Portugal offers golden visas to rich foreigners

http://www.theguardian.com/world/2013/dec/10/portugal-golden-visas-housing-market

Version 0 of 1.

Pascal Gonçalves, who started the Casa em Portugal (House in Portugal) estate agent's, soon realised that the future of his venture depended on what happened abroad. Debt and austerity measures were threatening to swamp his business in Lisbon, Oporto and on the Algarve coast.

So in 2010 he opened a branch in Paris, and another one in São Paulo, Brazil, the following year. In 2012 he opted for Caracas and Luanda, the capital cities of Venezuela and Angola, respectively. He told them about the attractive houses and flats in his home country, with their characteristic azulejos (painted, tin-glazed) tiles.

In October 2012 Pedro Passos Coelho's centre-right government introduced the vistos dourados (golden visas) scheme in a bid to boost VAT revenue and halt the drain on capital. Foreigners purchasing property worth more than €500,000 ($685,000) would qualify for a five-year visa to Portugal, and consequently the European Union. Gonçalves had backed the right horse.

"Since then we've been booming," Gonçalves says with a smile. So much so that in July he hired Yansi Xu to represent the firm in Shanghai.

"The Chinese are our best customers, ahead of Brazilians and Angolans," he adds.

Buying property is not the only way of qualifying for a visa and access to the Schengen area. Another option is to make an investment exceeding €1m or giving rise to 10 new jobs in Portugal.

The rules, published a year ago, took some time to gain public attention, but middle-class buyers in emerging countries have certainly got the message. According to the Portuguese foreign ministry, quoted by AFP, 356 residence permits have been granted to investors, including 279 Chinese, 16 Russians, 10 Brazilians and nine Angolans.

This adds up to about €222m invested in Portugal. "It's crazy," says Michel Veloso Viera, a lawyer who assists foreigners with the paperwork. "I'm getting an average of 10 applications a week from Chinese families."

Nor is Portugal the only country to be soliciting rich immigrants. Spain, Cyprus, Greece and the Netherlands have deployed similar schemes, in a bid to make up for falling investment, fill homes left vacant by the crisis and kickstart consumption.

At a time when immigration is such a sensitive issue, this initiative, endorsed by Brussels, may seem surprising. Particularly as after five years a golden visa may lead to Portuguese nationality, Veloso Viera explains.

Yet there has been little criticism of the scheme in Lisbon, apart from the leader of the far-right National Renovator party, José Pinto-Coelho, who claims that his country is "prostituting itself". So far even the Socialist opposition has tacitly approved the move. "We're adopting a cautious stance. The origin of funds must be checked, but it does encourage foreign investors, and if it can help our country ..." says the Socialist spokesperson on economic affairs.

The priority is to get Portugal back on its feet. Having survived since 2011, thanks to financial assistance worth €78bn from the International Monetary Fund, the European Central Bank and Brussels, the country is keen to see the back of the troika as soon as possible.

On the whole the Portuguese do not resent the tax breaks awarded to foreigners, even inside the EU. Although families are suffering from austerity policies, which have axed bonuses and increased tax, they are not unduly bothered by the idea that physicians, architects, senior executives and company directors – and all the others on the list of high added-value professions – settling in the country should qualify for a 20% cap on income tax.

In France, where exasperation at rising taxes is particularly acute, the scheme seems appealing. "There's not been a sudden rush, but certainly growing interest," says Carlos Vinhas Pereira, the head of the Franco-Portuguese Chamber of Commerce and Industry.

Olivier, who operates a string of salad bars in fashionable Paris neighbourhoods, is adamant that the tax incentives did not prompt him to "drop everything" and start the same venture in Lisbon, about which he knew nothing a year ago. It all started, he maintains, with a national insurance inspection last January during which he and his employee were "treated like dirt".

He was so disgusted he decided to move to Portugal, citing the "booming travel trade" in Lisbon, but also the "low wages, sunshine, cheap rents" and direct flights several times a day. Sufficient to convince him to leave with his wife and children in January.

This article appeared in Guardian Weekly, which incorporates material from Le Monde

Our editors' picks for the day's top news and commentary delivered to your inbox each morning.