Chapter 6

Portugal: For The “Man of Means”

Second Passport

Almost, but not quite, belonging in the chapter on citizenship without residence, is the country which I find the most attractive among those that I have studied for this Report. It is Portugal.

In view of the material contribution made to Portugal’s attractiveness by Roman law, as you will see, it may be asked: “Why not Italy?” Italy, after all, is where Rome is. Well Italy should certainly be considered as an alternative to Portugal (although there are differences that render the two not precisely comparable), and I have included a short section on Italy below [see Chapter 7].

In Portugal, you can become a resident, and later. a citizen, via a simple real estate investment — one incidentally that carries fewer risks than some of the similar investments in the more remote places mentioned in this Report.

During the period in which you have the right to reside in Portugal (as a result of your property ownership) you do not have to actually live there. There are drawbacks which I shall mention in the following outline of the requirements for gaining Portuguese residency and citizenship, and the costs of doing so.

Roman Law

Under Roman law, from which Portuguese law is derived, a prospective resident is required to be a man of means.

What does this mean? It is defined as, inter alia, the owner of immovable property. A fundamental difference between Roman law — the basis of the law of Portugal and the few other European countries unsullied by the Napoleonic Code — and English common law is that “what is written must be so.” If, under Roman law, you meet the requirements of the law in whatever respect, you must be granted every privilege that thereby results.

Similarly, to gain the protection of Roman law, you must comply precisely with the law in every respect.

While there remains latitude for the exercise of discretion, there is little if any scope for free interpretation — a significant difference from countries like England or the US, where, following the trend of English common law, a court’s interpretation of the law can sometimes give it a new meaning.

For our purposes, this means that the requirements for Portuguese residency and citizenship are specific: any person who meets the requirements must automatically receive the right of residency in Portugal.

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As we shall see later, there are bureaucratic requirements that may seem to make the process somewhat less simple than automatic, but so long as you comply with those requirements, the principle remains unaltered.

To understand the force of the Roman system of law, consider one aspect of the American, Australian, Canadian or New Zealand laws of citizenship:

any person born in one of those countries (bar a child of diplomatic personnel) is automatically a citizen of that country with all rights that are attached to such citizenship. In other words, in those countries citizenship by birth is a right, stemming from “jus solis,” the law of territorial origin (unlike the UK where it has been made a right depending in part on your parentage).

Harking back to the ancient system of the rights of Roman citizens under Roman law, Portuguese law confers the right of residency followed by the right of citizenship on anyone who meets the specified requirements.

This is an important distinction. When emigrating to Canada or the USA, for example, you are granted a permission because the government sees some benefit in having you present in the country. Whether that benefit is increased happiness for one or more of its citizens (reunion of families) or helping the government at the next election (more jobs as a result of your investment or more taps getting fixed because you are a much-needed plumber), your status is still undetermined until such time as you have qualified for citizenship; only when you become a citizen is your legal status by right rather than by permission.

Clearly, the simple right to reside does not bring the country any benefits unless it is turned into an obligation to reside — which is exactly what these countries require you to do in order to become a citizen.

The attitude of Portuguese law is quite different, and is reminiscent of the requirements for Roman citizenship in the Roman Empire 2,000 years ago. When Rome ruled the known world, Roman citizens were an elite within the empire. Citizens had rights, such as protection from arbitrary punishment by the authorities and the right to a trial. By contrast, the Roman authorities could punish anyone who was not a Roman citizen, without due process of law.

This elite status, of citizenship, was open to anyone who fulfilled certain requirements. For example, a slave could become a citizen if he could afford to purchase his freedom. Naturally, one route to citizenship was birth, though only if freeborn, but citizenship was open to all who satisfied certain requirements.

And so it is in Portugal today. One can be born Portuguese — and obviously since slavery was abolished everyone born in Portugal is freeborn,
and is automatically a Portuguese citizen (even if born of foreign parents, except parents in the employ of a foreign government or not resident in Portugal for at least six years) — or one can become Portuguese. To become Portuguese you need only fulfil certain specified conditions. If you meet those conditions you must be granted Portuguese citizenship.

The right of residency

As is the case with most other nations (apart from the few which will confer citizenship without residence), you must first become a resident of Portugal before you can become a citizen. The qualifying period of residency is 6 years.

But, as pointed out above, you acquire the right, but not the obligation, to reside in Portugal. The consequence of this attitude of Roman law is significant: a right is something you can exercise, or not, as you choose. Provided you maintain for 6 years your right to reside in Portugal, you can then become a citizen.

Because the right to reside is not an obligation to reside, its mere acquisition, and its maintenance for 6 years thereafter, is enough to qualify you for citizenship without your having actually physically to reside.

