THE END OF GOLDEN VISA: VACCINE OR EUTHANASIA?

It was on February 16th that the prime minister announced to the country, after some threats made by himself at the end of last year, the end of the Residency Permit for Investment Activity (ARI) program, also known as the “Golden Visa” program, created more than a decade ago, precisely in October 2012. The announced measure aims, according to the prime minister, to end real estate speculation and is one of the flagship measures to solve the housing crisis, integrated into a legislative package called “More Housing Program”, whose bill was launched for public consultation earlier this month. In addition, the proposal is not limited to the end of the program, as the government intends to extend its effects to the renewals themselves, conditioning their approval to cases where real estate investments have been made in the owner’s own and permanent housing or for descendants, or if the property is permanently placed on the rental market. Much ink has flowed since the announcement of the end of the program and protests have proliferated from different sectors of the economy, particularly the real estate sector, encompassing the overwhelming majority of players involved (developers, builders, brokers, architects, engineers, tourism and Local Accommodation operators, investment and immigration agencies, real estate consultants, etc.). At present, with the public consultation having ended on March 24th, the final bill proposal will be sent to Parliament for analysis and discussion, subject to approval, rejection, or amendments. In the worst-case scenario, assuming the proposal is approved with the initial text, the President of the Republic will still have to issue his opinion, opening up 3 possible scenarios – approve the bill, return it to Parliament for changes/corrections, or (predictably) refer the Constitutional Court to evaluate the constitutionality of some norms. Let us now, as an example and briefly, examine the main criticisms of the proposed measures:

1. The legislative proposal does not provide for any phase-out period that would accommodate the legitimate expectations of both investors who have already initiated (namely by signing reservation agreements or promise contracts) or completed their investment activities, for example by purchasing a property, and private promoters who have already invested their own capital and contracted bank financing, while providing their guarantees, and are developing or finalizing construction projects, mainly in the tourism sector, from north to south of the country, coastal and inland, whose final clients are mainly composed of foreign investors who intended to invest in this sector and, thereby, apply for a residence permit. On the contrary, in addition to providing for the complete revocation of paragraph d) of number 1 and numbers 2 to 4 of article 3 of Law no. 23/2007 of July 4, in its current wording (a law that regulates the entry, stay, exit and removal of foreigners from national territory), which will enter into force immediately on the day following its publication!, the proposed measure also contemplates a retroactive effect, only safeguarding ARI authorization requests pending with SEF as of February 16, 2023. In this particular regard, the contestations grow, denouncing a serious violation of the principles of security and protection of trust as constitutive elements of the Rule of Law, commonly recognizing that the succession of laws over time must obey transitional law rules or respect the principle of non-retroactivity. Indeed, it seems elementary justice to recognize to investors who trusted in our legal system and have already initiated or completed an investment activity that the result of the law application is foreseeable, a condition that makes it incompatible with the attribution of retroactive effects to the law. We cannot forget that this program is divided into two distinct phases and that the submission of the application on the SEF ARI portal is only possible after the completion of the investment. Thus, the abrupt termination of the program will inevitably shake the market, both on the supply and demand side, considering that both have already started their respective investment cycles, with a serious violation of the legitimate expectations of all involved, leading to significant losses, still incalculable at this stage, especially if we consider that the main asset affected is the confidence in the market and the credibility of Portugal in the international context! Similar to the last amendment to the ARI regime, whose vacatio legis was almost a year (February 2021 with entry into force on January 1, 2022), in the current radical scenario of the program’s termination, the proposed law should provide for a minimum hiatus of 18 to 24 months to produce the respective effects.
2. The (highly likely) unconstitutionality regarding ARI renewals, in relation to investments already made in real estate, regardless of their nature and use. As previously mentioned, the proposal provides that renewals will only be granted if the ARI holder can prove that the properties in question are rented for residential purposes for a period not less than five years or are being used for the permanent and habitual residence of the holder or their descendant. With regard to the retroactivity of such a measure, the same considerations, mutatis mutandis, apply as those already mentioned in the previous point regarding the admissibility of applications. In fact, there is a clear change in the rules of the game for all those who have already been granted a temporary residence permit and still depend on one or two renewals to obtain a permanent residence permit, once again constituting a serious violation of the principles of confidence and legal certainty that underpin our legal system. Likewise, it seems to us that the imposition of a destination on the acquired property, reflected in the forced leasing of a residential property for a period of not less than 5 years, is unconstitutional due to its infringement on the right to private property. Moreover, nothing is provided for non-residential properties, nor is any exception safeguarded for cases where a particular property is already subject to another type of contract, validly concluded and in force, particularly for the operation of tourist accommodation.
3. The justification for ending the “Golden Visa” program – the “fight against real estate speculation” – was not the subject of any technical study and may not solve the housing problem in terms of rising prices and the increase of affordable housing. Against all expectations (and requests!), the Government did not disclose any study that would support the notion that the housing crisis that has plagued the main urban centers of the country (for many years now) is related to the implementation and development of the ARI program, and on the other hand, demonstrates the positive impacts that the end of the Golden Visa will have on reversing the rising trend of housing prices and increasing the supply of affordable housing, including through the rental market. It is important to note that since its creation in October 2012 until January 2023, the Golden Visa program allowed the capture of a total investment value of 6.8 billion euros, of which 6.1 billion euros corresponded to investment made through the acquisition of real estate assets, and 10,755 residence permits were granted for this type of investment. On the other hand, if we consider that the real estate acquisitions made by ARI investors corresponded globally to only 0.6% of the total volume of house transactions in Portugal, and that regarding the main urban centers where there is indeed “urban pressure”, namely Lisbon and Porto, only 2% and 0.9%, respectively, correspond to purchases made by “Golden Visa” investors, we can legitimately infer that the revocation of the program may be absolutely ineffective in achieving the intended results, namely in combating the rise in housing prices. Moreover, considering that due to the last alteration of the ARI regime, which came into force on January 1, 2022, investment in the housing market in the main urban centers and the coast was no longer allowed, being limited to the purchase of houses in the interior of the country and autonomous regions, and if we analyze the real estate market data for 2022, provided by INE – 167,900 dwellings were transacted with house prices rising by 12.6% – we can legitimately conclude that the ARI program is not responsible for the phenomenon that is now intended to be combated. In this sequence, even the less attentive reader will intuitively question what is the practical effect of ending a program that, in this particular regard, had already been terminated for more than a year? We are tempted to answer that the underlying intention is to “drag” all other real estate investments that are not residential and have nothing to do with the problem of affordable housing, such as tourist units or commercial properties. The vast majority of associations and real estate professionals agree that the problem of rising housing prices results, from the outset, from the distortion that exists in the market regarding the lack of supply in relation to demand, resulting from the little housing construction that has been observed in the last decade. For this fact, various factors are commonly pointed out that have contributed to this phenomenon, namely the rise in construction material prices and shortage of labor; the high tax burden on construction (where VAT at 23% and AIMI on land for construction play a prominent role) and acquisition of properties (IMT); the successive delays in licensing processes and the lack of predictability in their completion; the improvement and valorization of the constructed assets, among others.
4. The lack of reasoning behind the complete revocation of the ARI program, which includes other investment activities unrelated to the housing problem being discussed. First and foremost, with regards to the investment activity in residential assets, which is currently only permissible in the interior and islands, it should be emphasized that in order to achieve the objectives and commitments outlined by the government itself, aimed at safeguarding the major urban centers and investing in inland territories, it is necessary, for reasons of territorial cohesion and equality, to grant a sufficient and adequate time horizon for the consolidation and verification of the results sought for those regions. Ending the program just over a year before the ongoing reform of the Law will not only hinder the intended development, but will also represent a frustration of the expectations of real estate developers and ARI Investors (to which municipalities and regional governments are added) who have redirected their projects and respective investments to the interior of the country or autonomous regions, hindering foreign investment and its respective economic development and revitalization of areas with low population density and investment levels. On the other hand, it should be noted that the Golden Visa program is not only made up of real estate investment, in fact, there are various types of investment provided for, which escape the numerous criticisms made throughout the life of the program. Channelling the issuance of residency permits towards existing investment activities that the country currently needs, such as, for example, job creation, support for artistic production and cultural heritage, creation and recapitalization of companies and national corporate capitalization, namely through venture capital funds (in such important sectors as technology, forests, agriculture, health, scientific research, senior residences, etc.) is imperative to the maintenance of the program and to the growth of the national economy. Additionally, nothing would prevent, indeed quite the opposite, the reconfiguration of the program for the purpose of combating precisely the crisis being witnessed in the housing market, namely, of so-called affordable housing. That is to say, transforming and reversing the myth (purely ideological) that Golden Visa is the problem to becoming part of the solution! Consider, for example, investment activities related to the acquisition or construction/renovation of residential properties, with the obligation to place them on the medium/long-term rental market (built to rent); acquisition of units of participation in real estate investment funds for residential rental, or whose portfolio was directed primarily towards the Accessible Construction program, where the State, through the PRR funds, would be the final buyer from the outset or, alternatively, the tenant, subsequently placing them on the accessible rental market, mitigating the risk of real estate promotion, in exchange for a possible reduction in the margins of the promoter, certainly accepted by the type of investor profile in question.

