18 May 2024

Portugal’s vision for tomorrow 

Foreign Direct Investment
| The European |

The focus of Portugal’s residency programmes has shifted to company and job creation, R&D, and philanthropy, as the nation continues to build on Lisbon’s recent EU accolade for innovation

An equitable tax landscape with no wealth tax, no inheritance tax, an attractive tax treatment of investment income and double taxation treaties with 79 countries has consistently made Portugal an attractive place to work, live and invest. Indeed, a Portuguese passport ranks joint fourth in Henley & Partners’ Global Mobility Report, with visa free access to over 191 countries.

For years, Portugal’s Non-Habitual Residence (NHR) scheme has been a cornerstone of its appeal to international residents. Offering generous tax exemptions and favourable rates for a decade, the NHR programme drew a wave of expatriates seeking both financial advantages and a high standard of living. However, recent changes have marked a shift in Portugal’s residency strategy.

The announcement of the NHR programme’s reform last autumn signalled a turning point. While existing participants were granted extensions, new applicants faced different requirements, prompting the introduction of the Incentivised Tax Status (ITS) programme in January. Offering a 50% tax exemption for five years, ITS opens doors for individuals seeking residency through employment or freelance opportunities.

Similarly, Portugal’s Golden Visa, although no longer accessible through property purchases, in its new form encourages investment into areas important for Portugal’s continued growth with the focus shifting to investment funds, job and company creation/investment, research and development, and philanthropy. 

Portugal’s choice of accessible VISA options also include; the D7 or Passive Income Visa, the most popular with retirees; the D3 is a highly skilled working visa; and the more recent D2 start-up Visa and the increasingly popular Digital Nomad Visa. Extended stays at Martinhal Lisbon Oriente have so far proved popular across the board with people wanting a Lisbon launch-pad or to explore their options. 

Martinhal Residences offer contemporary newly built luxury apartments and penthouses near to the Park

Embracing science and innovation

With over 2,000 registered startups, Portugal has more startups per capita than anywhere else in Europe, with Lisbon being the hub. Buoyed by the enormous success of the tech sector in Portugal, the government is doubling down on its focus into science and tech with a special new tax incentive designated to Scientific Research and Innovation. To be eligible individuals need to become tax residents; have not resided in Portugal for the past five years and be involved in specialised science, academic, and advanced R&D. They will receive a flat tax rate of 20% on income in these areas and exemption on any foreign sourced income.  

Portugal has a thriving enterprise sector with many large corporates basing their European HQs in Lisbon and impressive start-ups with 12 unicorns and counting. At the end of 2023, the multi-million-euro project funded in part by the EU; the Innovation Centre of the Instituto Superior Tecnico was inaugurated in Lisbon by the prime minister. The state-of-the-art 24-hour study space will focus on technology, research, and innovation. In November, Lisbon was also awarded the title ‘European Capital of Innovation’ by the European Commission and the city is putting in place a new strategy to develop large-scale companies and connect technology with culture, sustainability, and citizen engagement. 

In Lisbon Oriente – the eastern quarter of the city close to the airport, we have seen a huge amount of growth with new announcements, for example the HQ of Portuguese state bank Caixa Geral de Depositos will be relocating to Parque das Nações, and close by new residential and business district, EXEO where BNP Paribas will be based. Then United Lisbon, part of Edu Hub Lisbon continues to evolve with the development of additional space and facilities which serve not only the school but as a thriving ecosystem for creativity, learning and living. In the past few months alone, we have seen a threefold increase in visiting international study groups from leading international universities and MBA programmes.

Lisbon’s allure endures

Portugal benefits from excellent geostrategic position between Europe, America and Africa and serves 137 flight destinations, as well as having one of the highest levels of English proficiency globally.  With healthcare under pressure in so many places, Portugal by comparison has some of the best quality healthcare in the world. It was recently ranked number twelve by the WHO (World Health Organisation) and No.1 in a survey on healthcare provision by International Living across standard of care, efficiency, and cost. Here in Lisbon Oriente, there is a full range of traditional, functional, and alternative healthcare providers right on our doorstep, as well as a leading private hospital CUF Descobertas, moments away.

From a real estate perspective, Lisbon represents excellent value in price per square metre compared with other European centres. With a possible slowdown in new projects being built, Martinhal Residences represents a rare opportunity to own a unique typology and range of upper floor, penthouse formats with round-the-clock hotel-style service, ten minutes from the airport, and the best river views. 

When you add the low living costs to the high standard of living; Lisbon’s 300 days of sunshine; political stability, safety, and security (No. 7 in the World Peace Index); the warmth and friendliness of its people; favourable residency and tax options; you can see that Lisbon very much still has it. 

The undeniable impact of foreign direct investment underscores the positive influence of Portugal’s residency programmes on its economy and society. 

Further information

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