One Last Opportunity for the Portugal Golden Visa – The Time Is Now

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On 16 February 2023, this dream was shattered when the Portuguese government released a draft of a law proposal aiming to end its Golden Visa Program. While this is disheartening, those seeking a pathway to European residence and citizenship through Portugal have one last opportunity to do so.

The Portugal Golden visa

In 2012, the Portuguese government announced its own residency by investment program: the Portugal Golden Residence Permit Program, better known as Portugal Golden Visa Program. Like other golden visa offerings, this process aimed to boost the Portuguese economy through foreign investment.

The Portugal golden visa became one of the most popular Plan B options for South Africans and non-EU citizens. Henley & Partners explain that “Portugal boasts an excellent reputation and is considered one of the world’s most globalized and peaceful nations,” offering a high standard of living. And, with its rich history, lively culture, idyllic nature, and exceptional cuisine, it is no surprise South Africans are among the highest numbers of applicants for this golden visa.

Further, this permit offers many benefits, including the ability to live, work, and study in Portugal and travel to other Schengen states without an additional visa, as well as the possibility to acquire Portuguese citizenship after five years of legal residence. One more added allure, especially for South Africans, is the attractive Non-Habitual Resident (NHR) tax regime, which provided reduced tax rates and occasionally, full tax exemptions for the first ten years of residence.

Despite the many investment options HNWIs could have considered, most opted to invest in property worth at least €280 000 up to €500 000, and overall, the Portuguese golden visa succeeded in boosting the economy by bringing in €7 billion. Considering that about 90% of this large sum came from the sale of property to golden visa holders, one would think that the government would wish to continue the program.

However, this staggering statistic is behind the Portuguese government’s decision.

The problem with property and negative press

Whilst wealthy foreign investors have brought a large sum of money into the Portuguese economy by buying luxury real estate, it has resulted in a housing crisis. In recent years, the cost of real estate has increased substantially, particularly in Lisbon and Proto, mostly due to non-EU citizens buying homes at prices that members of the Portuguese public cannot afford.

However, while a major spotlight has been shone on the housing crisis, it is not the only reason why the Portuguese government has decided to end the popular golden visa program.

The European Commission, a subsidiary of the European Union, has been increasingly negative towards golden visas, stating that it undermines the values of the EU project and is a major security risk – supposedly opening the door to illicit affairs. For several years, the European Commission has urged countries within the union to reconsider their golden visa programs, or at least modify them to comply better with the EU’s transparency and security standards.

While the Portuguese government has maintained its stance on the housing crisis being the cause for its decision, one cannot ignore the mounting pressure from the EU. Portugal is not the only country to consider ending their golden visa program, as Ireland announced the end of theirs just days before Portugal’s announcement, and there are growing concerns that Spain will follow suit.

The threat of the end of a golden ticket into the EU is worrying for many South Africans wanting to incorporate residence and citizenship planning into their life roadmap, however, it is not over yet.

The door is not closed – yet

The announcement on the 16th of February 2023 was a mere proposal to end the Portuguese Golden Visa Program. Since then, the draft proposal has changed several times, but as it stands, existing and new applications will still be considered, if they are submitted before the law comes into force, which, at this point, is unclear.

The lack of clarity may be concerning; however, it does offer one last opportunity for South Africans to apply for a golden visa.

As mentioned, there are several economic contributions to consider when applying for the Portuguese golden visa, including:

  • A capital transfer of at least €1 million into the country;
  • The creation of at least eight job positions in Portugal;
  • The purchase of a property in Portugal worth at least €280 000;
  • Investing at least €400 000 in scientific research in Portugal; and
  • Invest €200 000 or more in Portuguese arts, culture, and heritage.

With so many options to choose from, and the scrutiny of the property investment route, it might be best to consult with emigration experts who can help you plan an effective financial emigration roadmap. A good roadmap takes into consideration all your plans for your and your family’s future and Portugal’s current standing on golden visa applications.

