Dixcart Domiciles. Second Edition

Transcription

1 Dixcart Domiciles Second Edition 2018 Cyprus Guernsey Isle of Man Malta Nevis Portugal (Lisbon, Madeira) South Africa Switzerland United Kingdom

2 CONTENT WELCOME BY MICHAEL MAXWELL MOVING TO THE UK THE UK ENTREPRENEUR VISA THE UK PROPERTY MARKET RELOCATING TO CYPRUS TAX INCENTIVES FOR INDIVIDUALS AND BUSINESSES MOVING TO CYPRUS RELOCATING TO MALTA AN EXPAT'S LIFE IN MALTA WHY PORTUGAL'S REAL ESTATE WHEELS KEEP ON MOVING DIXCART DOMICILES EVENTS UPCOMING TRAVEL

3 WELCOME Dear Readers, This second edition of the Dixcart Domiciles Newsletter focuses on moving to the UK. Whilst many of the jurisdictions that offer residence and citizenship programmes are fairly exotic places, many individuals seek a location that offers a traditional and stable lifestyle for themselves and their family. Priority is often, correctly, placed on education for children within the family and access to a thriving commercial centre, where business interests can be pursued. This is largely why international centres such as Geneva, Lisbon and especially London prove to be so popular. With or without Brexit, the UK is likely to remain an iconic destination and continue to offer high quality in terms of commercial enterprise and social stability. For this reason Dixcart Legal has recently recruited a specialist UK immigration lawyer, Vincent Chung. Vincent will work alongside the Dixcart Group's international team and Dixcart Domiciles to introduce and assist in establishing new arrivals in the UK. It is far more enjoyable taking advantage of what the UK offers with peace of mind that you have the correct visa and that your tax affairs and business interests are in order! At Dixcart Domiciles we provide the professional expertise to help ensure that fiscal pre-planning is complete, prior to a move taking place. This edition also includes an article by Grosvenor Billinghurst and Beauchamp Estates on the UK property market and an article by Paladin Real Estate Group on the growth of the Portuguese real estate market. In addition, we consider the residence schemes available in Cyprus and Malta. I hope you find the content in this edition useful. Should you have any questions regarding relocation or citizenship, or would like advice, even if you have already moved, please do not hesitate to get in touch. If you would like to meet with either myself or one of my colleagues, our travel plans for the next few months can be found on page 17 of this newsletter. Alternatively, please contact us: advice@dixcart.com. Kind regards, Michael Maxwell International Business Development Manager Vincent offers practical advice to businesses and individuals on all matters relating to UK immigration and nationality for clients in the UK and those seeking to move to the UK. 1

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5 Moving to the UK The UK is a very popular destination for many individuals seeking to move from their country of origin. It offers a rich culture, traditions and history and has a distinctive "British way of life", which many people feel comfortable with. The education and legal systems are of high quality and there is an excellent choice of property, both residential and commercial. EEA nationals (and their families) have the right to reside in the UK; the situation may change following Brexit. Non-EEA nationals need to obtain a residence visa. There are two types of UK visa which are particularly popular with high net worth individuals and/or entrepreneurs: The UK Investment Visa This is formally known as the Tier 1 (Investor) visa. Under this visa category, an individual from outside the EEA can apply for Entry Clearance (EC) for an initial UK residence visa, which will be valid for up to 3 years and 4 months, by bringing 2 million to the UK and investing these funds in permissible investments. As long as the provisions continue to be satisfied, after the initial 3 year period the individual can apply for Leave to Remain (LTR) (an extension) for a further 2 year visa and, following this, can then apply for Indefinite Leave to Remain (ILR) in the UK. The rules allow for accelerated ILR after 3 years if an individual has invested 5 million and after 2 years if 10 million has been invested. The UK Entrepreneur Visa This is formally known as the Tier 1 (Entrepreneur) visa and is a visa for entrepreneurs coming to the UK with the necessary funds to establish or take over the running of a business. It is a popular option, especially with individuals who have graduated from a UK university, as well as those with the relevant experience in industry abroad. For more information on the UK Entrepreneur Visa please refer to pages 4 and 5 of this newsletter. Dependants A partner and children under the age of 18 can accompany the holder of either type of UK visa as dependants. Additional Criteria and Citizenship An individual applying for LTR or ILR should submit their (and their family's) application(s) to 'UK Visas and Immigration' prior to their current visa expiring. In terms of an ILR application, the main applicant must not be absent from the UK for more than 180 days during any 12 month period, and must usually meet the 'Life in the UK' test and 'English Language' test. An individual can lose their ILR if they have been absent from the UK for 2 years. In order to be eligible for British citizenship, an individual must usually have been resident for 5 years in the UK before applying for ILR. Once ILR has been obtained, it must be held for 1 year (a total therefore of 6 years of residence in the UK). Applications are reviewed on the basis of the individual's last 5 years in the UK. To meet the citizenship requirements, an applicant must not be absent from the UK for more than 450 days in the 5 year qualifying period, and for not more than 90 days in the final 12 months of that 5 year period. The rules vary slightly for individuals married to, or in a civil partnership with, a British citizen. Generally, after 5 years in the UK the individual can apply for ILR. In this scenario the individual does not have to hold ILR for 1 year to apply for British citizenship. Applications will be reviewed on the individual's last 3 years in the UK, rather than the standard 5 years. To meet the requirements an applicant must not be absent from the UK for more than 270 days in the 3 year qualifying period, and for not more than 90 days in the final 12 months of that 3 year period. Dual citizenship is permitted and recognised in the UK; however an application for citizenship in a third country would make British citizenship invalid. Individuals should seek professional advice regarding UK citizenship and dual citizenship. 3