While this is not without cost, the requirement that you maintain the right of residency means that you can continue to pursue your other aims in life without significant interruption. If your current income, or prospects of substantial increases in that income, depend on your continuing to stay where you are and to do what you are now doing, then you do not have to search for equivalent opportunities in some other country. Or even worse, suffer the decline in your standard of living that could follow a move to another country.

A man of means

So what are the specific requirements? The short answer is that you must be a man of means. This is not as difficult as it may sound. The term has a specific definition: a person who owns a “hearth” in Portugal.

In other words, the primary requirement to qualify for Portuguese residency is the ownership of a house in Portugal.

The primary requirement for citizenship is that you should have maintained your right of residency for six years.

In the simplest terms, to become a Portuguese national — to obtain a second passport — you must have owned a house (or apartment) in Portugal for a period of 6 years.

The advantages of Portuguese citizenship

First, under Roman law a wife and children were considered chattels (i.e., property). From our modem human rights viewpoint this may be an unfortunate hangover from antiquity, but for our present purposes it is a good thing, because if the head of the household qualifies for Portuguese residency, all his or her dependants automatically qualify too. without extra cost.

In practice this means that a man may acquire the right of residency for his wife, his unmarried daughters of any age (under Roman law unmarried daughters of any age are considered dependants) and sons under the age of 18. A woman head of household may petition for her children to be treated similarly.

Second, Britain and Portugal have long been allies. Under the alliance, which dates back to 1492, Portuguese nationals have had preferential entry into the UK. On top of that piece of history there is now a new element in the form of Portugal’s membership of the European Economic Community.

Portugal joined the Community on 1 January 1986. All Portuguese will be entitled to the rights of free movement of labor and freedom of establishment provided for by the Community’s constitution, the Treaty of Rome (nothing to do with the Roman empire). This means that Portuguese citizens may live and work in any of the other member countries: Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, Spain, the Netherlands, the UK, and West Germany. For citizens of Portugal the Treaty provisions that grant these rights will not come into force until 1 January 1993 (1996 so far as Luxembourg is concerned), but 1993 will have been reached before anyone starting the process after reading this Report acquires Portuguese citizenship.

Third; due to the special relationship that existed between Portugal and Brazil, Portuguese nationals may with relative ease become temporary or permanent residents of Brazil.

Fourth, the holder of a Portuguese passport can, under present dispensations, visit virtually every country in the world without having first to go through the process of obtaining a visa. In addition, Portugal is among a number of countries that persistently press the US to abandon its policy of requiring every visitor to have a visa, and instead adopt the European practice of granting entry to nationals of most countries at the port of entry.

Fifth, as already mentioned, the process of acquiring Portuguese citizenship does not require you to live in the country.

In summary, as a Portuguese citizen you can effectively choose to live and work almost everywhere in Western Europe, plus Brazil, and visit most countries without restriction.

The eight steps to citizenship

Step #1. Enter into a contract to purchase a house or apartment in Portugal. The property could be of any value — even, theoretically, a shack in the slums of Lisbon. It must be residential, of whatever design or value. Undeveloped land does not count. For practical reasons the property should have a value of no less than $US30,000, and for investment purposes — remember that if you aim to rent it out it must be attractive to potential tenants — maybe you should spend somewhat more. I will mention lower down some examples of the kinds of property known to me at the time this is written, and the indicated price levels.

Something else you should be aware of when deciding the amount of your investment in Portuguese property is a recent development arising from Portugal’s entry into the European Economic Community, coupled with the nervousness in Whitehall about possible increases in immigration into Britain. The British government complained to Portugal about what it regarded as insufficiently tight control of immigration into Portugal from outside the Community (as we have seen, this amounts to an open door indirectly into Britain). The Portuguese government, in response, has made no official change in its laws. However some change of attitude has taken place nevertheless, and I am advised that, in order to have the best chance of passing through Step #3 without delay, a purchase price of the equivalent of $U575,000 should be treated as a minimum, with a down-payment of 50%.

Because this is clearly a politically sensitive area, I would advise potential buyers who have residence and citizenship as their objective to check carefully on the up-to-date position before entering into any irrevocable commitment to purchase.

Step #2. Apply for a police certificate of no criminal convictions in your current country of residence. (It may be suggested that you should obtain such a certificate also from Portugal, but not all Portuguese consulates require The former will normally require a letter from the Portuguese consulate or embassy to the police, requesting the certificate (which in Hong Kong will normally take about a month to get). Also obtain from an approved doctor (the consulate will supply his name and address) a certificate of good health for each person to be included in the residence application. This should be translated into Portuguese. At the same time open a current account with a Portuguese bank, and deposit in the account a sum equal to 312,000 escudos (about $US2,400) for each person included in the application for residence.

