Planning a move to Portugal? That’s great! But first you have to provide yourself with a material “cushion of stability” and then think about other aspects. Of course, housing, work, some social needs are very important. But you will need to pay for housing, pay for services, and you can’t count on a job, no matter how stable and well-paid it is these days. Especially when it comes to life in another, new, unfamiliar country. Right? That is, you need to provide yourself and your family a stable source of permanent income. Let’s specify, sufficient income for a decent life. And not to find it on arrival, but to provide in advance. Give up the dream can not in any case. But while it was “in my head,” it was just a dream. Since the decision to move to Portugal, it is no longer a dream, but a goal. You can try many different ways to achieve it.
The first way for those who like to take risks, not afraid of losing everything and returning home empty-handed to start from scratch again is called “hoping for luck” and we will not even consider it, so as not to give readers a false hope. And the second way fits the name “the way to the dream. It, like any road can be studded with stones and various obstacles. But if we work hard and remove stones to the side, clearing the path, the ascent will be though not easy, but without injuries and falls, of course, figuratively speaking.
And now let’s move on from philosophy and begin to make a plan for our move to Portugal, based on the story of our compatriot, who counted an awful lot of stones on the path, and is ready to tell you where they are, so that those who follow in the same direction will no longer stumble. Our former compatriot asked not to tell his real name; he is a businessman at the stage of development, and he does not want to “jinx it”, to put it in the Russian way. Of course, let’s meet him halfway and retell the story entrusted to us in a role with another character. Let’s call him Alexander.
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Investing in income-producing real estate is a guarantee of a stable incomeThe hero of our story, sharing his experience of moving, investing and business development, is 44 years old and has been in Portugal for five years. He lives with his family in Santarén. He co-owns an eco-hotel, a farm and his own plot of fertile land.
Of course it’s possible to live like this, many will say. Stop that thought. We’re talking about “eating,” but what about before that?
So why an eco-hotel? Because Portugal is loved by tourists who come here precisely to admire nature, a world far removed from their everyday life.
Because Portugal is loved by tourists who come here precisely to admire nature, a world far removed from their everyday life.
Why build a hotel like the Russian ones? Right? None! If we stake on the tourist, it is necessary to attract the tourist with something unusual, and then to retain him, to make him a regular customer and an advertiser in one person. And it should be an advertiser whose rave reviews and pictures on social networks will make your friends dream of seeing this beauty with their own eyes.
It was all the more so when fate itself prompted, prompted. In Santarén, Alexander had a plan to buy a small house in a quiet spot closest to the water. A health problem forced him to urgently look for a place to live with clean air. He and his wife had vacationed in Portugal a couple of years ago and had never seen cleaner. So they decided to come here. But to decide one thing, but to take on the case was, of course, a little scary.
They had a place to come back and it was reassuring. They didn’t leave everything, they went away kind of for a while. To recuperate, to get their health in order, and in case of need, to come back.
They didn’t leave everything.
Stable Income GuaranteeGuarantees were what Alexander needed, and they could only be obtained in serious deals. Yes, in the case of a loss and the loss would be greater, because the more serious the deal, the larger the sums. What to invest in? In other people’s businesses? No. Open your own? But that would mean starting all over again from scratch, and the age is no longer the same.
So the decision was made to invest in income-producing real estate? Why not? He had already made such investments in Russia, and quite successfully. Admittedly, at the time the question was about shares in projects of various developers, but nevertheless, it was an experience.
There begins a whole science to study which a lot of time, effort and money is devoted to.
Some knowledgeable, well earning people have decided to tackle this issue in depth. They’ve decided it makes sense. And not just decided, but have already tested their hunches and are already making a steady income, already more than happy. No need to go their way from scratch. There’s no point in inventing spoons and forks and other cutlery before every meal, right? They’re already there, you just have to use them for their intended purpose. It’s the same in financial matters, in investment matters. If something is already invented and tested, you just have to use it.