6 THE UK ENTREPRENEUR VISA The UK Tier 1 (Entrepreneur) visa allows individuals to come to the UK to either set up, join or invest in an existing UK business. Under this visa category, an individual from outside the EEA can qualify for a UK Entrepreneur visa if they invest a minimum of 200,000 in a new, or existing, business in the UK and create new employment. In certain circumstances the initial investment can be reduced to a minimum of 50,000. The visa allows an individual to enter and reside in the UK for up to 3 years and 4 months. After 3 years an individual can apply for Leave To Remain (LTR) in the UK for an additional 2 years, as long as the individual remains engaged in the specific business activity detailed by the visa and the business has created 10 full time jobs for settled workers in the UK. After 5 years the individual can apply for Indefinite Leave to Remain (ILR) in the UK. Similar to the UK Investor visa, the UK Entrepreneur visa allows for accelerated ILR after 3 years if the business has created 10 full time jobs for settled workers in the UK, or has an income from business activity of 5 million. Recent graduates may be eligible for the Tier 1 (Graduate Entrepreneur) visa which is a 'start-up' visa. The requirements are less onerous and can act as a bridge to the Tier 1 (Entrepreneur) visa. DIXCART CASE STUDY Rahul, an Indian citizen, had always wanted to live in the UK and decided that he would like to set up a company in London specialising in Radio-Frequency Identification (RFID) technology for asset tracking. Rahul travelled to the UK to assess the opportunities. Whilst in the UK he visited an art gallery as he has an interest in contemporary art. Talking to the curator he discovered that they had major problems in tracking artwork within the gallery and in the gallery warehouses and stores. This presented Rahul with an opportunity to exploit his expertise in RFID technology in the UK. An Initial Visa to Enter and Reside in the UK Dixcart was able to advise Rahul that by investing 200,000 in the project in the UK he would be able to gain an entry visa permitting him to enter and reside in the UK for up to 3 years and 4 months. thank 4

