Hello to all readers of the MoveToCascais blog! Today we decided to tell you the story of Diana, who decided to move from Russia to Portugal in 2020 through the Portugal Golden Visa program viainvesting in income property.
How to decide to move to Portugal
Diana’s story began in Moscow, where in 2019 she first considered moving to another country. Problems were piling up like a snowball: business was dying bit by bit, everything around her was getting more expensive, and the situation in the country was worsening. The only comforting thing was the financial cushion accumulated in recent years, but all the same, something had to be done.
The only thing that calmed me down was the financial cushion I had accumulated in recent years.
There were two possible ways out of the situation. The first was to try to resuscitate the business that had become so familiar and familiar over the past ten years. And at any other time this would have been a great idea, but the pandemic put a final end to the restaurant business in Russia. In addition, for the past two years, business was already going from bad to worse, so more and more often the girl’s thoughts were reduced to the second way – a change of direction to something radically new.
This kind of thinking began to form a clear plan of action. At the time Diana realized she didn’t just want to open a business in Europe. She wanted to get away from the hustle and bustle and perpetual problems. To finally try to live in a calm and stable country with a regular, preferably passive income. Finally, I just wanted to leave the gray, crowded Moscow and take a break from the cold winter by the warm ocean. Already at that time it was clear that the ideal option for her was to invest in foreign real estate.
Well, it’s decided! By the end of the season we need to close the restaurant, rent out the space, and start our way to a new life.
Preparing to move to another country
Assembling her thoughts and firmly deciding that it was time to move, the girl began to study the materials about moving to Europe, which were freely available. The main question that remained to be resolved was the choice of a suitable country to live in and start a business.
– Funny, but it turned out that many of my old acquaintances and even a couple of distant relatives had long since moved away from Russia. It’s amazing how I hadn’t noticed that before. After talking to them, I began to gather information about the different countries where I can try to get a residence permit.
Most people, of course, chose places closer to home, where it is easier to get used to. Countries such as Poland, the Czech Republic or Montenegro are the most common choice among emigrants or CIS. But after studying the details of the real estate market in Eastern Europe, Diana realized that there are virtually no prospects. Tourism is not developed here, so the rental income could not be hoped for, and property prices, though rising, but very slowly, so that in the best case could expect a profit of 7-10% when reselling the object. Then it was clear that it was better to look to the west of Europe and make a decision based on personal preferences.
I made my choice by elimination,” recalls Diana. – Austria or Germany – too high a threshold to enter the market. In Poland and the Czech Republic, even without considering the problems of the real estate market, too cold, and I wanted to live by the ocean. For a long time, my favorite was Italy, but because of the pandemic, entry was closed. So I eventually came to the conclusion that Portugal was the best option. There were many reasons: the high position the country holds in the world security rankings, excellent conditions for starting a business, high liquidity of real estate and, of course, the Atlantic Ocean, which washes the entire western and southern part of Portugal.
Why investing in income-producing real estate in Portugal is a profitable investment
After learning more about investing in real estate in Portugal, Diana learned that the country has a special immigration program for foreign investors: “Golden” visa, which is granted to foreigners who invest in local real estate from 500 thousand euros.
The visa gives its holder the right to live in Portugal, travel freely within the EU and after five years to apply for citizenship of the country. Portuguese “golden” visas are in great demand from foreigners, particularly Chinese citizens, who accounted for 80% of all foreign investors who participated in the program from 2012 to 2015. In total, during this period, the program brought about 1.5 billion euros to the Portuguese treasury, and more than 2.5 thousand foreigners received the country’s residence permit.
In addition, the country has an exclusive tax status for foreign residents who come to the country for permanent residence, but not previously lived in the country and did not have its residence permit for the last five years (Residente Não Habitual). At the same time, income received by the holder of this status in the territory of Portugal is subject to income tax at a rate of 20%, and income received from work and business activities abroad, as well as pension income, are exempt from tax at all. Participants of the investment program for obtaining a residence permit in Portugal can qualify for the RNH status.
– All this is a tax exemption for the participants of the investment program for obtaining a residence permit in Portugal.