Step #3. Apply to the Portuguese consulate or embassy for residence in Portugal. You will need the following documents.

Birth certificate(s)

Marriage certificate (if married)

Current passport(s) or other travel document(s)

Identity card(s) where applicable

Certificate of no criminal conviction

The official receipt relating to your purchase of Portuguese property, or a copy of the purchase contract

Two passport photographs for each person

The certificate(s) of good health

A declaration of intent and financial capacity. The financial statement should show a monthly income no less than $US1,500 — a man of means must after all be able to demonstrate that he can support himself and his family. However this is another item which is not invariably required, and the Hong Kong Consulate, for example – does not ask for it.

Your Portuguese bank statement, plus a reference from your regular bank, (though the latter is apparently not required by all consulates — for example the Hong Kong Consulate does not ask for it)

A form concerning your compliance with Portuguese exchange control in paying money into Portugal in respect of the property.

A certificate, obtained locally in Portugal, to the effect that the property provides adequate housing (although again not all consulates require this — in Hong Kong it is not requested, but an applicant from Kuwait was asked for one).

Readers who have seen previous editions of this report will notice that the list of requirements at Step #3 has lengthened noticeably. This would appear to be the result of the pressure referred to earlier. I should stress the importance of taking the utmost care to see that all the necessary documents are provided, and that all forms are fully and accurately completed. Any slip can lead to weeks or months of delay.

Step #4. Receive temporary 90-day Residency Visa.

Step #5. Travel to Lisbon and, with your Portuguese attorney, visit the Aliens Department for the issue of your Permanent Residency Visa from the Ministry of Internal Affairs. All family members included in the application should go with you — except children under 14, who are covered automatically under the parent’s application, and older children still at school (up to 18) who may give a power of attorney. If any are unable to do so, it may be possible for them to be represented by an attorney appointed for the purpose. Allow two or three weeks for getting the visas.

At this point, each family member included in the application has won the right to reside in Portugal. There are only two more hurdles to take before you all can achieve citizenship.

Step #6. For the six years following step #5. you must renew your right to reside in Portugal each year during the month shown in the residency card — and only during that particular month. This entails travelling to Lisbon and, with your attorney, visiting the Aliens Department to renew the card.

If for family or business reasons you are unable to make the trip in the correct month, your attorney may represent you. The fee for this service is approximately $US180. In theory, your attorney could represent you every time; in practice it is advisable that you should visit Lisbon at least twice during the six-year period after your initial visit.

Step #7. Upon completion of the above requirements, so having maintained for six years your right to reside in Portugal, there is one remaining test. This is in the Portuguese language. It allows considerable discretion on the part of the examiner, so it may be preferable to take it outside Portugal, at an embassy or consulate where the examiner may be lenient.

While learning another language may seem an unnecessary and perhaps unattainable accomplishment, remember that you learnt your native tongue without effort when you were a child, and that in all probability if you are reading this Report you have learnt at least one other language. Anyway, you will have six years in which to learn this new one — always assuming you do not know it already.

Moreover, you do not need to be fluent in Portuguese in order to pass the test. Depending on where you take it, you need master probably only about half a cassette course, and you can take the test any number of times until you pass. The questions and procedures are basically the same each time. So no matter what your native language, you should not be afraid of this requirement. It is not as difficult as it may have sounded when it was first mentioned.

Only the head of the family needs to take the language test, plus sons and daughters who have tuned 18 at the end of the six-year period.

Step #8. Having become a resident of Portugal and passed the language test, you now have the right to become a Portuguese citizen and to hold a Portuguese passport. You do not have to exercise the right immediately — there could be reasons why you should not (see dual nationality below) — so you may for the time being remain merely a resident. In this case you must carry on renewing your residency card, but now you need do so only every five years instead of every year. After 20 years’ residency it will be renewed for life.

The Portuguese alien passport

If your current travel document is restricted, like for example a Hong Kong Certificate of Identity, or if you are stateless, then upon completion of step #5 above you can immediately qualify for a “Portuguese alien passport.”

This is in effect a Portuguese “Certificate of Identity.” It is a travel document but you must seek a visa almost every time you travel on it.

It does not confer the same rights as a full Portuguese passport.

Nevertheless, one day after you have acquired residency in Portugal, you can obtain the alien passport in Lisbon if you currently hold a restricted travel document. The Portuguese alien passport has one great advantage over a Hong Kong Certificate of Identity: it is Portuguese, and therefore gives you the right to leave Hong Kong at any time, if only to travel to Portugal.