7 Fortunately, in the past Rahul had remitted monies out of India, which is an exchange control area, using the Liberalised Remittance Scheme, although he could also have used the Automatic Route for overseas direct investment. He therefore had funds at his disposal outside of India. Rahul wanted to be able to return to India for extensive periods of time during the year. He was able to have a 'whole time contract of employment' with the new UK company, which enabled him to enjoy Indian non-resident status, but to be able to visit India for up to 180 days a year. What Happened After 3 Years and 4 Months? Dixcart advised Rahul that before the initial 3 years and 4 months visa expired he would need to apply for "Leave to Remain" in the UK and would need to demonstrate: that he was still engaged in the business on the date of the extension application, and that the business had created 2 full time jobs for people settled in the UK (these jobs must have existed for at least 12 months immediately prior to the Leave to Remain application). Rahul's visa would then be extended for a further two years. A Thriving Business and its Effect on Rahul's Leave to Remain in the UK The business went very well. Rahul engaged software engineers, sales personnel and accounts staff, and quite rapidly the business created 10 full time jobs. This entitled Rahul to "Accelerated Indefinite Leave to Remain" in the UK after 3 years, rather than the normal 5 years (if only 2 jobs had been created). In fact, as the turnover of his organisation was in excess of 5 million after 2 years, Rahul qualified for Accelerated Leave to Remain in any event. Dixcart was able to help Rahul with the following: We were able to give Rahul pre-immigration planning advice, enabling him to enjoy the maximum advantage from his UK resident nondomiciled status by using the remittance basis of taxation. If you would like more information on the advantageous UK Remittance Basis of Taxation, please contact us: advice@dixcart.com. We helped draft the business plans, incorporated the UK company and provided a comprehensive range of accounting, taxation and legal services. As Rahul started to employ staff, we drafted employment contracts and relevant procedures. We also advised Rahul on the employee share schemes available in the UK. We drafted Rahul's commercial contracts and licensing agreements. When the business really started to expand it needed more capital. We were able to advise on tax efficient investment schemes, including Business Investment Relief, for Rahul, which made investing in the company even more attractive to potential investors. We ensured that Rahul received research and development tax relief on the advances and technological developments the company had made. This significantly reduced the company's tax liability. Rahul's business continues to expand. He is now developing technology that could be patented, and Dixcart has therefore advised him that he will be able to make use of the UK's Patent Box Regime. This would enable Rahul to enjoy a corporation tax rate of only 10% when exploiting the new patented technology. UK Citizenship Rahul was so involved with his business in the UK that, in fact, he did not spend much time in India. Over a 5 year period he expected that he would be outside the UK for less than 90 days each year. This meant that he would be able to apply for UK citizenship once he has been in the UK for 5 years. 5

8 THE UK PROPERTY MARKET By Grosvenor Billinghurst and Beauchamp Estates "There'll always be an England", wrote Ross Parker and Hughie Charles in 1939 as they penned their patriotic ditty. Britain, Scotland, England and Wales, Great Britain, the British Isles, Cool Britannia, the United Kingdom; however the collection of islands is referred to, the world knows its name, reputation and dynamism. The UK has been a world leader for hundreds of years, with the fields in which it has excelled changing over time, driven and shaped by not only the ever changing world, but also its people and culture. Whether it be purely a question of geography, historical legacy, or a combination of both, the UK is one of the world's most culturally and ethnically diverse countries; something that has been hugely significant in shaping its mores, values and social fabric. As a country, the UK has long held a seat at the table of global leaders and, as such, attracts considerable media interest, not just from its European neighbours and corners of the old Commonwealth, but from across the globe. When the UK Government, under the leadership of then Prime Minister David Cameron, made the decision to hold a national referendum on Thursday 23 June 2016 on whether the UK was to remain in the European Union (EU) or not, interest intensified; not just for the sake of the decision itself, but to monitor, measure and assess the consequential impact of the seismic waves arising from both the announcement of the referendum and the result, elsewhere in the EU. On the morning of Friday 24 June, the UK awoke to the fact that, based on a 51.9% majority of a 71.8% turn-out, the UK had expressed its desire, albeit by an exceptionally narrow margin, to leave the EU at 11pm on Friday 29 March Since that morning the national and international press have been full of stories and commentary on the process of exit (this is the first time a country has ever elected to leave) and the progress, or lack thereof, while pundits attempt to fathom the legal process and route that civil servants and Government attempt to plan and navigate. 6

9 The impact on the UK economy has, for many sectors, not been positive; businesses do not like uncertainty and the pending barriers to trade with EU markets and countries have been a cause for concern for some business leaders and investors. However, EU trade is only part of a picture that is difficult to define, with so many exported goods passing through intermediary EU ports en route to destinations outside the EU, and a significant part of UK exports being services. A further level of complexity is also the basis on which the UK trades with non-eu countries; in many instances trade is undertaken under an EU agreement rather than a World Trade Organisation agreement. Complexity and uncertainty have temporarily conspired to diminish confidence in the UK. But not for those taking a long and pragmatic view, or even perhaps contrarian view; complexity and current uncertainty have created a buying and investment opportunity for both private individuals and corporations, the like of which has not been seen for more than a decade. The UK has many strong, established trade relationships with countries across the globe and outside the EU; some existed pre EU membership and many continued post EU membership. Confidence for many is far from waning: Google announced earlier this year their plans for a new Google Campus at London's King's Cross. Facebook announced in July they are doubling their office space in the UK. Apple and Amazon are both looking at UK expansion. A number of wealth funds are investing in property and land investments across the UK. Property, which has always been seen as a key barometer of economic health has been forging ahead; where previously significant investment and development activity has been focused on London and the South East, there is now a wider UK spread of activity across the country and in regional cities such as Birmingham, Bristol, Manchester and Liverpool, all of which are experiencing market growth. Leading sector publication, Property Week, has not been short of investment stories on which to report. Commercial and residential property has lost little of its appeal, even in prime central London, but has seen market heat dissipate, in part driven by domestic changes to Stamp Duty Land Tax (SDLT) in 2014 and Ian Davies, of Grosvenor Billinghurst, a leading agent operating in the Surrey 'golden triangle' of Weybridge, Esher and Cobham, observes that while SDLT has had an impact in the prime SDLT has had an impact in the prime areas of both Surrey and central London, particularly St George's Hill in Surrey, in the prime and super prime markets, developers are changing their operating practices to help mitigate some of the impact of stamp duty. 7

