Portugal amends nationality laws

Portugal revamps their nationality laws. Citizenship eligibility now starts from the residency application date, not approval.

In a significant development, Portugal’s parliament passed amendments to the country’s nationality laws. 

These alterations mark a fundamental shift. They allow residents to commence their five-year countdown to citizenship from the day they submit their residency application. 

Uncover how this shift aims to address delays, particularly impacting golden visa investors, providing a more efficient and just pathway to Portuguese citizenship 

Moving Away from Approval Date

The noteworthy change signifies a departure from the previous practice. Initially, the clock for citizenship eligibility started ticking only after the approval of the residence permit.  

This alteration aims to streamline the naturalization process and potentially reduce the overall time to obtain citizenship. 

Addressing Delays in Approval Process

Under the previous legislation, foreign residents faced a five-year waiting period for Portuguese citizenship. It commenced from the approval of their residence permit.  

However, due to prolonged administrative delays within the immigration authorities, the period between application submission and approval could extend to two or more years. 

Impact Across Residency Types

The administrative backlog affected various residency categories, creating a situation where individuals, including golden visa investors, experienced substantial delays in reaching naturalisation eligibility. 

Despite legislation suggesting a three-month processing time for golden visa investors, the actual processing duration now exceeds two years. 

Amendment Aims to Rectify Injustices

Recognising the inherent injustice in the prolonged processing times, the recently amended law introduces a critical change in Article 15.  

This new provision considers the time elapsed since the submission of the temporary residence title application for the calculation of legal residence periods.  

The amendment aims to mitigate the impact of administrative delays and rectify the extended waiting periods faced by applicants, aligning the process more closely with the intended legal framework. 

Differing Interpretations Across Categories

Interpretation may vary depending on the immigration category. However, the focus is on the anticipated interpretation for golden visas. 

Where investors may initiate the five-year count from the day of online application and payment of the corresponding processing fee. 

Golden Visa Interpretation Rationale

Satisfaction of Legal Requirements at Application: There may be legal prerequisites, such as executing the investment and demonstrating a clean criminal record, are fulfilled at the time of the application. 

Assignment of Process Number: The application process is initiated with the assignment of a process number. 

Recognition by Online Platform: The online platform itself acknowledges this moment as the formal registration of an application. 

Reference in Proof of Payment: The proof of payment for the processing fee explicitly mentions “title for golden visa permit,” reinforcing the connection between payment and visa application. 

Application Form Title: The application date is the pivotal starting point for the five-year calculation. 

End of Real Estate Route for Golden Visas in Portugal

The Portuguese government has closed the door on using property investments as a pathway to the “golden visa” programme, which grants residency rights. The move comes as a response to the scheme’s alleged contribution to a housing crisis and aims to shift focus to alternative investment channels. 

Tightened Regulations Post-Initial Scrapping Plans

Initially, the government had declared its intention to scrap the golden visa scheme in February 2023 but later opted for stricter regulations.  

This decision aligns with efforts to redirect property investments from major cities to depopulated areas. 

Historical Overview of the Golden Visa Scheme

Since its launch in 2012, the golden visa scheme has attracted substantial funds, totalling €7.3 billion. 

The programme, offering residency to non-EU nationals making investments in Portugal, has been predominantly utilised by individuals from China, Brazil, and the United States.  

However, approximately 90 per cent of the funds had been directed towards real estate, leading to concerns about rising housing prices. 

Shift to Investment Funds as Principal Channel

With real estate no longer an option, the focus is expected to shift significantly towards investment funds.  

Legal experts anticipate funds to represent 80-90 per cent of all golden visa investments. To qualify, applicants must transfer € 500,000 to one or more qualifying funds. 

Implications and Expectations for Future Investments

Legal experts have expressed concerns about the potential decrease in overall investment in Portugal. This is as a result of the exclusion of real estate as an option.  

The impact on the nation’s benefits is further highlighted by the requirement that eligible funds only need to invest 60% of their cash in Portugal. 

Diversification of Investment Avenues

While the real estate option is no longer available, alternative routes to securing a golden visa include contributing to cultural or research projects or generating jobs. 

Legal experts anticipate the creation of more funds and a rise in donations toward cultural projects as investors seek new avenues under the amended regulations.