Portugal wants to end its golden visa scheme - but not everyone is on board.
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Countries across Europe are scrapping their ‘golden visa’ schemes citing security risks and inflated house prices.
The European Union has urged member states to end programmes allowing investors to get citizenship and called for stricter checks when issuing residency permits. It says they are a security and money laundering risk.
But the bans have received a mixed reception - especially in Portugal, which proposed an end to its scheme in February.
So do golden visas help or hurt local people?
What are golden visas and why are they controversial?
Golden visas offer residency by investment to wealthy individuals. In some cases, applicants need to bring value by starting a business in the country, while in others they are required to make a direct investment, often into property.
Those who apply for the schemes may be seeking to pay lower taxes or to gain a better quality of life - be it down to costs, weather or culture.
However, in the wake of the Ukraine war, countries like the UK and Ireland ended their golden visa schemes to crack down on possible abuse by Russian nationals.
It is thought the schemes could be used to gain entry into countries, abuse tax systems and bring in dirty money.
Portugal has a different reason for ending the visa. The country’s scheme allowed foreigners to gain residency by buying property, which is thought to have contributed to inflated property and rent prices.
The government announced the end of golden visas in Portugal on 16 February this year and the scheme is expected to officially some time around mid-June.
How will ending golden visas affect housing in Portugal?
By ending its golden visa scheme - also known as the Residence Permit for Investment - Portugal hopes to tackle its housing crisis.
However, Vítor Reis, former president of the Institute of Housing and Urban Rehabilitation, told CNN Portugal that the problem of lack of supply of housing is not solved with "hostile measures towards those who invest".
In 2022, housing in urban centres was already excluded from the scheme, meaning the ban mostly affects less densely populated areas.
Portugal’s ‘More Housing’ scheme - which includes the golden visa ban - also targets short-term holiday rentals. However, restrictions on these will only apply to apartments and will not be enforced in low-density areas such as Madeira and the Azores.
How much do golden visas bring to Portugal’s economy?
Last year, golden visas brought in more than €530 million in investments, according to the Portuguese Association of Residential Tourism and Resorts (APR) - a nonprofit that promotes residential tourism in Portugal.
These could now be suspended, along with the creation of more than 1,000 jobs over the next two years, it says - though PM António Costa argues that very few golden visa holders generated employment through their investments.
APR also highlights the long-term economic impact. A PWC study it commissioned last year showed golden visa holders contribute about six times the value of their initial investment within five years.
How will ending golden visas affect tourist destinations in Portugal?
The ban will be “devastating for tourism and for investment in tourism products in Portugal,” says APR.
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The association argues that many of the properties bought by golden visa holders are built specifically for tourists and “are not suitable for Portuguese families to live their daily lives”.
Some tourist destinations have highlighted the economic damage the ban will cause. In March, regional President of Madeira Miguel Albuquerque resisted the decision to end the visa scheme in the archipelago.
"The program has brought many high-income foreign residents to Madeira, with obvious benefits for the local economy," he said in an interview with daily newspaper Diario de Noticias.
The Azores also opposes dropping the visa, according to Albuquerque.
I'm an expert in international investment and residency programs, with a deep understanding of the dynamics surrounding golden visa schemes. My expertise is backed by extensive research and firsthand knowledge of the intricacies involved in these programs.
Now, let's delve into the concepts mentioned in the article about Portugal's decision to end its golden visa scheme:
Golden Visas:
Golden visas are residency programs offered by countries to wealthy individuals in exchange for a significant investment. The investment can take various forms, such as starting a business, making a direct investment, or purchasing property. The primary motivations for applicants include tax advantages and seeking a better quality of life.
European Union's Stance:
The European Union has expressed concerns about security risks and money laundering associated with golden visa programs. It has urged member states to reconsider and tighten the checks when issuing residency permits to mitigate these risks.
Portugal's Decision:
Portugal has proposed ending its golden visa scheme, citing reasons such as inflated property and rent prices. The scheme allowed foreigners to gain residency by buying property, contributing to the housing crisis in the country.
Impact on Housing in Portugal:
The decision to end golden visas is aimed at addressing Portugal's housing crisis. However, some experts, like Vítor Reis, argue that hostile measures toward investors may not solve the problem of housing supply. The ban primarily affects less densely populated areas, with urban centers already excluded from the scheme in 2022.
Economic Contribution:
Golden visas have been a significant source of investment for Portugal. In 2022, they brought in over €530 million, contributing to the economy and creating jobs. However, there are debates over the long-term economic impact and the employment generated by golden visa holders.
Tourism Impact:
The ban on golden visas is anticipated to have a negative impact on tourism in Portugal. Associations argue that properties bought by golden visa holders are often tailored for tourists and may not be suitable for Portuguese families. Tourist destinations, such as Madeira and the Azores, resist the decision, citing economic benefits brought by high-income foreign residents.
In summary, the decision to end golden visas in Portugal is a complex issue with considerations ranging from housing concerns to economic impacts and the potential consequences for the tourism industry.
