Portugal Business News interviewed a team of lawyers and international tax experts from Fresh Portugal, the largest expat legal advisory in Portugal, that provides tax, immigration, investments, corporate, and estate planning services.
This is the tip from Fresh Portugal for young expats who would like to move to Portugal: “Portugal is trying to introduce an unprecedented scheme for people under 35, exempting 66% of their income from tax (up to 80,000 Euros a year) and making Portugal one of the most attractive places in Europe and the world for young people”, advises Zeev Fisher, lawyer and international tax expert.
Portugal Business News: Welcome, everyone. Today, we're speaking with a team of experts from Fresh Portugal, the largest firm of lawyers in Portugal focused on advising expats, namely:
Zeev Fisher, a lawyer in the UK, Ireland, and Portugal and an expert in international taxation;
Pedro Abreu, a lawyer in Portugal and Brazil, specializing in international tax law and supporting expats in Portugal;
Daniel Russo, a real estate lawyer in Portugal; and
Manuella Sena, an immigration specialist.
Let's dive into the growing popularity of holiday home investments in Portugal:
1 - Why is Portugal becoming such a hotspot for holiday home investments?
Zeev Fisher: Portugal's attractiveness stems from its diverse landscapes, rich history, and vibrant culture. The Algarve's beautiful beaches, the Douro Valley's vineyards, and the historical sites across the country provide an exceptional quality of life. This allure, combined with political stability and safety, makes it an ideal location for holiday home investments as well as a place to move to.
Pedro Abreu: Adding to that, Portugal's favourable tax policies play a crucial role. Portugal real estate has been and continues to be a fantastic investment from a tax perspective.
2 - How has tourism impacted the real estate market in Portugal?
Daniel Russo: The surge in tourism has significantly boosted the real estate market. With a 20% increase in tourist arrivals in 2023 compared to 2022, more people are discovering Portugal and deciding to invest in real estate in Portugal. The relatively affordable prices, despite recent increases, make it a lucrative market for foreign buyers looking for vacation homes or rental properties.
3 - What about the islands, Madeira and the Azores? How are they faring in terms of real estate investment?
Daniel Russo: Both Madeira and the Azores are experiencing a real estate boom. Madeira, with its subtropical climate and stunning landscapes, attracts both tourists and investors. The capital, Funchal, offers a mix of traditional charm and modern amenities, making it a prime investment spot. Similarly, the Azores, known for its volcanic landscapes and tranquil environment, is becoming popular among those seeking a unique and serene investment.
4 - Manuella, how easy is it for foreigners to move to Portugal and invest in real estate?
Manuella Sena: Portugal is very welcoming to foreigners. The D7 Visa for passive income earners and the D8 Portugal Digital Nomad Visa are relatively easy to obtain, encouraging many people to move here. The friendly environment and streamlined immigration processes make Portugal a top choice for expatriates.
5 - What are the key real estate investment hotspots in Portugal?
Daniel Russo: Lisbon is a major hotspot, with neighbourhoods like Chiado, Bairro Alto, and Alfama being particularly popular. Porto, known for its wine and riverside beauty, is another key area. The Algarve remains a favorite, with towns like Lagos, Albufeira, and Vilamoura offering a variety of properties to suit different investment preferences. And recently, the islands are booming as well.
6 - How does the AL (Alojamento Local) taxation framework benefit real estate investors?
Pedro Abreu: The AL taxation framework is very favorable, especially for short-term rentals. Only 35% of the rental income is taxable, and the resulting typical tax rate is under 10% of the turnover. This low taxation rate encourages property owners to convert their homes into short-term rentals, catering to the booming tourist market and ensuring a steady income.
Daniel Russo: One should note that not every property can be a short-term rental due to recent limitations and this makes properties that can still get a license even more lucrative, considering the reduced competition.
7 - How is Portugal balancing tourism growth with sustainability?
Pedro Abreu: Portugal is emphasizing sustainable tourism to preserve its natural landscapes and cultural heritage. The government is promoting eco-friendly practices and investing in infrastructure that supports both tourism and the local community. This balance ensures that Portugal remains a top destination while safeguarding its assets for future generations.
8 - What future prospects do you see for Portugal’s real estate market?
Daniel Russo: The future is bright. With ongoing government initiatives, tax incentives, and continued infrastructure development, the real estate market will keep growing. We’re also seeing a rise in alternative investments like co-living spaces and boutique hotels, offering diversified opportunities for investors.
9 - And what of the future taxation and the NHR scheme?
Zeev Fisher: Portugal scrapped the NHR scheme in 2023 subject to a transition period that would end in 2024. That has been after scrapping the golden visa program intended to invest in real estate. However, that was the old socialist government. Now there is a new government and there are increasing signs that it would be able to pass a budget. The new government understands the importance of investment. It has already restored some tax benefits for real estate investors and is now trying to bring back most of the NHR scheme. In addition, it is trying to introduce an unprecedented scheme for people under 35, exempting 66% of their income from tax (up to 80,000 Euros a year) and making Portugal one of the most attractive places in Europe and the world for young people. It seems that the trend has reversed again and now Portugal is trying hard to keep its justified branding as the “go to” place in Europe.
Portugal Business News: Thank you, Fresh Portugal, for your insights. It's clear that Portugal's unique blend of natural beauty, cultural richness, and strategic initiatives is driving its popularity as a top destination for holiday home investments.
Fresh Portugal’s team of Experts: Thank you.
Portugal Business News: That concludes our interview. Stay tuned for more insights on the evolving real estate and tourism landscape in Portugal.
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