Last Updated on January 19, 2024 by Laila Oliveira
This new year brings new and unique opportunities for investing in Portugal and a promising environment for investors seeking growth and diversification. Whether you’re a seasoned investor looking to expand your portfolio or someone considering investing in Portugal for citizenship, we’ll unravel what makes it an attractive destination for strategic investments!
From Portugal’s GDP growth to government incentives, we’ll give you a comprehensive understanding of all that contributes to the allure for investors. Stay with us till the end because we’ll delve into the benefits and legalities of investments to add an extra layer of strategic value to your investment endeavors. Happy reading!
Overview of Portugal’s economy
Portugal’s consistent economic expansion created a diverse economy of export-oriented strategies and investments. Its investments made up 21.3% of its Nominal GDP in September 2023, increasing from the 20.2% ratio of the previous quarter.
This strong economy is reflected in the country’s employment rate of 58.73% and a skilled workforce. Parallel to the economy, the government policies encourage a streamlined regulatory framework for innovation and entrepreneurship, making Portugal an entrepreneurial hub.
The government is also committed to digital transformation and technological advancement, creating an inclusive business landscape.
Also, know that investing in Portugal comes with tax benefits for research and development and job creation initiatives. So, you’ll find that your investments come with an incentive structure that aligns with your entrepreneurial goals.
For example, capital gains have a flat tax rate of 28%, and if you sell shares in small companies not listed on the stock exchange, only 50% of the capital gains will be taxed.
What opportunities are there for investing in Portugal?
From the thriving real estate market to renewable energy projects, the opportunities for investing in Portugal are abundant. The technology sector also allures with its innovative ecosystem, and the Golden Visa provides avenues for those seeking residency through strategic investments.
Let’s break these categories down in detail:
As an expat, you have the option to explore both domestic and international funds in Portugal. Investment funds offer steady returns and a well-regulated environment for those new to the investment landscape. The country also imposes favorable taxes on certain funds, which adds to its appeal.
You should also know that the Golden Visa program has been renewed and now caters to investment funds.
To be eligible, you must transfer €500,000 to one or more approved funds overseen by the Portuguese stock market regulator, CMVM.
- Check out our detailed article on Portugal Golden Visa Through Investment Funds Guide!
Real Estate Market
Lisbon is a hotspot for real estate investment because of its substantial appreciation of property values. The city’s charm and lifestyle add to its allure for both residential and commercial investments.
With the Compound Annual Growth Rate at 3.73%, the overall market volume for real estate will increase to €1.62 trillion by 2028.
The Algarve region, famous for its stunning coastline, offers promising opportunities if you’re interested in investing in the vacation rental market. Porto has seen significant growth in the residential sector.
According to Statista, 2024 brings an estimated €1.40 trillion, of which residential real estate will be the dominant sector at €1.11 trillion. So, with a residence in hand, investing in Portugal for citizenship might itself be a fruitful decision.
Technology & Innovation Sector
Investing in Portugal’s technology and innovation sector is a compelling opportunity in Lisbon and Porto since these are vibrant hubs for tech and startup activities. Lisbon offers a dynamic tech ecosystem, fostering innovation and attracting global talent. It also has a thriving startup culture, hosting incubators, accelerators, and coworking spaces.
Likewise, you’ll find startups and a supportive infrastructure for technology-driven enterprises in Porto. Porto also offers research institutions, collaborative workspaces, and an entrepreneurial community.
The two cities are home to strategic geographical locations, which help form connections with international markets. As Portugal continues to invest in digital and technological infrastructure, these sectors in Lisbon and Porto provide a compelling landscape to benefit from the evolving global tech landscape.
Renewable energy and sustainability
Portugal recognizes the significance of and has prioritized sustainability in addressing global environmental challenges. This is reflected in the green initiatives and growing renewable energy sector with investments in wind, solar, and hydropower projects.
The emphasis on renewable energy aligns with the international approach to climate change adaptation, making it a promising avenue for sustainable investments.
The government’s supportive policies and the abundant natural resources create a welcoming environment for businesses focusing on clean energy solutions. As this sector expands, investors aren’t limited to contributing to environmental conservation but also invest in the economic viability of sustainable practices.
This practice encourages responsible investing by combining profitability with a positive environmental impact.
Why are Portugal’s strategic advantages?
Portugal has emerged as a startup hub, gaining recognition among global business enthusiasts.
With its strategic location, excellent coworking spaces for digital nomads, and affordable living costs, Portugal has become a favored expat destination. And expat investors see Portugal as a prime choice for investments because of its:
- Geographic Location And Connectivity;
- Quality of Life;
- Talented Human Resource.
Let’s break these down!
Geographic location and connectivity
Nestled at the crossroads between Europe, Africa, and America, Portugal offers a seamless gateway for international trade and commerce. With well-developed infrastructure and efficient transportation networks, investors in the country find easy access to global markets. This efficiency makes Portugal an ideal hub for business expansion and growth.
Also, the country’s affordability attracts entrepreneurs planning on investing in Portugal for citizenship. See the table below for rent costs in popular cities:
|Cost of Renting Property per m2
Estimates are from Idealista (as of January 2024).
Quality of life
Portugal offers a high-quality standard of living with secure neighborhoods, amenities, education, and healthcare. This allure extends to retirees who are interested in investing in Portugal.