Considering the above, it seems evident to us that the function is not yet fulfilled, and that the Golden Visa has proven to be resilient to criticism, adapting to the evolution of the market and the country, which still has much to benefit from the maintenance and reconfiguration of the program. Otherwise, we have no doubt that the final point of the program (as proposed), announced as a “vaccine” to save the housing crisis, will be nothing more than “euthanasia” to foreign investment, whose impact, it should be reiterated, is far from known…

For the good of the nation, we all eagerly await… a step back!

The end of Golden Visa: Vaccine or Euthanasia?, by João Nóbrega.

Last 30th October, the Regulatory Decree n.º 04 2022 of 30 September came into effect, amending the regulation of the legal regime for entry, stay, exit and expulsion of foreign citizens from the national territory, recently stabilized by the Foreigners’ Act, Law no. 18/2022 of 25 August.

Among several changes, it is worth highlighting the innovations brought to the visas for digital nomads, which will allow them to work in Portugal for one year remotely.

Thus, the visa for digital nomads allows its holder to live in Portugal and work here remotely, either for an individual person or for a company domiciled or headquartered outside national territory.

With this regulatory change, digital nomads (for working remotely outside national territory) are now required to present all the general documents for any type of residence visa, and also the following documents:

– Dependent work, one of the following documents:

1. Work contract; or
2. Promise of employment contract; or
3. Employer’s statement proving the employment relationship.

– Self-employment, the following documents:

1. Articles of association;
2. Services agreement rendered;
3. Written proposal for a service agreemetn;
4. Document demonstrating services provided to one or more entities;
5. Proof of average monthly income earned in the last three months in the exercise of a subordinate professional or independent activity of a minimum value equivalent to four guaranteed minimum monthly remunerations
6. Document proving his fiscal residence.

These are the new features for the digital nomads. However, to complement the information on residence and investment in Portugal, please check our RSA – Guide for Foreign Investors and Residents in Portugal.

Portugal Investment and Residency Guide for Foreigners

It is no longer mandatory for a foreign citizen residing in a third country, outside the European Union or the European Economic Area, to appoint a tax representative when registering and obtaining a TIN.

However, the appointment of a tax representative is mandatory if that foreign citizen is subsequently the subject of a tax legal relationship, namely, owner of a vehicle and/or property registered/located in Portuguese territory, enter into an employment contract or to carry out a self-employed activity in Portugal.

If you want to invest or relocate to Portugal, consult our Guide for Investors and Foreign Residents where you can obtain all relevant information on this and other subjects.