10 "At the very top end" he says, "where once a developer would have purchased a site on which to undertake the build and then sell the completed project, we are seeing a change where developers are working with clients to identify sites and then undertake development of a new build home on the site, once purchased by the new owner." Davies continues, "In Surrey where plots are generally much larger than London, the process of redevelopment can be far easier and the cost substantially less in regard to site purchase and therefore purchase costs. This increased value for money, on a cost per square foot basis, of the completed property, when compared directly to central London, is encouraging and a number of people who may have previously rejected Surrey have paused for thought. Particularly when also factoring in growth potential and lifestyle, Surrey offers an enviable quality of life, particularly for families." "At the top-end of the sales market: instructions 10 million and above, buyers see what they like and wish to secure it," says Davies. "As stock at this level is finite and limited, demand remains. The rumours of large discounts are, in the main, exaggerated; sensible bids are more likely to secure the property." NB: Runnymede and Elmbridge are boroughs within Surrey. Grosvenor Billinghurst's associate, London based Beauchamp Estates, which assists many HNW and UHNW individuals, as well as corporate clients, has seen the volume of sales in prime central London decrease, while values have not reflected the same rate of change. Beauchamp Estates' Founder, Gary Hersham comments: "Despite the events of 2016, namely Brexit and US Elections, the UK remains one of the most stable countries and economies globally, with property in prime central London losing none of its cache. There are very few alternative locations that offer quite so many benefits: location, culture, diversity, education, healthcare." The attractions of both Surrey and central London present compelling and robust arguments for their respective respective locations. It can be hard to balance one off against the other, as while their merits may be equal, they are not in every instance the same. This is creating an increasingly common brief for wealthy families locating to the UK, that of the 'dual property search'. Davies comments, "Both Grosvenor Billinghurst and Beauchamp Estates have received dual property search briefs and it is something that I anticipate something seeing more of in the future. The combined resources and expertise of both companies make us exceptionally well placed to understand and respond to client requirements in both locations." Predicting the future, in the absence of a crystal ball, is always a challenge and rarely a science. While the prevailing political issues and machinations are likely to continue into 2019, these do not fundamentally alter the fact that the UK remains a safe, stable, secure 8

11 secure and vibrant location in which to live and market in which to invest, with the southern home counties remaining a firm favourite with national and international buyers, who seek proximity to the capital and international airports, increased value for money, good schools and excellent quality of life. For more information on Grosevnor Billinghurst and Beauchamp Estates: The UK property market overall will see some growth in 2019, with some locations set to outperform others. Surrey continues to be an important market, in increasing the appeal of the UK, particularly for international investors who value its location and the range of property available. While Brexit may have momentarily lessened the UK's economic luster, it has not diminished the UK's appeal as an excellent location in which to live and raise a family; indeed it has inadvertently created an excellent opportunity to make that move. INSPIRATIONAL PROPERTY moving home as it should be done 9