A contribution to the futureHave you ever heard the expression “cash flow”? I’m sure I have. What came to mind when you did? For people who are not interested in investing (no offense, just a fact – people who have never invested before), it may seem like a kind of gold bullion which is constantly growing by itself. From which you can break off bits and pieces and it will grow in size, getting bigger and bigger and bigger.
There is something to the point.
It does make sense in some ways. But it is clear that the ingot can’t come out of thin air, and it won’t grow by itself, but under the right conditions. In other words, one should know how and where to take the “gold bar,” where to place it, and how to take care of it.
“Bullion” has to be attractive, right? And what’s attractive about Portugal? Nature! So business should be built around that resource.
It turns out, the task is to move to the most environmentally friendly area, to establish a business that will begin to bring income almost immediately and will not “burst” after a while, and will become the business not only of the current family, but also of future generations. It’s for life. And what about investing? Combine? It would be nice. What are the options? Farming! Or farming. Or better yet, both. And to hedge against a “rainy day”, divide the money into parts. The first investment is a farm, the second is an eco-hotel, and the third is a contribution to a serious financial company, preferably related to real estate.
The first investment is a farm, the second is an eco-hotel, and the third is a contribution to a serious financial company, preferably related to real estate.
There’s a thought, a “spinning of the wheel,” which means you’ve chosen the right path. The farm is great, but the animals can get sick, how many cases where people were left at the broken trough, and even in debt. Eco-hotel – incredibly cool and modern, but the pandemic has shown that you can not rely solely on tourists. So the third “lifeline” must be unequivocally. And it will be an interest-bearing investment. The idea has been formed, now we need to put it into practice.
Why Portugal?Portugal is part of the euro zone and the Schengen zone, and is a member of the UN, NATO, the OECD and the European Union!
The agreement signed by Portugal with many countries, of course with Russia and Ukraine, provides mutual protection of investments, as well as the possibility to avoid double taxation.
From 2012 – Portugal is considered a rising star of the euro economy, and from 2018 – the eurozone of economic growth.
<The “Simplex” program, actively pursued by the government of J. Socrates, is yielding tangible benefits, especially for Europeans. It has resulted in absolute transparency in the conduct of business. Permits, documents and licenses can be obtained online. Here, in general, there are a lot of online services in state institutions. That is why it takes two days, 14 days at the most, to open a business. But not months, not years, forcing to look for “workarounds” or someone who will help do everything quickly, but for a certain amount of money or not entirely honest.
What will our countrymen say when they see a link on the Internet – business with a full package of documents and permits in an hour? Yes, in life he will not believe that they are not crooks. And in Portugal such offers are the absolute norm.
- Portugal is an agricultural and industrial country. Its most important industries:
- Textile industry (wool and cotton)
- Wine production (especially famous for its port wine)
- Olive oil production, canning (mainly fish).
- Cork bark processing (the country is at the top of the world)
- Metallurgy (both non-ferrous and ferrous).
- Machine building (auto assembly, electrical engineering, ship repair, shipbuilding).
- Petrochemical and chemical industry.
- Agriculture (both crop and livestock).
“Welcome, investors!”The exemplary slogan of the country these days. For investors from other countries, in fact, all conditions are in place. To be honest, Alexander was sure this was an exaggeration, a kind of publicity stunt, but it turns out that in Portugal there are actually so many people waiting to join the development of the country.
In order to get accelerated citizenship it is necessary to invest a million euros in business, or to ensure a stable 10 jobs, or to invest 500,000 euros in real estate.
Numerous, at first glance. Now for the state’s answer. Anyone who provides jobs for at least 10 Portuguese citizens can pay 50% less social security tax. And immediately another bonus. If the company is not engaged in manufacturing, but in research and development (possibly in conjunction with production), it also receives a 20% subsidy for the purchase of the necessary equipment.
