Jurisdiction: Portugal

Cyprus – Tax Benefits for Expatriates and High Net Worth Individuals Relocating There

Moving to Cyprus – The Benefits for Individuals and Key Advantages of Cyprus

Why Cyprus?

Cyprus is an appealing European jurisdiction, located in the eastern Mediterranean Sea and offering a warm climate and attractive beaches. Situated off the southern coast of Turkey, Cyprus is accessible from Europe, Asia and Africa. Nicosia is the centrally located capital of the Republic of Cyprus. The official language is Greek, with English also being widely spoken. Cyprus offers a palette of personal tax incentives for expatriates and high net worth individuals relocating to Cyprus.

Personal Taxation

An individual becomes a tax resident in Cyprus by spending more than 183 days in Cyprus in any one calendar year. With that being said, they will be taxed on income arising in Cyprus and also on foreign source income.

Any foreign taxes paid can be credited against the personal income tax liability in Cyprus. An additional incentive has been implemented whereas individuals can become tax residents in Cyprus by spending a minimum of 60 days in Cyprus provided that certain criteria is met.

Individuals who were not previous tax residents can also apply for the non-domicile status. Individuals who qualify under the Non-Domicile Regime are exempt from taxation income derived from; interest, dividends, capital gains (apart from capital gains derived from the sale of immovable property in Cyprus), capital sums received from pension, provident and insurance funds. In addition, there is no wealth and no inheritance tax in Cyprus.

Income Tax Exemption for Taking up Employment in Cyprus

  • An exemption of 50% of the remuneration from employment is available for an individual in Cyprus who was resident outside Cyprus before the commencement of his/her employment in Cyprus. The exemption applies for a period of 10 years starting from the first year of employment in Cyprus, provided that the income from such employment exceeds €100,000 per year.

The Cyprus Action Plan for 2022 provides for tax exemptions that apply to foreign highly skilled employees in the Republic and are being extended to a maximum period of 17 years.

The existing 50% tax exemption is also being extended to cover new resident employees, with an annual employment salary of €55,000 or more.

The relevant legislation for the extended tax exemption is yet to be submitted and approved.

Nil/reduced Withholding Tax on Income Received from Abroad

Cyprus has more than 65 tax treaties that provide for nil or reduced withholding tax rates on; dividends, interest, royalties and pensions received from abroad.

Tax Advantages for Pension Lump Sums and Income

Any lump sum received as a retirement gratuity is exempt from tax.

A Cypriot tax resident individual receiving pension income from abroad may choose to be taxed at a flat rate of 5%, on amounts exceeding €3,420 per year.

Additional Information

If you would like any additional information regarding the tax benefits available for expatriates and HNWI’s relocation to Cyprus, contact the Dixcart office in Cyprus: advice.cyprus@dixcart.com

Publication

8 December 2022

Reference

IN875

Country/Countries

Living in Cyprus.

For further information

Please contact Charlotte McGonigle.

Portugal – The New Digital Nomad Visa

The Portuguese Government announced the introduction of a new visa for digital nomads, which came into force on the 30th October 2022, allowing remote workers and/or self-employees to pursue their profession in Portugal.

Portugal is one of the oldest countries in Europe with striking historical and cultural attractions, an idyllic climate, superb cuisine, a low cost of living, low taxes and is regarded as one of the safest countries in the word to live and work. Portugal is destined to become a new oasis for digital nomads.

Overview

In October 2022, the Portuguese Government implemented, article 61.ºB, the Digital Nomad Visa which allows, foreign professionals to provide their services remotely, either as a subordinate worker (employee), or as an independent worker, in Portugal, for the maximum period of one year.

Each individual needs to provide; a work contract from a company based outside of Portugal, or a company incorporation contract, or proof of being self-employed and a commitment to register as an independent worker. 

The most important requirement to obtain the Portuguese Digital Nomad visa is the salary. Each applicant needs to demonstrate that they earn the equivalent of four times Portugal’s minimum monthly wage, which is €705, therefore making the monthly income required a total of €2,820. Portugal’s minimum monthly wage is expected to increase to €760 euros in 2023.

Individuals also need to be a citizen of a non-European country, in order to apply for the Digital Nomad Visa.

What is the difference between a D7 Visa and the Digital Nomad Visa?

The Digital Nomad Visa is an alternative to the D7 Visa. In order to apply for the D7 Visa, revenue must come from passive income, such as real estate investment or a pension.