Last Call to obtain Portuguese citizenship for those of Jewish descent

The recent Decree-Law No. 26/2022, of March 18, which came into force on April 1st and applies to pending cases, made the necessary changes to the Portuguese Nationality Regulation, thus regulating the amendments made to the Nationality Law by Organic Laws No. 2/2018, of July 5 and 2/2020, of November 10th.

In substantial terms, Decree-Law no.26/2022, of March 18, regulates the changes made to the Nationality Law, in what concerns the attribution of originality nationality to individuals born in Portuguese territory, children of foreigners, the acquisition of nationality by adoption, the acquisition of nationality by naturalization – in this context regarding the general requirements for naturalization, the naturalization of minors, the new regime of naturalization of minors received in institutions, the naturalization of foreigners born in Portugal and the new regime of naturalization for ascendants of original Portuguese citizens – , the alteration of the regime of opposition to the acquisition of nationality and the new regimes of nullity and consolidation of nationality.

Nevertheless, the new regulation also introduces some improvements in the processing of nationality procedures. 

On the one hand, it provides for a regime of electronic processing of nationality procedures, according to which lawyers and solicitors are obliged to perform their acts by electronic means and will always be notified by the same means. Whenever so determined by the registrar or registry officer, lawyers and solicitors have the duty to exhibit the original documents submitted by electronic means, which shall be preserved for a period of ten years.

However, the use of the electronic procedure is optional for applicants who are not represented by a lawyer or solicitor. 

This new system allows nationality procedures to be consulted electronically, both by the respective applicants and by the lawyers and solicitors representing them.

In addition, communications between the Central Registry Office and other services or entities will also be carried out, whenever possible, by electronic means.

On the other hand, it is foreseen to speed up some aspects of the processing of nationality procedures, such as the exemption of the translation of documents in certain situations.

Finally, it is important to note that some terminological updates were made, such as the adaptation of the accompanied adult regime, approved by Law 49/2018, of August 14, to the new Nationality Regulation and the organic structure of the Institute of Registration and Notary Affairs, I.P.

However, the big news concerns the alterations to article 24-A of the Nationality Regulation, which regulates the naturalization of foreigners descending from Portuguese Sephardic Jews.

Before analyzing the changes implemented by the new regulation on Portuguese nationality, let us recall the controversy that occurred in 2020, with the PS proposal to amend paragraph 7, of Article 6 of the Nationality Law.

The proposed amendment to the law aimed to introduce a requirement of legal residence in Portugal for a period of 2 years for descendants of Sephardic Jews who wished to naturalize as Portuguese citizens, in order to establish an objective criterion of effective connection to the national community.

Strictly speaking, this was an attempt to “de-mercantilize”.” the acquisition of Portuguese, and therefore European, citizenship by people who have no cultural or emotional connection with Portugal.

Strongly criticized as anti-Semitic, since the naturalization of descendants of Sephardic Jews aims at “historical reparation” for the expulsion and religious persecution that the Jewish people suffered in the Iberian Peninsula in the XV and XVI centuries, the proposal ended up not succeeding.

However, the new wording of article 24-A of the Nationality Regulation leads us to conclude that the amendment was “worse than the disease”, since the descendants of Portuguese Sephardic Jews, who apply for naturalization, are now required to provide a certificate or other document proving: i) the ownership, transmitted mortis causa, of real rights over real estate located in Portugal, other personal rights of enjoyment or shareholdings in commercial or cooperative companies based in Portugal; or

ii) of regular trips to Portugal throughout the applicant’s life, when these facts demonstrate an effective and lasting connection to Portugal.

Strictly speaking, most of the possible/potential applicants for naturalization in this way do not fulfil any of these criteria of effective and lasting connection to Portugal. 

It is not advisable, as it will not have the desired effect, the creation of commercial or cooperative companies based in Portugal only with the purpose of obtaining Portuguese nationality, as the applicants will always have to comply with the “durable” connection criterion.

Thus, paragraph d) of no. 3 of article 24-A of the Nationality Regulation constitutes a real and radical obstacle to the submission of new requests for Portuguese nationality by naturalization by descendants of Portuguese Sephardic Jews.