12 CYPRUS Cyprus is an appealing European jurisdiction, located in the eastern Mediterranean Sea and offering a warm climate and attractive beaches. Situated off the southern coast of Turkey, Cyprus is accessible from Europe, Asia and Africa. Nicosia is the centrally located capital of the Republic of Cyprus. The population of Cyprus is approximately 1.2 million and the official language is Greek, with English also being widely spoken. There are two options available to non-eu nationals seeking to relocate to Cyprus. The Citizenship by Investment Programme offers non-cypriot nationals a "fast track" means of obtaining a Cypriot passport and freedom to travel, work and reside within the EU. One of the investment routes requires a minimum total investment of 2 million in Cyprus. The application process usually takes six months. For more information, please contact Dixcart. A Permanent Residence Permit is very useful as a means to ease travel to EU countries and as a gateway through which to organise business activities in Europe. Non-EU nationals, who wish to live in Cyprus but do not intend to be employed in Cyprus, must purchase one or two new real estate properties in Cyprus with a total purchase cost of at least 300,000. next The main applicant must have a minimum annual income of 30,000 from pensions, overseas employment, interest on fixed deposits or rental income from abroad. Other criteria also apply and information can be provided on request. The procedure should take no longer than two months, from the date of the application. Why consider becoming a Cyprus citizen? Cyprus is a member of the EU and the following benefits are therefore available: Free movement of people: a Cyprus citizen can travel, work and reside freely within the EU. Free movement of services: Cyprus citizens and companies can freely offer services within the EU. Free movement of goods: goods produced within the EU can be transferred between Member States. Staff at the Dixcart office in Cyprus are well placed to provide advice and support to individuals interested in relocating to, or who have relocated to, Cyprus: advice.cyprus@dixcart.com. 10

13 Tax incentives for individuals & businesses moving to Cyprus It is important for businesses and high-net worth individuals (HNWI) to carefully consider jurisdictions that can optimise and safeguard their commercial activities, assets and tax residency. Cyprus has established a number of measures to attract businesses and HNWI, and in 2015 new tax laws came into effect which provide significant benefits to individuals relocating to Cyprus. The Cyprus Non-Domiciles Regime Cypriot non-domiciliaries benefit from a zero rate of tax on the following sources of income: Interest Dividends Benefits for Employees in Cyprus Individuals earning more than 100,000 per annum in Cyprus, and not previously resident there for work purposes, are entitled to a tax exemption of 50% on their employment income in Cyprus for a period of 10 years. Cyprus standard income tax rates are: 0-19,500 = 0% 19,501-28,000 = 20% 28,001-36,300 = 25% 36,301-60,000 = 30% Greater than 60,000 = 35% Professional advice should be sought by individuals and companies considering relocating to Cyprus. Carefully considered pre-planning, prior to a move, is essential. Cyprus was the first nation to include its map on its flag These zero tax benefits are enjoyed even if the income has a Cyprus source and is remitted to Cyprus. There are several other tax advantages, including a low rate of tax on foreign pensions. Cyprus is one of the oldest wine producing countries in the world There are no wealth or inheritance taxes in Cyprus. The Benefits of Establishing a Company in Cyprus Cyprus offers one of the lowest corporate tax rates in Europe and has over 50 double tax treaties to assist in international tax structuring. The whole of Paphos is a UNESCO World Heritage Site The benefits of establishing a company in Cyprus include: The corporate tax rate in Cyprus is 12.5%. There is no withholding tax on dividends paid from a Cyprus company to its shareholders, as long as the shareholders are not Cyprus tax resident. Tax relief is available in the form of tax credits for withholding tax on income received in Cyprus. There is no taxation on dividend income (subject to conditions). The incorporation process is simple and straightforward. No restrictions on individuals acting as directors and/or shareholders. Fast and efficient procedure for opening a bank account. More than 55 beaches on Cyprus have been awarded the EU Blue Flag for cleanliness and safety Cyprus has the largest number of sunny days in the Mediterranean; up to 13 hours of sun a day during summer! 11

14 MALTA Malta offers a temperate climate, attractive beaches and is located in the Mediterranean Sea, just south of Sicily. The Maltese archipelago consists of the three islands of Malta, Gozo and Comino. The area of these Maltese islands is 316 square kilometres and the largest island is Malta, which has a population of approximately 475,000. Maltese and English are the joint official languages of Malta. Malta offers five residence schemes to meet different individual circumstances. Each scheme provides an opportunity for individuals to move to Malta, with some providing the option to gain Maltese citizenship and, subsequently, a Maltese passport. Maltese citizenship is granted to qualifying applicants who make a cash contribution of 650,000 to the Individual Investor Programme (IIP) and meet certain investment criteria, including the rental or acquisition of a qualifying property with a minimum value of 350,000 and a financial investment of 150,000 in Government Bonds. Benefits of the Malta IIP include freedom of residence anywhere in the EU and ease of travel throughout the world. The programme also enables a spouse and/or other dependants to gain a Maltese passport. The Residence and Visa Permit Programme enables non-eu individuals to reside or stay indefinitely in Malta. Individuals need to make a 30,000 contribution payment to the Maltese Government, invest a minimum amount in Malta and purchase or rent a property, for a specified minimum amount, in Malta. Individuals taking advantage of this scheme will be classified as resident but not domiciled in Malta. Under the Global Residence Programme non-eu nationals can obtain a special tax status in Malta and a residence permit by meeting certain criteria, including the acquisition or rental of a qualifying property, and by making a minimum tax payment of 15,000 annually. Once obtained, successful applicants are then eligible to reside in Malta and travel in the Schengen Zone of countries. The Highly Qualified Persons Scheme is open to EU and non-eu nationals, and provides significant tax advantages to professional individuals employed in Malta, earning over a specified amount per annum. EU nationals whose main source of income is their pension are eligible to apply for the Retirement Programme and move to Malta to enjoy a special tax status. An Authorised Registered Mandatory is required in Malta to submit applications on behalf of individuals. Dixcart can provide Authorised Registered Mandatory services in Malta. 12