Thomas Lobban, Head of Cross-Border Individual Tax at Tax Consulting SA, agrees that Portugal remains a destination of choice for South African HNWIs, especially from a tax perspective, due to the “robust double taxation agreement” between the two countries. He also goes on to say that “We have seen South Africans make this transition with relative ease, where it is well planned, and we do not typically see these individuals permanently returning to South Africa thereafter.”

The time is now

While the ending of the Portuguese Golden Visa Program might be disappointing, the opportunity to invest and live in Portugal is still there, until the Portuguese parliament votes the proposal into law.

Ultimately, the time to invest in and move to Portugal is now.

For greater success in securing your spot, it is best to consult with emigration experts who can assist you in planning an effective roadmap.

Henley & Partners, in collaboration with Tax Consulting SA, will discuss the Portugal Golden Residence Permit Program, other European Residence Programs, tax planning, and more, at this year’s South African Roadshow, Investment Migration Is More Than Just a Plan B — Secure Financial Freedom and Global Education for Your Children. Visit henleyglobal.com to register for this free event.

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A New Critical Skills List, But Does It Do Enough For South African Employers?

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In response to the need for relevant data on critical skills, Xpatweb launched its annual Critical Skills Survey in 2017. This service gives employers the opportunity to identify the critical skills they need currently for their company and, through Xpatweb, share their requirements with policymakers.

Does The Current Critical Skills List Solve Employers’ Problems?

South Africa continues to struggle with critical skills shortages, thus employers are directing a new recourse to source these talents from abroad.

The value of foreign talent includes:

  • Reducing the current shortage of skilled workers that can keep companies in business and help them remain profitable.
  • Improving the operational integrity and service delivery of businesses so all South Africans have access to products and services that better the quality of their lives.
  • Helping South Africa to become competitive and remain significant in today’s global markets.
  • Developing local entrepreneurship and innovation by bringing in talent from technologically and economically advanced regions.
  • Driving economic growth through the very skills the government has identified as essential to that outcome.
  • Providing interim replenishment of talent lost to the ‘brain drain’ to allow the country time to develop comparable skills locally.

Unfortunately, if the required occupations do not appear on the national Critical Skills List, then employers will be unable to bring them into the country on a Critical Skills Visa.

Yet, even after the most recent update to the list in August last year, the latest Critical Skills List may still not solve employers’ problems when trying to recruit foreign talent.

But how can employers provide their input if they feel the Critical Skills List needs to be improved?

Xpatweb Critical Skills Survey Carries Employers’ Voice to Government

Since Xpatweb’s Critical Skills Survey was first launched in 2017, its results have evolved into a respected authoritative reference among policymakers.

It has been hosted annually over the past 7 years, with the 2020 and 2021 data being combined due to lockdown restrictions.

Each year, the firm submits its findings for consideration by policymakers. However, in 2020, it was invited to present its data to several government departments, including the Department of Home Affairs (DHA), involved in compiling the latest Occupations in High Demand (OIHD) list.

The output of that exercise carried through to the development of a new national Critical Skills List in 2021. During the period of public commentary, employers raised concerns that several occupations had controversially been omitted from the List.

After the List was finally gazetted in February 2022, Xpatweb’s research and input again contributed to its amendment in August 2022. This update saw the return of some previously abandoned occupations, including Corporate General Manager, certain Engineering roles, and several Health Sector professions.

Such wins were only possible because private groups lobbied for these occupations to be reviewed and because sufficient data was collected to justify their demands. Xpatweb’s Critical Skills Survey results were an important dataset in this process.

Pushing For a Regularly Updated Critical Skills List

Xpatweb continues to actively participate in government programs as an ambassador of the critical skills community.

Jacobs says the firm plans on submitting this year’s Critical Skills Survey results to the government as it has faithfully done in the past.

“It is our belief that the Critical Skills List must be updated at least every two years to remain aligned with employers’ needs, not every 10 years”, says Jacobs.

Jacobs urges critical skills employers to take part in Xpatweb’s Critical Skills Survey, a long-running service that has helped shape the latest Critical Skills List.

“This is your chance to create the Critical Skills List you need,” she says.