But, that’s not all. 

The certificate of Jewish community with the status of religious legal person residing in Portugal, which demonstrates the tradition of belonging to a Sephardic community of Portuguese origin, must comply with the model to be approved by order of the member of the Government responsible for the area of justice and must contain (i) the full name, date of birth, place of birth, filiation, nationality and country of residence of the applicant; (ii) the express indication of direct descent or family relationship in the collateral line of a common parent from the Sephardic community of Portuguese origin, with the indication of the means of proof presented for this purpose and identification of the elements considered relevant to attest the tradition of belonging to that community; (iii) the family lineage of the applicant coming from the common Sephardic parent of Portuguese origin.

In addition to greater requirements in the preparation of certificates that demonstrate the tradition of belonging to a Sephardic community of Portuguese origin, the Jewish Community will now be required, for a period of 20 years, to be the trustee of the documents used to issue the certificate, which will be digitalized, together with the certificate issued, and sent electronically to the Central Registry Office when the application for acquisition of Portuguese nationality is presented.

The Central Registry Office may also, whenever necessary, request the Jewish Community to send the original documents which instructed the issuing of the certificate for safekeeping and conservation, or request their exhibition. 

However, Article 24a of the Nationality Regulation will only come into force on 1 September 2022 and will only apply to nationality cases submitted from that date onwards and not to pending cases.

A rush and boom in nationality applications is inevitably expected by September 1 this year from applicants of Sephardic Jewish descent wishing to naturalize as Portuguese under the previous Nationality Regulation, as they are not required to meet any objective criterion of demonstrating an effective and lasting connection to the Portuguese community.

In conclusion, there is the reflection that it would not be at all disadvantageous if the proposed criterion of 2 years of legal residence in Portugal, so vehemently criticized, had been established in paragraph 7 of Article 6 of the Nationality Law.

Last Call to obtain Portuguese citizenship for those of Jewish descent, Sara Minhalma.

TOMORROW OPEN TALKS Investing and/or residing in Portugal by foreigners

4:00 PM WEST

The Portugal Golden Visa Program offers the fastest gateway for investors to become EU residents. Being granted Portugal residency will give investors and their family members access to public Health Care, Education, and Social Security. It also gives them a chance to become EU citizens and enjoy the benefits of the EU as a whole.

Speakers:
– Pedro Gonçalves Paes
– Sara Minhalma
– Ricardo Néry

Mozambique and the Islamic Finance, the Alternative in the Post-Covid 19 Situation

“With the looming post-Covid 19 crisis and the potential loss of liquidity in the banking market, the Islamic financial system (internationally known as “Islamic Finance”) may provide an alternative to the African banking model for customers and could provide additional ways for domestic banks to finance themselves.” 

Pedro Gonçalves Paes

What investors need to know about the new Mozambican Credit Institutions and Financial Companies Law

On 31 March 2021, the new Mozambican Credit Institutions and Financial Companies Law no. 20/2020, of 31 December 2020, will come into effect. This new law is in response to the demand for a banking regulation that forces national banking entities to act in the best interest of their clients, by complying with contractual obligations in a rigorous manner.

What prompted the new law? What changes does the law introduce?

Pedro Gonçalves Paes answers those questions and brings more information about this new law in this Ongolo article.

RSA LP Angola/ AV&A has participated following the invitation of the international law firm Baker McKenzie, in the preparation of the Legal Atlas on the rights of street children in Angola for the international NGO “Consortium for Street Children”. 

This Legal Atlas is a tool that can be consulted online at  The Legal Atlas for Street Children | – Consortium for Street Children and will serve as a guideline for the United Nations (UN) in identifying national laws and policies that can be created or amended to improve the situation of street children around the world.

This pro bono project for Angola was led by the partner in charge of the International Operations at RSA LP, Pedro Gonçalves Paes, with the collaboration of the Angolan lawyers Miguel Matias, the partner in charge of Criminal Law department, and the principal associate lawyer Andreia Gonçalves Costa.