To obtain the Digital Nomad Visa, passive income is not required – the salary is the important factor, as detailed above.

Step 1: Portuguese Tax Number and Opening a Portuguese Bank Account

To apply for the visa, individuals need to prove that they have sufficient means of subsistence in Portugal for the period of their stay. That means a Portuguese bank account, and consequently a Portuguese tax number, are both required.

A deposit of the minimum wage, multiplied by the number of months the individual is staying in Portugal, is then mandatory as evidence to the Portuguese Immigration Authorities.

Step 2: Collect Documentation

Gather all of the documents necessary to be submitted at the appointment at the Portuguese Consulate:

General documentation to request a visa

  1. Proof of legal residency on the country where you are applying
  2. Travel insurance covering necessary medical expenses
  3. Return airline ticket
  4. Criminal clearance record
  5. Proof of accommodation in Portugal for the period of your stay
  6. Proof of means of subsistence in Portugal

Specific documentation for the Digital Nomad Visa

  • In the situation of subordinate work, i.e., as an employee, one of the following documents is required:
    • Work contract; or,
    • Promise of work contract; or,
    • Declaration by employer confirming the labour link.
  • In the situation of independent professional activity, one of the following documents is required:
    • Contract of incorporation of company; or,
    • Contract of provision of services; or,
    • Written proposal of provision of services contract; or, 
    • Document confirming the services to be provided to one or more entities.
  • Proof of average monthly income for each of the last three months, with a minimum monthly value, equivalent to four Portuguese monthly minimum wages.
  • Document confirming your tax residence.

Step 3: Legal Formalities

The next step is to make an appointment at the Portuguese Consulate, where a meeting will be organised to submit the documentation and collect biometric data for the Visa.

Step 4: Final Steps

After analysis of the application is complete, the Digital Nomad visa is issued for the period of the work contract, up to a maximum period of one year.

Advantages

Apart from tax benefits and other advantages, Portugal has 3 cities in the Nomad List of top 10 best cities in which to work remotely. 

Lisbon is rated as the best city, whilst the island of Madeira also rates highly. Important factors include internet speed and entertainment, specific communities with a social structure, co-workspaces, and medium-term accommodation, each of which are important to Digital Nomads.

Madeira established the first Digital Nomad Village in Ponta do Sol, where Digital Nomads enjoy free workspaces, with high-speed broadband internet, spectacular scenery, and a vast array of activities.

Why Should You Reach out To Dixcart?

Taken into account that the Digital Nomad Visa is a very recent option as a visa in Portugal, it requires guidance from experts with sufficient experience and knowledge of immigration law.

 Information is available on the internet that may assist you in obtaining the Digital Nomad Visa on your own, but this may come with many hurdles that our team are familiar with and that can easily be avoided with the help of a professional.

 In addition, Dixcart can provide tax planning, among other services, that can assist when relocating. Tax planning is considered necessary before your actual move to Portugal, as arriving unprepared may result in unfavourable tax consequences that could have easily been avoided.

Additional Information

Please reach out to Dixcart Portugal for additional information: advice.portugal@dixcart.com.

Publication

1 December 2022

Reference

IN872

The End of the Portuguese Golden Visa is in Sight

News was announced in November 2022, when the Portuguese Prime Minister Antonio Costa indicated that the Portuguese golden visa is “no longer justified” – hinting at the prospect that the end of the famous residency-by-investment programme may be in sight.

History

The Portuguese golden visa programme was introduced in Portugal in 2012, to attract much needed foreign investment into the country. It came at a time when government effort was needed to fix Portugal’s public finances, following the 2011 bailout from the European Union.

So far it has been one of the world’s most popular residency-by-investment programmes, raising €6.6 billion from over 20,000 individuals (according to the Portuguese Immigration and Border Services), with a spectrum of benefits, including  the right to live, work and study in Portugal and visa-free travel within the Schengen Area for a period of five years.

The biggest investors have been from China, however, it is expected that Americans are poised to surpass them in 2022, for the first time.

Emotional Reaction

The potential change is prompting an emotional reaction from many, who are considering investing into the programme and  who are keen to ensure that their ‘plan B’ residency option is in place, before the expiry of the Portuguese golden visa.

