THE PORTUGUESE NON HABITUAL RESIDENT (NHR) and GOLDEN VISA (GV) programmes

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1 THE PORTUGUESE NON HABITUAL RESIDENT (NHR) and GOLDEN VISA (GV) programmes AFONSO BARROSO February 1 st 2018 Carlton Club London Abreu & Marques & Associados Afonso.Barroso@amsa.pt

2 THE PORTUGUESE NON HABITUAL RESIDENT (NHR) and GOLDEN VISA (GV) Legal instruments bolstering Portugal s attractiveness as a preferential residential hub and gateway (w/investment) into the European Union (including Schengen) Portugal: Open to the world (Azenhas do Mar)

3 Scope of this address 1.What are these regimes; the particularities and process. 2.The material differences and the benefits. 3.In addition to attracting direct investment into Portugal, how do these matter for a post Brexit Britain. 4.Portugal today: some recent summary information. Lisbon: Outward-looking

The Portuguese NHR Regime The Non Habitual Resident s regime is a Portuguese unilateral regime for relief from international double taxation, with European Union approval.

4 The Portuguese NHR Regime The Non Habitual Resident s regime is a Portuguese unilateral regime for relief from international double taxation, with European Union approval. It works as a means of enabling tax residence in Portugal, with a preferential (as opposed to the Portuguese in general) tax regime. It is, for the time being, a one off, 10 year entitlement starting from the date of application, with the possibility of interrupting and restarting, counting the period of interruption. Bordering the world: (Arrábida beach view)

5 There are NO investment requirements to secure NHR. Applicants must meet a double prerequisite: - To have civil law consent to reside in Portugal; - To not have been tax resident in Portugal at any time, in the five years immediately preceding the date of application; Within the European Union arrangements, most of its citizens are able to reside in other EU jurisdictions without the need for a specific prior consent. Rigour and Reliability: (Portuguese Equestrian Arts School) In contrast, this is not the case for individuals originating from non-eu jurisdictions.

The indispensable substantive requisite is for the applicant to demonstrate they have premises contracted either rented, purchased or merely lent allowing their residence to be in Portugal, from

6 The indispensable substantive requisite is for the applicant to demonstrate they have premises contracted either rented, purchased or merely lent allowing their residence to be in Portugal, from where they will perform their world wide interests. Due process is purposely simple: (i) On an authenticated sample of the applicant s passport, and with evidence of foreign residence (via utility bills) they secure a Portuguese non tax resident registration. (ii) They contract the residential premises and secure attestation of their residency from the municipal authority with jurisdiction. Physical presence on application is required. (iii) They convert, on the back of the foregoing residency certificate, the pre existing non tax resident registration into a fully Portuguese tax resident registration. (iv) They apply, on line, for the NHR status, declaring under oath not to have resided in Portugal in the immediately preceding five years. Habitually, NHR is granted in the range of 15 business days.

7 Careful Planning: Bullfighter in Lisbon s bull ring

8 Careful tax planning with identification of the NHR applicant s sources of income and existing holdings is not only advisable but indispensable. In general terms, the NHR provides for benefits applied in line with two streamlined income criterias. These are: (i) Source (Portuguese or foreign) and (ii) Nature of the income Tax exemption on foreign-sourced income: dividends, interest and other financial income, capital gains (derived from property but not securities), income from self employment and from retirement and pensions; Taxation at a fixed rate 20% - on Portuguese-sourced income of self employment; Taxation at a fixed rate -20%- and employment provided it originates from certain legally classified activities, such as architects, medical doctors, dentists, engineers, liberal, technical and similar professionals, namely company directors, plastic artists, musicians. (Alas: NOT lawyers!)

The foregoing exemptions have particular requirements on nearly all types which, without being complex, require previous careful scrutiny and advice.

9 The foregoing exemptions have particular requirements on nearly all types which, without being complex, require previous careful scrutiny and advice. By way of example: Pensions may be exempt even in the absence of taxation at the source country, if the latter are payable by a non-portuguese tax resident entity; Income derived from Portuguese black-listed jurisdictions will be disregarded from the exemption and CFC rules are likely to apply. Sintra : The village of Byron

10 The GOLDEN VISA (GV) The Golden Visa is no other than a residency by investment programme. It is awardable to individuals who are not citizens of an European Union jurisdiction and meet certain minimum investment requirements, namely in property,cash, or origination of new employment. The Golden Visa is granted initially for a one year period, renewable for one or more two year periods, provided the investment requirement remains valid. In the first year the applicant must spend 7 days in Portugal; thereafter 14 days. After five years, the Golden Visa beneficiary may (at his election) secure a permanent residency visa, ceasing to have to meet any investment requirements. Six years residency entitles the applicant to secure Portuguese nationality, provided other requirements such as language acomplishment are also met.