– All of this at the time gave me confidence that everything would work out for me. The only unresolved question was the choice of which object to buy. Normally I would have been able to open a visa and figure it out on my own, but the quarantine made that impossible. The only thing left for me was to go to a real estate agency and, jumping ahead, I say that this was the right decision.
Selecting an investment target and participating in the Golden Visa Portugal
Well, a clear plan has been formed. It is necessary to find a property in Portugal through an investment agency. It is clear that the object must have a high liquidity, and it must fall under the conditions of the golden visa.
But even with a plan of action in hand, there were many problems. Chief among them was choosing the right agency. Given the scale of the upcoming deal, Diane spent several weeks searching for an expert.
– Two weeks later I found the website of the consulting agency MoveToCascais. I was immediately pleased with the possibility to solve most of the issues remotely, so I ordered a trial consultation. On the same day, I realized that I would cooperate with this agency: I had never been given more detailed information about the possibility of immigration through investments in income property.
With Diane and I planned my steps for the next six months. Here’s what came up.
The first order of business was figuring out where to invest. It took literally one week to find a suitable property. A small townhouse on the outskirts of Lisbon. Apartment with a total area of 2000 square meters, divided as follows: fully equipped kitchen with dining room and living room, spacious terrace, 2 bedrooms and bathroom on the first floor, two living rooms and bathroom on the second floor. The total cost is 550,000 euros, which is ideal for participation in the program Golden Visa Portugal.
If we talk about renting out the space, it meant that the tourists would bring in about 87.6 thousand euros per year. Divide that amount by the initial 600, and Diane realized a return on investment of about 15%, and possibly more.
So far, it has been difficult to say how much profit the sale of housing brings in 5 years. Even taking into account the trends that have been observed. But one thing was certain: investors will gladly buy the property. If it can earn at least 10% of the investment per year without the active participation of the owner, such an object will be in demand among buyers.
– Certainly, it is possible to make a profit on the sale of housing.
– Of course, all these calculations are without taxes. But the experts from MoveToCascais persuaded me that they can reduce them to a minimum. So this figure will not play any special role in the final percentage of profit from the use and sale of real estate. They also promised to exempt it from the tax on subsequent sale: local laws allow it.
Getting a visa and first trip to Portugal
The next step was to obtain a temporary visa to confirm the transaction in Portugal. To obtain it, Diana had to present a minimum set of documents, which included:
- Medical insurance policy;
- Application for criminal history check in Portugal;
- Certificate of no criminal record in the applicant’s country of residence;
- Certification of indebtedness from the tax authorities and social security agencies.
In ten days the entry permit was ready and it was time to hit the road. The last thing to do before buying the property was to open an account at a local bank and apply for an individual taxpayer number.
The last thing to do before buying the property is to open an account at a local bank and apply for an individual tax number.
The beginning of a new life
Today marks the end of the third month since Diana moved to Portugal and settled in. Together with her, we recently submitted all the necessary documentation for obtaining a residence permit in Portugal. When we asked her how she is doing here, she says:
– Forgetting to apply for a residence permit in Portugal.
– Forget about jostling on the subway, running up the escalator, getting nervous in line, eating on the go, and planning anything. Portuguese don’t rush anywhere and know how to enjoy life. Immigrants joke that it’s their time here. If you have a meeting with the locals, feel free to add an hour or two to your appointment and you won’t go wrong. This is hard to get used to in the beginning, but then you do not notice how late everywhere. The ocean and the nice weather make for a leisurely life.
Portuguese people are incredibly friendly and kind people. The sales clerk will ask you how you’re doing and the butcher will tell you how to order in Portuguese. You’re greeted everywhere with a smile, and you quickly get used to it.
Portugal knows how to charm. I began to understand the locals who don’t actually travel. The country has everything for a happy life. Most of all, I was won over by the northern city of Porto, which has Portuguese romance and a buzzing student life. I feel so comfortable and good there that I don’t want to leave the northern capital even for a few days.
You too can fulfill your dream and move to this beautiful country. Click on the link below to book your first moving consultation where our experts will answer all your questions about moving to your dream country!