To be honest, before the events that will be described later, I had never thought about moving to another country. I was born in Russia, graduated from school and university here, opened my own business, which brought me a good income, and, of course, found the love of my life here. Unfortunately, I did not have time to raise my son and build a house, but I had another pride. That pride was my small business, which I managed to open right after the 2008 crisis. We have grown to a regional level from a small logistics company with 5 cars in 6 years; we have grown to a regional level! It seemed that I was completely entrenched, and the last thing I could think of at the time was to drop everything and take off for another country. It’s funny how things have changed in literally one year.
How I decided to move to Portugal
I won’t go into too much detail, the only important thing here is this: in 2015, with insurance and maintenance rates rising, excise taxes on fuel and rates on loan and lease payments, the old logistics model simply died. It was urgent to find a way out, introduce a CRM system and automate the entire work process. Perhaps then I would have been able to stay afloat, but another blow awaited me. A partner, with whom I had worked together since 2010, looked at what was going on around him and decided to go out of business. The company I had been building with my own hands for years was falling apart before my eyes.
This was the first year we talked about moving. At a family dinner, our good friend Pasha voiced an absolutely crazy but exciting idea. “If a business in Russia hasn’t lived up to expectations, why not try in another country?” It turned out that at that time, he had long been interested in the possibility of investing in European income property. At that time, we talked about Cyprus or Montenegro; no one had thought about Portugal yet. We, of course, laughed at such a venture, and somehow the conversation was forgotten, but the thought of the opportunity to move to a warm country and even profitable to invest their savings did not give my wife and my rest. “And indeed, what prevents us from trying? Especially since nothing is keeping us in Russia anymore. This question became the main topic of discussion for the next couple of months.
But wait, why would two people who had never been beyond Turkey before this year suddenly decide to snap and go buy up real estate on the Atlantic coast? It’s an expected question, but it’s not that simple.
First of all, my wife and I have already had some experience in buying and selling real estate. Several apartments bought in Moscow in the last five years brought a constant passive income from tenants, so I understood that real estate is synonymous with stability even then. In addition, this same asset acted as a kind of guarantee if something goes wrong.
The next month I was planning to spend in search of all the necessary information. I realized only one thing – I would need the help of a professional in this field in any case. I could certainly have neglected that and spent several months researching an unfamiliar market in a foreign country, but that reduced my chances of success.
But first, I want to tell you why we chose this country. The main reason we chose Portugal for our adventure is the incredible liquidity of local real estate. Judge for yourself: When we moved, Portugal was among the top five fastest-growing real estate prices in Europe. Today it is in the top three: in some regions growth is up to 10% per annum.
After that, the reasonable question usually follows: “But, in that case, why not Montenegro or, for example, Cyprus? Indeed, at first glance, it may seem that the situation there is similar, but Portugal has a significant difference. Real estate in Portugal is not overvalued. Unfortunately, the demand for real estate in the Caribbean, Cyprus, or Montenegro is fueled exclusively by foreign investors. In Portugal, by contrast, it is driven by other domestic factors. For example, against a background of low unemployment and a stable economy, the local population’s demand for real estate is formed. And, of course, one cannot ignore tourists who also need rentals.
Cooperation with MoveToCascais and participation in Portugal’s Golden Visa program
As I wrote above, I needed a specialist who could help me choose a property for investment. There were many options, but everywhere had its own problems. Somewhere it was necessary to be in Portugal, even for the first consultation. Others tried, by all means, to dissuade me from investing in real estate and redirect me to another industry, such as alternative energy, which I definitely was not ready for. From advertising in social networks, I came across guys from MoveToCascais, with whom I immediately arranged my first consultation. There I got answers to all my questions that I have been asking for the past few months, related to immigration and investing in income-producing real estate. It turned out that Portugal has a separate immigration program for foreign investors seeking citizenship – the Portugal Golden Visa.
And what is Golden Visa Portugal?”
The term “golden visa” I have met in almost every resource where possible ways to get a residence permit and citizenship in Portugal were described. But what is it? Later I learned that the “golden visa” is a special immigration program, which allows you to get resident status in Portugal under a simplified procedure for investment. The options for investment are many: from investing in science and culture to opening your own business or buying shares in a Portuguese company. In addition, there is an option that interests us specifically: investment in real estate in Portugal.
A little excursus to the history. The Portuguese government introduced the Golden Visa in 2012. It was a reaction to the crisis of 2008: the country’s GDP had fallen severely, unemployment remained high, and the real estate sector was bankrupt. The Golden Visa Portugal could offer foreigners a residence permit, and in return asked for investments in critical areas of the economy. In 4 years, the golden visa helped stabilize the economy a little – the GDP grew by 3%.
Briefly describing the benefits of the program:
- The opportunity to live and work freely in Portugal.
- Right to visa-free entry into the Schengen zone.
- All your family members also receive residency status
- Free education and health care.
- The opportunity to benefit from preferential tax treatment, as long as you live in Portugal for at least 183 days per year
And the main advantage, which for many becomes a deciding factor for participation in the program. As an investor, you have complete freedom of movement, so that you only need to stay in the country for 7 days a year.
Conditions for obtaining a “golden visa” for Portugal are simple. You need to meet the minimum investment requirements (in the case of investment in real estate, the minimum amount for investment is 350 000 euros) and provide the necessary documents, which will be discussed later. To answer the question that many are concerned about:participationation in the program does not require knowledge of the Portuguese language. However, it is worth clarifying that you will still have to pass a language test if you plan to acquire Portuguese citizenship in five years.
Tax rates in Portugal and preferential tax treatment
A major advantage for all Gold Visa participants is the simplified tax treatment.