Without panicking, the hero of our story calmly reconsidered his planned investment in the business. Everything was working out. The house, the plot for the farm, and the subsequent construction of outbuildings came to 800,000 euros. A large sum? Not insignificant.
But it’s not a small price to pay. All the more so because the 800,000 divided by the required investment of 500,000 euros. It turns out without taking into account investment into personal use, personal possession, and personal stable income of 300,000 euros.
So more and more Alexander was getting stronger and stronger in the idea. And he made up his mind.
Once the paperwork is complete and he can immediately start working.
Business registration in PortugalAccording to Portuguese law, there are several ways to register a company. It is better to do it with the help of professionals (our contact details are listed on the site, please call, write or leave a request online). But you can also try to do it yourself. The options are as follows:
- Empresa na Hora (business in an hour). The fastest way. But so that there are no delays, you need to prepare all the documents and registration papers. In addition, you need all the co-owners. If there is no connection with some, this option of registration will not work. Go directly to the offices of Conservatória de Registo Comercial or Centro de Formalidades das Empresas. This is not a problem. Institutions are located throughout Portugal. The cost of the service is 360 euros.
- Empresa Online
- Empresa Online. As the name suggests, registration is done through the Internet. Takes two days. From each co-owner digital certificate is needed, confirming the electronic signature and the identity document. The cost is the same as the Empresa na Hora.
- Empresário em Nome Individual (individual entrepreneur)-opening is free and pays no taxes for a year. Very profitable.
- Estabelecimento Individual de Responsabilidade Limitada, EIRL (limited liability company individual)
- Sociedade Unipessoal por Quotas (joint stock company with one shareholder).
- Sociedade em Nome Colectivo (collective society);
- Sociedade por Quotas, Lda (capital from one euro to 5 thousand, at least two shareholders).
- Sociedade Anónima (ZAO or corporation). This type is preferred by large businesses. The authorized capital of 50 thousand euros and not less than five shareholders. Responsibility of co-owners equal to their contributions.
- Sociedade em Comandita (translated as a limited company, the same collective company, there are only minor differences).
- Cooperativa (cooperative).
- The identification card (temporary) and the name of the company is issued;
- The deed of incorporation is notarized
- files an application to the local tax office to start a business (it has 90 days from the date of receipt of the identification card).
- registration with the Conservatórias do Registo Comercial (it is a commercial register);
- registration with the Social Security and Insurance;
It’s as simple as possible, and the government is working hard to help. But those who break the rules and laws are not that disliked, they are simply not forgiven for those mistakes. If a mistake is made out of ignorance, there will be no problem in telling them how and what to do correctly. But if the fact of fraud is confirmed, there will be no talking about deportation to the home country. And 99%%% that such an expert would never enter the country even with tourist visa and even many years after the incident.
Not only that information would go to all the databases of Euro-countries. Harsh? Why, it’s more like fair. Why would a developing country accept those who would drag it to the bottom?
So those who are serious in Portugal, such as the hero of our story, are always welcome, and those who are suspicious, and even justify it, they say “goodbye” forever.
Country resident statusThe country’s residency is taxable. Therefore, it is important for Portugal that all those who do business in its territory are also tax residents.
And this requires:
- actually stay in the country at least 183 days a year;
- have a center of economic or vital interest in the country;
- have a permanent address, business or job in the country.
It is important not only to become a resident of Portugal, but also to exit the tax residency status of another country. A lot of people miss this point. That’s why so much help is needed from professionals in such a demanding matter. Alexander did not miss this point and there were no delays in business development, but if it were not for the help of professionals, there would have been a serious hitch.
Portugal strengthsThe country has low production costs, a stable political and social situation, and everything with the prefix “very.” Here entrepreneurs of any level can directly reach the top leaders of the state to solve their problem. Can our compatriot at home write a letter to the president or a minister with the confidence that the recipient will read it? He can there. There is a real connection between the government and the people. The kind they talk about in different countries is already there in Portugal.