The well-regarded healthcare system makes Portugal an attractive investment facet for retirees. The country boasts modern medical facilities and services, providing retirees with access to high-quality healthcare.
When investors plan to relocate with their families, they’re at peace knowing Portugal is a good place to raise a family. The quality of public and private education is excellent, and plenty of recreational activities keep life fun at all times. The fact that Portugal is the 7th safest country in the world also makes the quality of life worth investing in.
- Learn more about the Top 5 Investment Options for Retirees!
Talented human resource
Portugal’s educational institutions produce a stream of skilled professionals who foster innovation and creativity. The multilingual workforce offers a diverse talent pool that works at collaborating on international projects.
This intersection of a skilled labor force with favorable living conditions enhances the appeal for businesses considering Portugal as an investment destination.
How do I invest in Portugal as an expat?
Once you decide to invest in Portugal, you’ll have to understand the legal considerations to ensure compliance with the regulations. And opening a bank account in Portugal will be essential for your financial transactions. Let’s go over these fundamentals!
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Legal consideration to be aware of
In Portugal, residence permit and visa are distinct documents. Although residence visas allow legal entry into Portugal for living purposes, they do not allow for extended stays.
They have limited validity and are designed for registration at AIMA upon entry. Then, you must apply for a Portugal Residence Permit.
You’ll also need to know corporate laws, licensing, and regulatory requirements. If the investment involves hiring local employees, adherence to labor laws and employment regulations is necessary.
You must pay the personal income tax (IRS) on worldwide income, property taxes like IMI, and one-time IMT for property purchases, municipal taxes, and property wealth tax for real estate exceeding €600,000.
Capital gains tax applies to asset sales, with non-residents facing a flat 28% rate, while residents encounter a progressive 14%-28% rate based on asset type, ownership duration, and residency status.
There are exemptions and deductions available that can help reduce the tax burden for residents and non-residents. So, carefully go over Personal Tax Deductions in Portugal.
Get professional help
When navigating new avenues, it’s always a good idea to seek professional help. This will help you avoid any legal mishaps and make it easier for you to fulfill your goal.
At Viv Europe, we help our clients curate a well-defined plan to secure their residence permit in Portugal with our Visa assistance services. We also offer investment advice through our qualified, trusted partners, who thoroughly study each case.
Once you’re ready to get started, book a consultation with our team of experts and answer all your questions! We’ll help you with the necessary guidance on legalities, visas, and real estate. And remember, we’ll stay with you till the very end.
Open a bank account in Portugal
This is necessary as local bank accounts make transactions much more convenient and come with certain legal benefits. Portugal offers a separate investment account option as well. This account type is ideal for investment options like stocks, bonds, and bills.
However, you’ll have to pay brokerage fees on every investment transaction from this account.
Each different account requires certain specific documents, but you’ll need the following to open any account type:
- Valid identification;
- Proof of your current residence;
- Proof of your income;
- The NIF Number.
Opening an account remotely can be complicated. But Viv Europe can help you with that. Get in touch and get your bank account in no time!
- Check out the Top 4 Best Banks In Portugal For Expats
Get your NIF Number
NIF number, a 9-digit code assigned by Portuguese tax authorities, is essential for both resident and non-resident citizens. You’ll need it for various purposes, including opening a bank account, establishing utility and internet services, and engaging in property transactions.
The process to get an NIF differs for EU and non-EU citizens. If you’re a non-EU resident, you’ll require a tax representative for your NIF application and need the following mandatory documents:
- Identity Card
- Citizen Card
- Birth Certificate
- A photograph
- Proof of residency (a lease agreement or utility bill)
Click here to get your NIF Number remotely in a week!
Do your research and plan well
You must do thorough research and strategic planning before you begin your investment plans. As foreign investors, understanding Portugal’s legal framework, visa regulations, tax implications, and property laws will help you navigate the system’s intricacies.
Also, make sure to go through the nuances of the Golden Visa program, as it comes with legal benefits for investors. Lastly, establishing a strong local network involving legal advisors and financial experts will help you handle potential challenges effectively.
And, of course, Viv Europe is always there to help you each step of the way.
Establishing a realistic investment budget
As an investor, you already know the significance of proper budgeting. You can begin by assessing your current financial situation, income, expenses, and assets.
Next, you should define your investment goals and whether you want a short-term or long-term objective.
You must carefully evaluate risk tolerance to align your investment strategies with personal comfort levels. Here, it’s crucial to factor in potential market fluctuations and unforeseen expenses.
Lastly, regularly review and adjust your budget to the circumstances. This will help you make informed decisions, mitigate risks, and work towards achieving your financial objectives.
Be wary of scams
Once you start investing in Portugal, or anywhere for that matter, be cautious against possible scams.
Keep the following in mind to mitigate the risk of falling victim to fraud:
- Verify investment opportunities;
- Ensure compliance with legal requirements;
- Be skeptical of unsolicited offers;
- Conduct due diligence on promoters;
- Seek professional advice.
Do you need help investing in Portugal?
We hope this guide was everything you were hoping it would be! Now that we’ve gone over the process of investing in Portugal, you’ve probably got questions.
The next step is super simple – book a consultation with our team and map out a plan for your next big achievement. Our experts are here to guide and support you till you make it to Portugal!
If you want to read more about expats’ journeys, join our Facebook Group – All About Portugal For Expats. Ask questions, read stories, and get ready to be inspired!