Likely to be Advanced Warning of a Timeframe

It is important to note, though, as we have seen in the past, that changes made in the Portuguese golden visa programme typically have a timeframe applied during which the opportunity to apply for the programme will continue. Currently there is no confirmation in terms of when we may expect to see the end of the Portuguese golden visa, however, it is very likely that the timeline is finite and will come to an end sometime in the future.

Political Commentary

The likelihood of an advanced warning is supported by the fact that, earlier this year, there was a proposal to end the golden visa programme which was rejected. More recently, on 22 November 2022 the socialist party, which forms the current majority government in office, rejected the communist party’s proposal to introduce the end of the golden visa in the state budget for 2023.

This is despite the fact that, as mentioned earlier by the Prime Minister, the Government is evaluating the possibility of ending the regime. It is important to note, however, that a working group has been appointed to analyse the impact of the programme in the country and that this is a topic with a moving target and susceptible to change in the future.

What Action Should be Taken?

Investors who wish to enter the visa programme should do so sooner rather than later, to avoid the rush that was seen at the end of 2021, when the golden visa investment thresholds increased, with some losing out on being able to enjoy the lower investment rate, due to the influx of applications seen at the eleventh hour.

For those who have already invested in the Portuguese golden visa programme, the benefits of having the visa will remain and the commitment to those who have gained a visa, before the end of the visa programme, will be honoured.

Benefits Available Through the Golden Visa Programme

Benefits for those whose applications have been accepted, include the following:

  • Visa-free travel in Europe’s Schengen Area and the right to live, work, and study in Portugal
  • Eligibility to apply for citizenship after five years as a legal resident while keeping other citizenship(s)
  • Low physical presence requirement: 7 days during the first year of residence and 14 days for the two subsequent years, which can count towards citizenship eligibility after five years
  • Excellent international and Portuguese schools and universities
  • High quality of life, local cuisine and wines, rich culture, mild climate, and a high level of security
  • International quality healthcare clinics and hospitals
  • A country where people actually want to live and bring up their families, compared to some other jurisdictions who are offering other types of CBI programs
  • Only 7 days on average per annum stay in Portugal is required, over the five year golden visa period

Additional Information

If you have any further questions regarding the golden visa programme, including the investment options available, please reach out to Dixcart Portugal, for more details: advice.portugal@dixcart.com

Having an experienced team to assist is paramount to ensure a steady and efficient process.

A golden visa application typically involves more than just the actual visa submission, and depending on the investment option selected, may require an experienced team of professionals such as Dixcart to assist you with various matters relating to the application.

Publication

1 December 2022

Reference

IN870

Options and Steps for the Portuguese Golden Visa Residence by Investment Programme

The Golden Visa Residence by Investment Programme was introduced in 2012 in Portugal, and is a five-year Residence Permit Programme, after the first residency card has been issued, for non-EU nationals. Portugal is a full member of the EU, and therefore successful applicants of the Golden Visa Residence by Investment Programme benefit from visa-free access to Europe’s Schengen Area.

The permit requires a low physical presence requirement with an average stay of just seven days a year, or fourteen days in a period of two years in Portugal, over the five-year period. Benefit of the programme include the right to live, work and study in Portugal, with the key benefit of obtaining citizenship at the end of the program and the entitlement to European citizenship.

Portugal has, in recent years, extended its excellent reputation, with many discovering this beautiful Mediterranean region in Europe.

It is considered one of the world’s most globalised and peaceful nations, with a high quality of life. It has been ranked highly on several index rankings (including that of education and living), and offers a warm climate, superb cuisine, and a relatively low cost of living.

Portugal is a place that families want to move to and where businesses can expand and grow, with the forecast Portuguese growth rate expected to exceed the European average.

Step 1: Hire a Legal Advisor

The Golden Visa programme is a relatively complex visa that requires an expert with sufficient experience and knowledge of the programme. Things to consider when selecting a legal advisor are experience in the market specifically in the Golden Visa programme, and the track history of the firm.

Once a legal advisor is appointed, they will assist you in hiring a tax representative, the opening of a Portuguese bank account, and will explore the different investment programs options available in Portugal with you.

Step 2: Choose an Investment Programme

The investment options available under the Golden Visa programme are a capital transfer, a property acquisition, or investment into a business.