15 An Expats' life in Malta Malta continues to be a popular destination not only for tourists, but also for expats moving there. There are numerous reasons why expats enjoy living in Malta and it is not just due to the Mediterranean climate, which results in 300 days of sunshine per year! English is one of the official languages which makes communicating with the friendly and hospitable locals easy. There are a large number of expats already on the island, so there is an excellent social life, with events planned throughout the year. For individuals that have made Malta their home there are a number of established and growing expat communities, such as InterNations, where individuals can share invaluable insights and top tips to make expat life in Malta as easy as possible. The cost of living in Malta is relatively low and a large variety of real estate and accommodation can be found. The medical services are extremely good, with public hospitals and many private clinics available. Malta has one of the lowest crime levels in Europe, and the education system is similar to that of the UK, largely due to the fact that Malta is a former British Colony. There are plenty of choices available and Dixcart can assist in finding the right schools. Malta's economy is considered to be highly advanced, with a steady growth rate, focusing on tourism, foreign trade, financial services, manufacturing and, in recent years, an emphasis on FinTech, Blockchain and egaming. Malta has also taken steps to firmly establish itself in the cross-border fund administration business. end There are no inheritance, wealth, or annual property taxes in Malta, which is why expats do not just venture there for work, but also to retire. Expatriates who take advantage of the Global Residence Programme or the Highly Qualified Persons Scheme are taxed at a reduced rate of 15% on income they earn in Malta (standard income tax in Malta is up to 35%). Certain requirements must be met, so it is important to seek professional advice. Dixcart has an office in Malta, including a Business Centre offering serviced office facilities to businesses and individuals. One of our tenants is an expat who moved to Malta from the North of Italy. Her advice to individuals who are considering relocating to Malta is: "Unless you experience it yourself, you won't know how it is. Each of us have different needs, different requirements, different family situations, different interests. For me island life is great." If you would like further information about what a move to Malta involves, please speak to Dixcart Malta: advice.malta@dixcart.com. 13

16 Why Portugal's Real Estate Wheels Keep on Moving Paladin Real Estate Group Portugal heads the list of most improved nations ever, since the economic recession hit Europe a decade ago. While all its sectors have had solid performances in recent years, real estate stands out on all fronts. Investment options in core, core plus, and value added assets attract investors with a variety of appetites from all around the globe. The reasons behind the real estate growth are well diversified, which suggests the bull market will continue well in the year's to come. Portugal is witnessing a consistent GDP growth since 2015, along with a reduction in its public debt and 1 budget deficit. Subsequently, upgrades to its credit ratings are fuelling investment into the country. The resurgence of the economy can best be seen in the growth of its real estate market. The residential market has exceeded all expectations since 2013 and the sales growth echoes in all areas of the real estate market, including retail, office, hospitality and industrial units. The year 2017 experienced a 50% increase in the cumulative 2 cumulative real estate investment compared to It would be fair to expect another 25% to 50% annual growth by the end of The particular growth in the sector can be explained by a number of factors: Underpriced assets in the market, especially between Tax incentives for foreigners to buy in Portugal. Golden Visa programme providing residency through real estate acquisition. Non-Habitual Residency programme attracting highincome earners to start living in Portugal. Influx of tourists in hospitality and short-term rental units bringing sales to retail establishments. Upgrades to credit ratings, leading to affordable bank loans in Portugal. Growing confidence among Portuguese buyers getting back into the market to own their homes. A growing technology and start up scheme, which brings in employees and demands for office space. 1 2 Portugal GDP , Trading Economics, World Bank DBRS Portugal Real Estate Report 14

