The legal change represents a positive step
Diogo Capela and Ana Sofia Lamares, Partners at the Law Firm Lamares, Capela & Associados (LACA), highlighted, in an interview, the recent changes in obtaining Portuguese nationality and in the tax regime for residents in Portugal, including the Golden Visa program. These changes promise to simplify the process for applicants and may boost foreign investment in the country.
Can you tell us a little about yourselves and the firm you founded: Lamares, Capela & Associados?
Diogo Capela (DC)
My name is Diogo Capela and I am a partner and founder of the law firm Lamares, Capela & Associados (LACA). My partner – Ana Sofia Lamares – and I have been working together since 2014 and decided to create the firm in 2019.
Previously, both my partner and I had worked in other law firms and in different areas. However, our office focuses primarily on supporting clients who are abroad and wish to live or invest in Portugal.
Our main areas of practice are Nationality, Immigration, Real Estate, Companies, Labor, Tax, Successions, and Family. We are a team of 16 people, each with diverse skills and areas of expertise.
You mentioned Nationality and Immigration Law. I would like to focus our conversation on these topics, as there have been significant changes recently in these areas, correct?
Ana Sofia Lamares (ASL) That’s true.
Can you then explain to me the main changes to the Nationality Law that came into effect on April 1st?
ASL
We can highlight three major changes regarding the following topics: 1) the regime for granting nationality to descendants of Sephardic Jews; 2) establishing parentage for the purpose of obtaining original nationality; 3) counting the time of residence for granting nationality.
People who wish to obtain Portuguese nationality through residency in Portugal received the change in the law as great news, isn’t it?
ASL Yes, it is.
Can you explain to us better what this change was?
ASL Of course. The Law states that it is possible to obtain Portuguese nationality when, among other factors, the individual has legally resided in Portugal for at least five years.
Article 15 of the Nationality Law established that, for nationality purposes, “individuals who reside legally in Portuguese territory are those who are here, with their situation regularized before the Portuguese authorities, under any title, visa, or authorization provided for in the regimes of entry, stay, departure, and removal of foreigners and in the asylum law.”
In other words, the period of residence for the purpose of obtaining Portuguese nationality (5 years) only starts counting from the moment the residence permit is issued.
Now, in many cases, there is a very long period between the residence permit application and its approval, during which the citizen effectively resides in Portugal, but this period cannot be considered as legal residence.
How did the new law change this rule?
ASL The amendment to the law allows for “the time elapsed since the application for the temporary residence permit was requested, provided that it is granted.”
That is, the five years are counted from the beginning of the residence process and not from the moment the residence permit is issued.
Can this change also apply to Golden Visa applicants?
DC Yes, it can. In fact, this change will apply to all immigration/residence processes for Portugal.
In your opinion, do you think this change is positive for them?
DC I argue that it is. This change allows to mitigate the long-standing injustice felt by those who waited, sometimes for years, for the approval of their requests.
Now that the waiting time for the approval of the residence permit application will also be taken into account for obtaining nationality, an unjust situation that affected thousands of people, harmed by mere administrative delays to which they were completely unrelated, is corrected.
The legal change represents a positive step and aims to provide greater predictability and equity to the nationality acquisition processes for Golden Visa applicants in Portugal, giving a very positive signal and restoring credibility to the country.
Considering that LACA specifically works on these immigration-related topics, what impact do you think such a change can have on attracting foreign direct investment to Portugal?
DC This is a very interesting point. In fact, immediately after the news about the change in the Nationality Law, articles also began to appear in the international press that placed the Portuguese Golden Visa Program at the forefront of Residence Programs through Investment internationally.
In fact, the legal change brings greater stability, predictability, and speed to the entire process.
That is, an investor currently knows that if they make an investment of, for example, €500,000.00 (five hundred thousand euros) in an Investment Fund and then submit the application for the Golden Visa, they know that after five years they can start the process of obtaining Portuguese nationality, and then obtain the Portuguese passport approximately one year later.
Additionally, the Portuguese passport remains one of the strongest passports in the world. For people who value the possibility of moving without restrictions and who come from countries where this is not the usual reality, this can be a very important step for their lives and for the lives of their families.
Changing the subject now. The State Budget Law for 2024 introduced a new tax regime applicable to individuals who come to reside in Portugal. Can you tell us a little about this topic?
DC The tax regime for non-habitual residents (NHR) has been repealed, being replaced by the so-called Fiscal Incentive for Scientific Research and Innovation, which is now provided for in the Statute of Tax Benefits (EBF), which we now call NHR 2.0.
Care was taken to create a transitional provision in the Law, to safeguard individuals who were already in the process of transitioning their residence to Portugal and planned to obtain the NHR, but the regime effectively ended, and a regime of lesser scope was created.
Generally, what are the requirements that must be met to access the benefit? And what are its benefits?
DC It applies to individuals who have not been residents in Portugal for the last five years and who are now changing their tax residence to the country.
The benefit occurs in IRS, applying a special rate of 20% on the net income of categories A and B – earned in the context of teaching in higher education and scientific research, highly qualified professionals framed in certain types of companies or inserted in specific sectors of activity – for a period of ten consecutive years from the year of their registration as residents in Portugal.
Did the State Budget Law also change the regime that applied to Portuguese emigrants who intend to return (Return Program)?
DC It is a fact. The tax regime for Former Residents, also known as the Return Program, can now be called the Entry Program, that’s how we like to refer to it at the moment, as its application is no longer dependent on previous residence in Portugal.
This regime, besides having been extended until 31/12/2026, provides for the exclusion of taxation of 50% applicable for five years to category B income for individuals who become tax residents in the years 2024 to 2026.
The 50% exclusion, however, now has a limit of €250,000 (two hundred and fifty thousand euros) for individuals who become tax residents from 2024 onwards.
