Plan and Deliver
With over 20,000 British citizens currently living in Portugal and numbers increasing on account of Brexit, what does 2021 and beyond hold in store for property buyers looking to put down more permanent roots?
The latest edition of the luxury property magazine Abode2 counts on with useful pointers for British citizens willing to invest and reside in Portugal after Brexit provided by MATLAW’s managing partner Joana Neto Mestre.
Read the full interview and find out more here (p. 120,121).
Could Brexit see the end to the automatic right of the British to reside in Portugal? No. Portugal is and has been one of the UK’s favourite destinations well before the creation of the European Union, with many third-country nationals residing here too. Brexit will assign the UK to ‘third country status’, but UK nationals will still be able to reside in and relocate to Portugal.
How might tax liabilities be affected for those who currently own a holiday home? It’s mandatory for non-EU citizens who own a holiday home to have a tax representative based in Portugal. This tax representative will correspond with the Portuguese Tax Office, receive the property owner’s tax bills and assist with respective payments within required deadlines. Tax representation is a service provided by the property owner’s lawyer, as it concerns privileged information and the management of clients’ funds.
Portugal has strong historical ties with Britain – does this make it easier to gain residency status? As always, Portugal will continue to welcome British nationals. For the moment there are no ‘special rules’ for residency applications post-Brexit and therefore the Portuguese legislation on access and residency status of thirdcountry nationals still applies.
As we approach the deadline for a BREXIT deal, has there been an increase in property transactions from buyers keen to secure residency status? Many clients have fast-tracked property investment and relocation decisions in order to qualify for Portuguese residency before the end of the transition period. Together with the lockdown imposed by Covid-19 and the possibility to work remotely, more and more people are looking to buy a second home in Portugal to enjoy longer periods here.
What are the likely changes for those wanting to buy a holiday home in Portugal, but not reside there full-time? UK nationals travelling to Portugal to spend time in their holiday homes will be expected to meet the same entry requirements applicable to non-EU citizens, since owning a property does not grant any special entry rights. For the time being, British passport holders can travel for touristic purposes without a Schengen Visa and stay for a period of up to 90 days during a 6 month timeframe (renewable for another 90 days). In addition, as with other third country nationals, those individuals will be required to have international travel insurance with healthcare cover, proof of income (subsistence cover) during their stay, as well as return flights home booked and proof of accommodation.
How long does the conveyancing process take? It depends significantly on the financing and structure of the transaction. It’s possible to successfully complete a property purchase in two weeks, but on average and based on our experience, it takes approximately two months.
Is the ‘Golden Visa’ programme a popular way of securing residency status? The ‘Golden Visa’ programme is very attractive for third country nationals as a means of obtaining Portuguese residency (extendible to applicant’s relatives) without the need to stay in the country for more than few weeks each year and while still being able to capitalise on a second home investment. On completion of the Brexit transition period, UK nationals will qualify for this programme.
What are the main challenges for those in the UK wishing to invest in Portugal should there be a no deal Brexit?Asides from travel and entry requirements (which might be revised in the near future, by an agreement between the UK and the EU), a no deal Brexit will have no signicant impact on real estate investment. From a tax perspective, the property transaction tax, stamp duty and property tax due, won’t differ between EU and non-EU buyers. However, the applicable tax framework for capital gains generated upon a property sale varies, depending on whether the vendor’s tax residency is within or outside of the EU.