Setting aside the desire to communicate personally with the Portuguese government and getting back to the essentials.
Why is Portugal regarded as an economically friendly country? Because taxes are low and it’s a super business environment.
Want proof? Please. Here are just the main “pros”:
- Investors in businesses, firms, and companies based in islands and continental zones pay no taxes at all the first year.
- The flat corporate tax is only 19% (and there is a possibility that it will continue to be reduced). And businesses with an income level below 15,000 euros pay initially 17%.
- Value added tax of 23%. When it comes to food, medical supplies, as well as for some representatives of the hotel business, the preferential rate of 6%. Restaurant and flower business, as well as partially producing food products – also 6%. Pay attention! Do not pay VAT opening businesses in the field of insurance, finance, health and education.
- The country has free economic zones. These are Madeira and the Azores.
- Portugal entrepreneurs serve 20 million tourists annually.
- Internet technology is great! Portugal’s e-government system and online access to public services is recognized by the UN as the best in the world!
This is more than just renting an office, it is an investment in your own startup. The company is doing a great job. The company promotes actively, many of its “promoters” have already become successful businesses.
There are some disadvantages.
There are some disadvantages. Not without that. And you have to know them beforehand. Especially since they are quite non-critical.
Deficiencies of the systems of organizing and doing business in Portugal and PolandStable GDP growth and improvements in the economic side of life do not exclude obstacles in the way of businessmen. But on the other hand, even in fairy tales trouble happens to heroes, and this is real life. You just have to be prepared for the challenges and know exactly which side to expect them from.
The main difficulty, according to businessmen in Portugal, is getting credit and attracting active investors. In second place is bureaucracy. If you have time, a reserve of nerves, and most importantly knowledge of the laws, rights, rules, etc., you can try it yourself. You can try it yourself. If not, it is better to leave all matters of paperwork and its further management “on the shoulders” of specialists.
A very serious obstacle, perhaps one of the most serious, is language. It’s great to have our fellow countrymen living next door to you, but knowledge of Portuguese is essential in all instances. English is only good as a “reserve” for about 5%. No more. Be prepared for that. Although, in principle, it makes sense. What is a country? It’s not just a territory, but also speech, language, people’s traditions. Want to be part of it? Learn Portuguese.
Few investors for a startup in Portugal. Minus? Yes, if one of the people who plan to develop a business at the expense of other people’s investments moves. But a plus for our plan, because we are considering a move at the expense of investment. As soon as they find out on the spot that someone wants to make an investment, they will be flooded with offers. And these proposals need to be prepared for, you need to know in advance how much, where to invest, what expectations to have about these investments.
Plan implementationAlexander saw a suitable object on his monitor screen about three weeks after he began his search. A 4-apartment house of 230 squares in total. It cost 600 thousand euros because it needed serious reconstruction, preliminarily estimated at 200 thousand (but honestly, thanks already!). The renovation was not done quickly. Decided not to hire workers at once for the house, but one by one for the apartments. It turns out, one completed and handed over, and others are engaged, and so on.
Then the owner improved one of the apartments by making the terrace and turning it into a recreation zone, which means that the owner would no longer rent it as an apartment, but as an apartment with a terrace and the price would increase to 5000 euros per month.
I began to improve the second apartment. Here I put the emphasis on modern appliances. The result is high-end accommodation, extra class. The rent rose to €11,000 per month.
After repairing all the apartments received a minimum annual income of 15% of the investment. Minimal during the quarantine period! And now Alexander is hoping for more. But he is not sitting idle. There are plans for a tour bus, but for now these are plans.
Somehow we got up to speed and the situation in Portugal. The basis, the base, if that is more convenient, you got, now it remains to determine the direction of work with specialists, to create a plan, to make calculations. Sign up for a consultation – there is still a lot of work ahead. The calculations are probably the most important. But the first and most important step you have already made – you know who to contact for all questions and with any problems regarding the move to Portugal through an income property investment.