  • Capital Transfer

The options available in relation to a capital transfer are:

  1. A capital transfer of €1.5 million into a Portuguese bank account or an approved investment
  2. €500,000 for the acquisition of investment or venture capital fund units committed to the capitalisation of companies incorporated under Portuguese law, with a maturity of at least five years and with at least 60% of the investment portfolio in companies with a registered office in the national territory of Portugal
  3. €500,000 for research activities of public or private entities that are part of the national scientific and technological system (€400,000 in a low population density area*)
  4. €250,000 in support of artistic production or in the recovery or maintenance of national cultural heritage (€200,000 in a low population density area*)

Property Acquisition

The two options in terms of property acquisition are:

  1. 350,000 minimum real estate purchase for the refurbishment of residential properties older than 30 years or in an area of urban regeneration, including the cost of renovations (residential property is limited to designated interior areas), (€280,000 in a low population density area*)

*A low population density area is defined as less than 100 inhabitants per km², or with a GDP per capita lower than 75% of the national average.

Business

The options for the establishment of a business are:

  1. Creation of a minimum of ten new jobs (eight new jobs in a low population density area*)
  2. €500,000 for the incorporation or increase of the share capital of a company that is registered in Portugal, creating, or maintaining a minimum of five permanent jobs for a period of three years

Step 3: Legal Formalities

The next step is preparing all of the necessary information to be submitted to SEF (Portuguese Border and Immigration Service). Some specific documents will be requested by your legal advisor, depending on the type of investment that is chosen, together with other documents, including criminal record details and tax number of the country of origin.

Step 4: Final Steps

Once all of the documents have been provided to your legal advisor, these are submitted to SEF for acceptance. Once accepted, you will be notified to schedule a biometric appointment at SEF, and after this procedure has been completed, will be followed by a residence card which represents the golden visa.

Renewals need to take place every two years, with documentation being updated and biometric appointments to take place in Portugal.

Requirements

The following criteria are applicable for the golden visa programme:

  • Minimum average seven day spend in Portugal per year, over the five year period, after the concession and until the first renewal
  • Minimum fourteen day spend in Portugal for the period of two years between renewals
  • Maintain the investment for a five year period, after receipt of the residency card

Advantages

After the five year residency programme is completed, the investor can keep renewing the temporary residency card as long as wanted while keeping the investment, apply for permanent residency in Portugal where a five year residency card will be issued, or apply for Portuguese citizenship and get a Portuguese passport.

For the second two options, it is mandatory to pass a A.2 level Portuguese exam. 

Tax Consequences

The tax consequences for each investment option vary depending on the investment programme selected. Please refer to the following articles which include more details regarding the tax consequences that need to be considered:

Additional Information

If you require additional information regarding the Golden Visa Programme, including the investment options available and the next steps to take, please contact Lionel de Freitas at the Dixcart office in Portugal: advice.portugal@dixcart.com 

Publication

19 October 2022

Reference

IN862

Why the Portuguese D2 Visa, known as the Entrepreneur or Business Visa, is the “New Golden Visa”

Why Portugal?

Portugal is currently a topic of conversation, across the world, for several reasons. It is more than just the sunny weather, low cost of living, great food, variety of world winning wines and charming people, that everyone is speaking about.

The reason is simple: Portugal is a place people actually want to live and can see the possibility of raising a family and doing business in. A combination of factors now encourages leading entrepreneurs to establish and grow their companies in Portugal.

Portugal- A Few Facts and Figures

Portugal is projected to exceed the European economic growth forecasts, at least until 2024. It has been ranked as one of the best places to live according to the Global Peace Index (currently ranking 6th on the 2022 Global Peace Index), offers very good healthcare according to the Health Care Index (with an average life expectancy of 82.47 years in 2022), and is ranked highly from an education point of view.

Traditional Portuguese Universities have become “Top Ranking” International Universities, the  “Universidade Católica Portuguesa” and “Nova SBE” were included as two of the best universities in the world by the British newspaper, The Financial Times, in 2018.

It is without a doubt a place that ticks the boxes when choosing a place to live.

Portugal’s Golden Visa – Evolution

The Golden Visa program became increasingly popular after its introduction, and attracted world attention to Portugal. The world came to learn about Portugal and having the Golden Visa, as essentially a plan B; not having to move to Portugal to be eligible, but keeping it as a potential second option for the future if things do not work out where individuals currently live, people have now shifted their attention to plan A; making a permanent move to work and live in Portugal.

Of course, moving to Portugal requires more than just a visa and there needs to be economic reasons  to do so. It is becoming rapidly apparent that the economic potential is vast and powerful in Portugal, especially when taking into account that it is a small European country on the tip of the western continent.