17 In addition to the above factors, a number of tax breaks and advantages to benefit both tenants and landlords were proposed in the 2018 State Budget. The abolition of the Income Tax Surcharge, which came into effect this year, is only one of these benefits. Although the bullish real estate market visibly pushed the yields down, they are still higher than most of the other European markets. However, unlike other European countries, like Spain, Ireland, or Greece, Portugal did not have a real estate bubble, in the run-up to the debt crisis a decade ago. Subsequently, the drop in the real estate market led to underpriced assets, which then climbed back to pre-crisis levels 3. While such price climbs in countries such as Ireland and Spain could not prevent the homeowners from carrying negative equity, this is not the case in Portugal. Although the residential price index has been climbing steadily since , Lisbon is still more affordable than most other European capitals. With the resurgence of the economy after the European debt crisis, Portugal came under the radar of global investors for the first time in a long time. It appears the prices will remain elevated as the supply is limited and zoning prevents mega developments ruining the historic architecture of city centres. The fact that the growth does not heavily depend on a single factor, but a number of strong factors, increases the likelihood of having an extended bull market in the real estate sector of Portugal. Paladin is an active player in both commercial and residential real estate markets. Our local team in Portugal performs advisory and syndications on a deal-by-deal basis. With offices in different geographic locations, we cater to both institutional and individual investors, focusing on international real estate investments in both the U.S. and Europe. One particular observation we see in the Portugal market is that residential real estate appreciated faster than commercial real estate over the last few years, and it would be safe to assume that commercial real estate will catch up with residential in the near future. Furthermore, niches such as student housing, senior housing and co-living will have a growing appeal. 3 Association of Estate Agents in Portugal (APEMIP) 4 House Price Index, 4th Quarter 2017, Instituto de Estatistica (INE) 15

18 DIXCART DOMICILES EVENTS2018 S e m i n a r s D u r i n g UPCOMING SEMINARS January PrimeGlobal AP Pan India Sub-regional Conference: Dixcart: 'The UK and Brexit' January February Johannesburg: 'Moving to Cyprus: Citizenship by Investment' 27 February - 5 March March São Paulo: 'Portuguese Golden Visa and Investments in Portugal - Solutions for Brazilian Entrepreneurs' Tuesday 20 March October London: 'A World of Options Await' Thursday 4 October Registration now open: S e m i n a r s January Interlaken, Switzerland: Swiss & Liechtenstein STEP Federation - Alpine Conference: 'Mobility' January April London: Annual Dixcart Seminar: 'Gaining a Foothold in Europe Ahead of Brexit' Thursday 12 April STEP Africa Event April Moscow International Emigration & Luxury Property Expo April June International Wealth Forum Tbilisi 6 June July Istanbul: Libertas Portugal: 'Portugal for Living and Investing' Tuesday 3 July 16

19 DIXCART DOMICILES LIMITED R E S I D E N C E A N D C I T I Z E N S H I P A R O U N D T H E W O R L D U P C O M I N G T R AV E L Over the new few months Dixcart Domiciles Managers will be travelling to and within: Colombia Egypt Estonia India Italy Kazakhstan Mexico Monaco Netherlands Russia South Africa Switzerland Turkey Ukraine United Kingdom USA If you are interested in relocating and understanding the best scheme to suit your needs or would like to meet with one of our Dixcart Domiciles Managers, please contact us: advice.domiciles@dixcart.com. The Dixcart Group is an independent organisation, which has been providing international business support services for over forty-five years. We have eleven offices around the world and have extensive expertise regarding residence schemes in a number of countries. We take time to understand a client's specific needs and then recommend which particular residence scheme or schemes would offer the best solution. We also advise on the restructuring of assets and family wealth that will need to take place when an individual or family is planning to move. Dixcart Domiciles can offer advice and assistance regarding relocation to the following countries, where we have staff in place to help make each move as smooth as possible: Cyprus Guernsey Isle of Man Malta Portugal St Kitts & Nevis Switzerland United Kingdom We can also provide advice regarding other countries which offer attractive residence schemes and the alternative lifestyles that are available. 17

20 This newsletter has been prepared by Dixcart Domiciles Limited for the information of clients and associates. Whilst every care has been taken in its preparation, no responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. Issued September 2018.