Minimum investment requirements for the Golden Visa access are, alternatively: Alentejo provincial road : Calm and Peace: (I) 350 000 to 500 000 property acquisition, varying with the status and

11 Minimum investment requirements for the Golden Visa access are, alternatively: Alentejo provincial road : Calm and Peace: (I) to property acquisition, varying with the status and location, namely: age of property; located (or not) in classified urban renovation area; or, (II) in cash deposited and held in a Portuguese resident banking institution (including a branch of a foreign bank with Portuguese physical presence); or (III) Investment creating more than 10 new jobs; or, (iv) in investment in or aid to artistic productions or the up keep and renovation of Portuguese cultural heritage.

Golden Visa applicants must meet the following substantive requirements: (i) Not have been convicted of any offence punishable in Portugal with more than one year s imprisionment; (ii) Not be

12 Golden Visa applicants must meet the following substantive requirements: (i) Not have been convicted of any offence punishable in Portugal with more than one year s imprisionment; (ii) Not be prohibited to enter Portuguese territory nor have been expelled from it; (iii) Not be listed in either the Schengen Information System or with the Portuguese immigration services; Interms of process documentation it is required that the applicant have: (i) A valid passport; (ii) A Schegen visa application; (iii) A clean criminal record certificate; (iv) A consent authorizing the consultation of the applicants criminal record in Portugal; (v) Statements from the Portuguese tax and social security authorities attesting absence of any outstanding debts; (vi) Evidence of posessing health insurance; (vii) Oath statement attesting applicant has met the investment requirements.

Benefits of the Golden Visa are: - Entering and staying in Portugal without need for residency visa application; - Possibility of other

13 In terms of cost, the application for the Golden Visa has the official cost of circa 515; the granting circa 5 147, with renewals at circa where final numbers vary with specific case file content. Benefits of the Golden Visa are: - Entering and staying in Portugal without need for residency visa application; - Possibility of other residency, namely tax residency in another country; - Freely circulate in the Schengen area; - Right to family reunification; - Access to permanent residence (within five years) and, potentially, nationality (six years).

14 NHR and GV are not to be confused. The NHR is a tax residency enhancing programme, aiming to attract highly qualified and reputable individuals to Portugal, by granting a particular type of tax residency that has several conditional tax benefits. Port: The English wine The GV is a residency by investment programme, aiming to attract investment to Portugal, via the grant of a particular, less demanding route to a special civil residential status, requiring residual, ocasional physical presence and allowing other residencies, namely for tax purposes.

For the post Brexit Britain, one of these two types of programmes may come to be particularly useful depending on the - as yet uncertain outcome of the Brexit terms.

15 For the post Brexit Britain, one of these two types of programmes may come to be particularly useful depending on the - as yet uncertain outcome of the Brexit terms. If citizens of the United Kindgom are allowed some form of European Union residence and or nationality entitlements, the NHR may continue to be the preferential instrument of recourse, as it is today. 19% of all NHR s granted to date have been to citizens of the United Kingdom. The NHR has proven particularly attractive to United Kindgom retirees, but not only them. In the case of harsher Brexit terms, for unqualifying British citizens with at least a portion of the European Union entitlements, the Golden Visa programme could be a particularly attractive means to access the Schegen area via its Portuguese member state.

Expo 98 site / The modern Lisbon Portugal today; (a) Is a jurisdiction with double taxation conventions with 115 countries; (b) Has a considerable English-speaking population with a legion of young,

16 Expo 98 site / The modern Lisbon Portugal today; (a) Is a jurisdiction with double taxation conventions with 115 countries; (b) Has a considerable English-speaking population with a legion of young, highly skilled, flexible employees; (c) A 2,6% GDP growth;(expected) State budget deficit below 2% in 2017; GDP comprised of 42% by exports w/ statistics of November 2017 (last available) indicating a 12% growth in exports; (d) Same time zone as the United Kindgom; (e) A wealth of historical links and enforceable international treaties with the United Kindgom.

17 Nazaré giant wave Nazaré s (giant) winter wave: The Place to Surf the future. THANK YOU! Copyright Abreu & Marques 2018

WHY INVEST IN LISBON? Market overview 2017

WHY INVEST IN LISBON? Market overview 2017 Why Lisbon invested in real estate through Golden Visa programme Lisbon is fast emerging as one of the world s most attractive capitals to both live and invest