The D2 Visa – Becoming ‘Golden’

The D2 visa is the real Golden Visa, as it not only allows you to benefit from living in Portugal, with unlimited access to the Schengen area, but provides the opportunity to benefit from access to one of Europe’s best places to establish a business, by living there.

Portugal has become known as the California or Silicon Valley of Europe. Successful global tech events such as the Web Summit have now taken place in Lisbon for several years running – testament to the fact that it is a place that is finding the right people with the right mindset.

The D2 visa is essentially an entrepreneurial visa.

D2 Visa: The Criteria

Requirements include the following:

  • Be a non-EU national
  • Have sufficient funds to support yourself during your stay in Portugal
  • Incorporate a Portuguese (or Madeiran) company
  • Prepare a business plan
  • Hold a clean criminal record
  • Be willing to reside for more than 183 consecutive days in Portugal (or not be absent from Portugal for more than 8 non-consecutive months in any single calendar year)
  • Show proof of a place to live in Portugal
  • Be willing to become a fiscal resident in Portugal

Why Should You Reach out To Dixcart?

We are celebrating our 50th anniversary this year, with Dixcart having had a presence in the Portuguese market, for over 30 years. We have thus dealt with many structures and arrangements from start to finish, working with international investors and families from many corners of the earth. As a trusted service provider, we look forward to welcoming you as a client.

In addition to assisting entrepreneurs to select the most appropriate legal route to structure their activities in Portugal, Dixcart also provides:

  • A complete range of services relating to the incorporation of a company and its day-to-day obligations; from bookkeeping through to tax compliance.
  • Assistance to entrepreneurs and their families in relocating to Portugal and in obtaining the necessary residence permits.

Additional Information

If you require additional information regarding the D2 visa and the types of company and tax frameworks available in Portugal and/or the types of visa and residence options, please contact Lionel de Freitas at the Dixcart office in Portugal at: advice.portugal@dixcart.com 

Publication

27 September 2022

Reference

IN854

What are the Advantages of Portugal’s Non-habitual Residents Regime?

Background

Portugal’s Non-Habitual Resident Regime (NHR) attracts thousands of new residents to Portugal, by offering competitive tax rates, and in the right circumstances, full tax exemptions on certain foreign income, for ten years.

Visa Opportunities in Portugal

Portugal is an attractive and popular location. Not only is it undoubtedly a beautiful country, offering an attractive lifestyle and way of life, it also offers a temporary residence visa for digital nomads, which freelancers and entrepreneurs often take advantage of, and the popular Golden Visa and the Non-Habitual Resident (NHR) programme, which when combined together, offer an interesting route for individuals to move to Portugal and enjoy very agreeable tax advantages once they relocate.

Relevance of Golden Visa and the Non-habitual Residents Regime

Portugal’s Golden Visa is less important for EU citizens, as they already have the right to live in Portugal without formal immigration or investment requirements needing to be met, but the buzz and energy in Portugal has sparked interest amongst many.

Portugal is currently attracting the affluent, as well as a wide range of other individuals, through the favourable tax regime: the NHR, which is a major motivator for both EU and non-EU citizens. 

The Non-Habitual Resident Regime Explained

NHR lasts for 10 years and is available to EU and non-EU citizens who become tax resident in Portugal, provided they have not been resident in Portugal for the previous 5 years.

Individuals can enjoy non-habitual status, whereby income derived from employment or independent individual services, from a domestic (Portuguese) source, is taxed at a special flat rate of 20%, provided the income is from high value-added activities or are of a scientific, artistic, or technical nature.

A tax exemption may apply to income derived from a foreign source.

Criteria to Meet NHR Status

The following criteria must be met:

  • The right to reside in Portugal, either by being an EU/EEA/Swiss citizen, or through schemes such as the Golden Visa programme.
  • Must not have been resident in Portugal within the last five Portuguese tax years.
  • Must not have been a Portuguese tax resident in the five years prior to taking up residence in Portugal.
  • The individual must have a place to live in Portugal, this could be the rental of a modest apartment.
  • To apply for NHR, a fiscal representative, such as Dixcart, needs to be appointed in Portugal.

Additional Information

If you would like more information, and/or would like to instruct Dixcart to act as your fiscal representative, please get in touch today: advice.portugal@dixcart.com.

Publication

16 August 2022

Reference

IN850