about an own and permanent housing of the owner or his descendant, or if the property is placed durably on the rental market.
Already at the last Web Summit, in November 2022, António Costa had admitted the possibility of ending the Golden Visa scheme. The Prime Minister had even stated that the program could have already served its purpose. Since then, an inter-ministerial working group has been created to study the issue, and last Thursday António Costa alluded to it by signing an opinion piece in Público, where he cited the "fight against speculation" as one of the main axes of the housing package.
The Prime Minister has also taken an important decision to relieve the middle classes. He 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 the inhabitants by taking a larger and larger share of the usual supply.
Measures taken include freezing the licenses (AL) Airbnb, except in rural areas, the renovation of vacant housing with the state taking charge, to facilitate a re-rental "at a reasonable rate". The Prime Minister also announced aid of up to 200 euros to 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 considers to be an infringement of property rights.