In the standard situation, an investor who injects capital into the real estate sector may pay tax under certain circumstances. Namely:
- Herb levy or Imposto do Selo, IS. The rate is 0.8%.
- Transfer Tax or Imposto Municipal sobre Transmissões, IMT. The rate is 6 to 6.5%.
- Annual property tax or Imposto Municipal sobre os Imóveis, IMI. The rate is from 3 to 8%, varies by property type and region.
Taxes can be waived if you have obtained residency status on a Golden Visa and reside in the country for 183 days or more.
“Greenlight” from taxes are given to creative people, doctors, IT professionals, scientists, and owners of large capital, investors under the Golden Residence Permit.
The exclusive tax status holders can pay no income tax of 20%, tax on employment or business activities, and retirement income for 10 years.
What do I need to do to apply for a Portuguese Golden Visa?
The first thing you need to do is gather a set of documents for your application. It looks like this:
- passport or valid identity document;
- Schengen short-term visa (proof that you entered the country legally);
- health insurance (issued within the last three months);
- certificate of criminal record from the country of residence or origin (issued within the last three months);
- evidence of compliance with tax and social security obligations;
- receipt of payment of fees for the Portuguese gold visa.
Further, to participate in the program, you must meet a few simple requirements:
First, the principal investor (and his spouse and children under 26, in the case of a collective application) must be clean before the law.
In other words, they must have no criminal record.
Secondly, the investor (as well as the persons submitting the joint application) must not have any restrictions concerning entry into the EU at the time of application, which could take the form of a visa refusal for one reason or another – for example due to a previous blacklist in the SIS.
Thirdly, the sources of the investment funds that the foreigner will spend on the application for a golden visa in Portugal must be legal and officially confirmed.
Fourthly, if the collective application includes children aged between 18 and 26 years old, it is necessary to provide the Portuguese authorities with documentary evidence that these children are financially dependent on the main investor (for example, it is possible to send documentation proving that the children study at a university).
Fifthly, potential participants of the Portuguese business immigrant program must have health insurance that is valid in the Western European country in question.
Sixth, after the registration of the “golden visa” in Portugal, the main investor and the other subjects of the collective application can extend the residence permit issued in this way only if they reside in this country at least 7 days per year. The investor visa is initially valid for a period of one year after issuance. At the same time, it can be renewed every two years, provided that the applicant spends two weeks in Portugal.
Seventh, the investment requirements must also be met, providing evidence of the acquisition of real estate, job creation, capital transfer to Portugal and so on.
Eighth, the investment object acquired when applying for a “golden visa” in Portugal the foreigner will need to hold for at least five (5) years. Otherwise, he will lose his residency status.
If all the conditions are met, and this is exactly what happened in our case, it is necessary to go to the visa center and fill out a form on the state online resource. The permit itself is usually issued in three months. After getting it, we could safely fly to Portugal.
Investing in income-producing real estate in Portugal. Selection of an object and first steps to move.
The object was found very quickly and suited us perfectly – an apartment hotel located right off the southern coast of Portugal. The building has 108 rooms with ample parking, electric car charging stations, and other necessary infrastructure systems. The minimum investment amount was 350,000 euros, and the expected rate of return for potential investors – from 7.41% per annum (from 2017 to 2022). Looking ahead, the final result has already exceeded all forecasts.
As a result, when I invested in the project to open and sell the apartment hotel, I, as an investor, got:
- Separate full ownership apartments;
- Participation in the profits of the entire hotel, including lobby areas, gym, restaurant, and so on;
- Access to reporting on the financial component of the operation of the entire hotel;
- The ability to manage my own apartments;
- The ability to sell my apartments at any time.
First days at the new location
The first days at the new location were magical. In October 2017, the first building of our aparthotel was finished, and we were ready to start our new life. The first thing after checking into our new apartment, my wife and I decided to take a walk around the neighborhood.
First, a few words about the hotel itself. I have been a couple of times to popular tourist destinations like Turkey or Egypt. At the word “hotel,” I had images in my mind of old peeling houses covered with a thick layer of water-emulsion, with repairs ten years ago. Forget about that. In Portugal, we checked into a modern business center consisting of a hundred comfortable apartments. The funny thing is that only the best of the hotel was left here in the form of a beautifully landscaped area with a huge swimming pool, gym and park, regular cleaning in the room, and a restaurant on the terrace, where they cook amazing breakfasts. Hell, there’s even a small golf course! Other than that, it’s the usual residential apartments, which, more often than not, are rented on a long-term basis. Needless to say, we were just over the moon about this acquisition?
What about now? New life and plans for the future
And now we’ve finally gotten to today. My wife and I have been living in Portugal for four years and have never regretted the decision to move one day. Of course, we had some problems with adapting to a new place. I still speak Portuguese badly (it’s amazing, but it took Lena only a year to learn it, and she already easily communicates with the locals as equals). Still, those problems don’t mean anything compared to what we finally got.
In addition, this year we are starting our new project. Our little Eastern European restaurant is opening this year in the center of Lagoa, a small tourist town about 10 minutes from our house. Of course, we invited experts to design the space and put together the menu, but I also did my part. I wanted to add something native and homemade to the list of dishes. Consider it homesickness)
What advice can I give to new immigrants. Remember, nothing is impossible in this life. Any wish you have, even the craziest one, is doable. All that matters is your motivation and desire to make a difference. Believe me, if you strive for any goal, sooner or later, you will achieve it!
Know why moving to PORTUGAL is a great solution for 2021.
*The material reflects the story of the hero of the article as interpreted by the author; concerning the described methods and processes of obtaining a residence permit – they may not coincide with the actual opinion of the editors of move to cascais in this regard.