According to the president of the Portuguese Association of Real Estate Professionals and Real Estate Companies (APEMIP), Luís Lima, under discussion at the OE2020 will be the Residence Permit for Investment Activities (ARI) and the Tax Regime for Non-Habitual Residents (NHR).
“Although the information conveyed in the media is not concrete, it is now known that the Government appears to be intent on demanding 10 percent IRS from foreign retirees wishing to join the NHR, with a minimum tax of €7,500 per year,” said Luís Lima in a statement.
This is “bad news” for the Portuguese real estate industry, as “giving in to the disgusting demonstrations revealed by other European countries about the programme seems to me to be absurd, especially when in the same field we have countries like Spain, Ireland or Italy, with very similar mechanisms, which will eventually absorb the investment that, with these measures, will no longer enter Portugal,” he says.
For Luis Lima, “it is scandalous” that the government is stopping investment under such programmes that helped rehabilitate city centres, create jobs in the construction and tourism sector and that have set the country on the path of international real estate investing.
“Acting to curb demand is a crime against Portugal and the consequences are not being properly assessed,” warned Lima.
He explains that the housing problem in Portugal today “is not the result of foreign investment, but of decades of ineffectiveness of successive governments that have never bothered with the implementation of a true housing policy.”
“Now that the problem has erupted and its impact is unquestionable, it is important that effective measures be taken to increase supply, not to curb existing demand.”
The signal from abroad “is that the country no longer needs investment, which, as we all know, is not true,” he says.
He continued: “We have a unique opportunity to focus on decentralising investment outside major cities and thus on boosting economic growth in other parts of the country, and we are throwing that opportunity away, which our European ‘competitors’ will certainly take advantage of”.
For Luis Lima, the only alternative to solve the lack of affordable houses is to take an effective position on the part of the Portuguese state, either through central or local power.
The president of the association also argues that “we must think of alternatives in partnership with the private ones, in which the State cedes the right to use land in exchange for the construction of assets that are subsequently sold or leased at controlled prices”, considering that “these actions are urgent”.
As proposed changes to taxation for foreign investors is discussed it has been revealed that foreign investment from private business inflows was up by 9.2 percent in 2019.
Portugal’s minister for economy said that foreign investment contracts secured by its agency for foreign trade and investment, AICEP, reached “a new high” in 2019.
Pedro Siza Vieira was addressing a joint session of the parliamentary committees on budget and finance and on economy, innovation, public works and housing that was considering the draft state budget for 2020, which had its first reading last week.
“We last year achieved the maximum level of foreign direct investment in our country that we have ever had,” the minister told deputies. “Once again foreign investment contracts secured by AICEP reached a new high, that is, private business investment in our country grew 9.2 percent.
“Despite the level of taxation, we are seeing very vigorous paces of investment growth,” he concluded.
Siza Vieira also said that “in the country’s current situation, lowering taxes now would only increase the debt and deficit” and this would flow through into a rise in market interest rates.
The minister was responding to calls from some quarters to reduce the burden of taxation to attract still more investment.
Although the draft budget is the first in Portuguese democracy to foresee a surplus, and the country’s public indebtedness as a share of gross domestic product has been falling for some time, the ratio is seen remaining above 100 percent for several years.