Last year’s results and the current survey can be accessed via Xpatweb’s website here: https://site2.xpatweb.com/annual-critical-skills-survey-portal/

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Latest Immigration Directive Update – Key Requirements Waived For Temporary Residence Visa And Permanent Residency Applications

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This new directive will be welcomed by all the applicants who were previously burdened by the bureaucratic requirements that come with applying for visas or permanent residency permits. The radiological report requirement has been a long-standing issue for many visa applicants. This test can be both costly and time-consuming, and many applicants have found it to be a significant barrier to entry. A radiological report was required for every visa application that exceeds a 90-day period in South Africa, while only being valid for six-months.

The burden of obtaining this report was further compounded by the fact that it needed to be originally issued and issued in the country where the applicant will submit the visa application.

With the new directive, these requirements have been waived, making it easier for applicants to apply for visas and permanent residency permits.

Similarly, the police clearance certificate requirement has been another stumbling block for many applicants. This certificate attests to the applicant’s criminal history in every country it has been obtained from.

Prior to the new directive, an applicant was required to obtain a police clearance certificate from their home country and every other country they have been resident in for a period of 12 months after attaining the age of 18 years. Obtaining this document can be a costly, complex and time-consuming process, particularly for applicants who have lived in multiple countries or who have a complicated legal history. With the new directive, this requirement has also been waived, making it easier for applicants to apply for visas and permanent residency permits.

The new directive reduces the burden of the police clearance certificate as an applicant that will only need Police Clearance Certificates from countries they have lived for the past 5 years, preceding the date of their visa or permanent residency application.

The new directive is a step in the right direction towards a more streamlined and efficient visa application process. However, there are some concerns about the potential impact of this new directive. Without a medical and radiological report or a criminal history, there is a risk that some individuals with criminal histories or contagious diseases could slip through the cracks and gain entry to the country.

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Finance Minister Concerned On Home Affairs’ Impact On South Africa Economy

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Finance Minister Enoch Godongwana was spot-on with his assessment –

“We are clearing the backlog in work visa applications and are implementing the recommendations of the skilled immigration review.”

Cabinet Ministers generally stick to their own turf, being on the same team. When they publicly comment on another, it is generally positive or showing that they work together. There must have been a very good reason for the Budget Speech, being the most watched annual event of South Africa, to comment on Home Affairs troubles.

Why is this so Important?

The South Africa work visa system is currently in the worst shape it has been, and this is an Eskom complex problem to resolve. Foreign nationals are mostly not getting their work visas correctly issued and in timely and correct manner. This is not good for South Africa, as it makes the country less investor friendly. Other countries get certain visa categories issued at record speed and with high proficiency. The current system places foreign investors in a difficult spot, as they need to be prepared for a frustrating process and a bit of a fight to get their visa. Whilst certain sections of Home Affairs and Embassies are world-class, this is more due to the quality of the individual official involved, as opposed to the system.

What has the Minister of Home Affairs been doing?

He has been doing a good job, but he is up against heavy odds. The courageous decision was made by the Minister early in 2022 to implement centralized adjudication, meaning the work visa approvals were taken away from Embassies and taken over by Head Office. This decision was explained to be for two reasons, those being (a) to ensure that there is consistency in the documentation which Embassies require as well as to address various inconsistencies in Embassies throughout the immigration process, and (b) to address the matter of corruption at various levels.

We can attest that this decision was underpinned by valid reasoning.

However, the upshot hereof has not been good for the Minister, the Department of Home Affairs and most importantly international employers. It appears from the very limited number of visas which were processed, that the initiative failed. Various directives were issued in this regard and to the point where the work visa adjudication process was handed back to Embassies on new submissions. The Embassies have not taken back the Head Office submissions during the directive period, so these remain with Head Office according to the certain Embassies. However, Head Office confirms that Embassies may proceed to adjudicate on these matters where they have not had feedback from Head Office on an outcome. This misalignment continues to delay the backlog on these applications.

 The Head Office has informally communicated some deadlines to clear their backlog, but this process is slow. Meanwhile, new applications at Embassies have the same challenges as before and Embassy service has declined. There remains a couple of excellent countries where the Embassy staff are outstanding. However, the practical outcome is that there has been a marked deterioration compared to times prior to the Ministerial centralisation intervention.

