In Final Text, Funds Still Qualify for Portugal Golden Visa But Cannot Invest in Real Estate

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The Portuguese Parliament’s Commission on Economy, Public Works, Planning, and Housing today voted to approve the final text of the Mais Habitação bill, which, among many other policy initiatives, would end the golden visa’s direct real estate investment and capital transfer options.

The final text indicates most of the program’s qualifying options will survive, but that the most popular options are all out:

• Subp. 1 – Capital Transfer
• Subp. 2 – Creation of at least 10 jobs
• Subp. 3 – Real Estate
• Subp. 4 – Real Estate – Renovation
• Subp. 5 – Scientific research contribution
• Subp. 6 – Cultural Heritage Investment
• Subp. 7 – Venture capital/investment funds*
• Subp. 8 – Business investment with min. 5 jobs

*The latest version of the law has been updated to disqualify investment funds that invest in real estate, which most of the listed Portugal golden visa funds do. Lawmakers appear unequivocally determined to prevent golden visa investment in real estate, despite the country’s lack of housing and investors’ manifest preference for this asset class.

“It is obvious that the government wasn’t aware of all the perspectives regarding the program,” says Sara Sousa Rebolo of the Portuguese Association of Immigration, Investment, and Relocation (PAIIR).

“The reversal of the government’s position on investment funds was a great win [previous versions of the text had excluded this option], and it shows what can be done when the correct information and economic impact are clearly demonstrated by stakeholders. The real estate sector was not able to show with concrete data that it can be a solution and not the problem.”

She also emphasizes that amid all the commotion surrounding the law, few have paused to consider what the regulations will look like.

“The last time the law was amended, the SEF practically suspended processing altogether [for more than six months] because they were waiting for the regulations to be updated, until someone in the government finally declared that regulations didn’t need an update. In this case, considering the scope of the amendments, an update to the regulation is mandatory so as to bring clarity, objectivity, and harmonization to the market.”

Providing a grace period the “only fair thing to do” for developers

One damaging consequence of the final text – which, according to immigration lawyer Madalena Monteiro of Magwind, is practically a foregone conclusion now that it’s been approved the commission, in which all parliamentary parties are represented – is that developers who started projects in the country’s interior (upon the direct encouragement of the January 2022 golden visa reform) would need to source capital outside of the golden visa investor pool for these projects once the new law takes effect.

“These changes will be damaging,” says Monteiro. “Developers began projects in the interior under regulations approved more than a year and a half ago. The government should provide more of a grace period. It’s the only fair thing to do for companies that started projects by following all applicable laws and regulations.”

Following today’s vote, the bill has cleared the second of four major hurdles before it can become law:

1. Voto na generalidade – Vote in the generality
2. Voto na comissão – Vote in the commission (today)
3. Voto na especialidade – Vote in the speciality (likely July 19th)
4. Promulgation by the President

Current program likely to last for another three months “at least”

A grace period may yet come for developers, not necessarily in the form of a last-minute amendment but, more likely, from delays in the legislative process itself.

“The law will most likely be approved in its current form” in the voto na especialidade on July 19th, explains Porto-based lawyer Inês Costa Moura, General Manager of International Atlantic Services, “before it is sent to the president for promulgation.”

But sending the bill to the president for promulgation, she points out, typically takes weeks rather than days because of a series of formal requirements that must be met. Once the president – a constitutional scholar known for reading proposals in their entirety – is in possession of the bill, there’s a general deadline for him to finish considering the bill. “But in practice,” says Costa Moura, “he tends to ignore these guidelines when it comes to more complex bills and to take his time to scrutinize them. This takes time and, in August, he always takes a holiday.”

Considering past experience with complex legislation, Costa Moura says the most likely scenario is promulgation by the end of September. That is, unless the President asks the Constitutional Court to review the bill, which is a real possibility considering opposition parties are likely to vote against the bill.

“According to our political advisors,” reveals Costa Moura, “even that is a very conservative timeline estimate. Consider that the president recently took some three months to promulgate the relatively less complex legislation on Ubers, and that wasn’t even during the holiday season.”

Golden visa developers and real estate fund managers, as a consequence, could therefore realistically have several more months left to wrap things up before golden visa capital is off the table.

Sousa Rebolo, meanwhile, says that “as far as we are aware, the bill’s wording [despite being referred to as final] is not fixed, and efforts in the coming days can make a difference.”

Backlog figure unverifiable, timeline unrealistic

Costa Moura also objects to elements of our article from yesterday, which indicated that, at current rates of processing, the reported 7,802-strong golden visa application backlog would take until 2030 to clear:

“First of all,” she begins, “we must point out that the figures provided in the article [7,802 pending applications, as revealed to Público by a source within the SEF] are not official figures. They were given by an alleged ‘source’ but without any indications as to the reliability of their provenance.”

The 7,802 figure for the backlog, which, she points out, we have no way of verifying, could have several explanations, she indicates:

• Files can be under review without having reached pre-approval;
• they may have been pre-approved but biometrics may not have been collected yet;
• biometric data may already have been collected, but they may be waiting for applicants to deliver the documents;
• They may already have been completed and approved but still awaiting final clearance.

In many cases, highlights Costa Moura, the backlog grows because applicants do not show up for their biometrics appointments.

“Moreover,” she adds, “it is entirely unrealistic to extrapolate to such severe conclusions based on uncertain numbers. The SEF processing capacity continues to increase, and the government has been recruiting more and more.”

Even if the numbers are correct, Costa Moura emphasizes that there ware "legal ways to force the immigration agency to make a decision after a certain time has passed, so the 2030 scenario is entirely unrealistic."

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