Is there hope for Home Affairs?

The main problem is new submissions being done, whilst older submissions are not getting closed. Where a system is under pressure, you are dealing with officials who must put out fires, and they are under constant pressure. Unfortunately, we have also seen that this pressure has resulted in various unwanted behaviours coming through such as rejections for not good reasons and request for information which are outside the law; which appears obvious “buying time” tactics.

 We do not believe the system will get better anytime soon and due to the sheer quantity of the historical backlog.

 Our recommendation to clients is to have a very clear Home Affairs submission strategy and that there is a clear roadmap or project plan for each submission. In the current environment, each application must be commenced as soon as possible, the steps must be proactively planned, and the standard of submission must be at a level, addressing the nuances of each category permit and Embassy specific requirements.

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SONA Foreign Talent Announcements Enticing, But Are They Realistic?

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However, she warns that any advantage to be gained will depend on how well the proposals are implemented, how soon and if the current visa system can support them. “Whatever the improvements we can hope for, employers need them yesterday,” she says.

Xpatweb’s respected annual Critical Skills Survey has been running for the last 5 years and consistently indicates that over 80 percent of businesses struggle to recruit skilled talent locally. So, the only way to satisfy their operational needs is to source it internationally.

The proposals put forward by the President include:

A more flexible points-based system to attract skilled immigrants

Several other countries, notably Canada and Australia, use a points-based system that assigns points to selected criteria, such as education level, years of experience, wealth, etc. If the accumulated points pass a minimum threshold, a candidate qualifies to enter the country.

“We currently have fairly rigorous requirements to bring skills into South Africa, so a ‘more flexible’ system suggests that certain of these will be eased to speed up the entry of suitably qualified candidates,” says Jacobs.

A trusted employer scheme to make the visa process easier for large investors

The Department of Home Affairs (DHA) already launched its Corporate Accounts Unit in 2014, dedicated to servicing corporates and multinationals based in South Africa.

“This certainly seems like an extension of that function to make it easier for these companies who need to bring in skills regularly and on an ongoing basis, so it is an extremely good development,” says Jacobs.

The streamlining of application requirements

It is on this point that Jacobs becomes less positive about the realities of these changes. “While the initiatives are to be applauded, their efficacy hangs on good implementation,” says Jacobs.

She highlights the backlog from the failed Central Adjudication system last year, leaving a large number of expatriates still waiting to be issued their visas.

In addition, Jacobs reports a tightening of the immigration regime over the last 12 months that has made it much harder to secure a work visa and that it takes much longer now for applications to be processed. She also sees the highest rejection rate in the last 15 years, often for arbitrary reasons.

“To provide the greatest benefit, the government must ensure there is an underlying system that aligns with and supports these proposals,” says Jacobs.

The introduction of a remote worker visa

Remote visas are a rapidly growing trend and are being introduced by many countries around the world. Apart from attracting the foreign income of digital nomads, the visa could serve as an incentive to foreign candidates whose spouse wishes to continue working remotely for their overseas employer.

“After COVID, we saw a massive increase in remote working and still deal with this daily as a consulting business, and we foresee this visa being immensely popular for the foreseeable future,” says Jacobs.

A special dispensation for high-growth start-ups

This proposal is very vague. It may refer to easing restrictions on business visa applicants or local employers importing foreign skills. This is provided, in either case, the intended business is a start-up and promises high-growth potential within South Africa.

“These kinds of applications must always be accompanied by a fact-based business plan, but we must also consider that the government will focus on the classes of business that promise greater economic growth and employment opportunities to locals,” says Jacobs.

Tentatively optimistic

For the most part, Jacobs is tentatively optimistic that, provided they are implemented correctly, the announced initiatives can bring welcome relief to employers hard-pressed to source critical skills.

Although this is a huge step forward for these employers, Xpatweb acknowledges the hurdles that still need to be overcome in this space.

“We will continue to act as an ambassador of the critical skills community, using our research and the results of our Critical Skills Survey to promote meaningful change with policymakers,” says Jacobs.

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