Dependants

As noted above, application by the head of the household for residency in Portugal can also include a wife, all unmarried daughters, and sons under the age of 18. You cannot include other relatives, such as older sons, married daughters, parents, or cousins, in your initial application.

However, once you have acquired Portuguese residency you may, so long as you or at least one member of your family are actually living in Portugal, bring other relatives to live there provided you guarantee they will not become wards of the state. Those other relatives may themselves acquire Portuguese residency and citizenship in their own right by satisfying the same requirements — except that they need not become property owners.

The disadvantages of Portugal

There are two disadvantages in becoming a Portuguese national. The language test is one. The second is more serious.

Any male born in Portugal or born of Portuguese citizens is liable for service in the armed forces. So your sons born after you have become a citizen will be liable to do their military duty. Luckily however, Portuguese law provides an option. It is possible to make a payment in lieu of performing the service. The amount in question at current rates is about $US2,000.

Dual nationality

If you become a Portuguese national, Portugal does not require you to renounce any other national status that you may have.

Not all countries are so tolerant. The US used to refuse to recognise dual citizenship: any person becoming a US citizen was required to give up his former national status.

New Zealand, the UK and Canada are not disturbed by their new citizens retaining other nationalities.

Australia is a special case. For an Australian it depends on how that second nationality was acquired. A person becoming Australian does not have to give up his original passport. But an Australian who actively seeks another citizenship must turn in his Australian passport. If the acquisition of a second nationality by an Australian is a secondary consequence of some other event, such as marriage, then the Australian is not actively seeking another national status. But if he were to seek Portuguese citizenship via the purchase of property in Portugal, he would be deemed an active seeker of that citizenship and would be required by the Australian government to relinquish his Australian passport on receipt of his Portuguese one. Of course an Australian’s investment in Portuguese property for its own sake does not have this effect, because the acquisition of citizenship is neither an intended nor an automatic result — one has to go through the other motions as well.

Switzerland, too, is a special case as regards dual nationality. Anyone wishing to become a naturalised Swiss must, under Swiss law, refrain from doing anything that aims at the retention of his current citizenship, and so far as can in the circumstances be expected, he should renounce his current citizenship. On the other hand, a Swiss who obtains another

nationality by naturalisation does not, under Swiss law, lose his Swiss citizenship. Also, a woman who marries a Swiss national can immediately become a Swiss citizen; but a man who marries a Swiss woman must reside in Switzerland for 12 years — and may then apply for citizenship without any guarantee of success.

If you have any doubts about your country’s attitude to dual nationality, it would be wise to find out before you start to seek a second citizenship.

If necessary, obtain legal advice, rather than rely on a ruling from a government representative, who may not know the full answer and may not tell you what exceptions may exist.

Four Valuable Passports Anyone Can Obtain

For Americans, the right to dual nationality is a recent development resulting from a Supreme Court decision. Most Americans, including some consular officials, still think it is impossible.

Of possible interest to people in Hong Kong is the fact that Chinese law prohibits dual nationality. Thus when Hong Kong becomes part of China in 1997 its citizens could in theory be banned from applying to other countries for naturalisation. Those already with second passports could be required to surrender them, or alternatively surrender their Kong status, and presumably their at present putative Chinese nationality.

The difficulties this situation may present to those who hope to hold public office in the Special Administrative Region (which is what Hong Kong will be after the colony reverts to China) remain to be seen.

It was announced in mid-December 1987 that China was aware of the possession of foreign passports by many Hong Kong people, and recognised their need for such passports. A spokesman for Beijing at the time, indicating the possibility of change (described as unprecedented), was reported as saying that such change might allow foreign passport holders in Hong Kong to be excused from the obligation to report their possession of such passports to the government, and continue to hold them. Such change would not however apply to holders of full British passports, it was added.

At end-December 1987 the uncertainty over future prospects for Hong Kong people desirous of possessing a second passport was underlined by a further statement from the Beijing official, denying the accuracy of the earlier press reports.

Clearly this situation needs to be watched if you are contemplating remaining in Hong Kong after 1997, if you hold, or are contemplating getting, a full British passport — or any other.

If you are a citizen of a country that requires you to renounce that citizenship on acquiring a different one, yet you still wish to have the option of a second nationality, then Portugal would seem to provide the answer: you simply complete steps #1 through #7 as outlined above. This gives you the right to complete your acquisition of Portugese citizenship at any time, provided you observe the essential requirement of maintaining your status as a Portuguese resident (and if you have put off taking step #7, the language test, keep up your Portuguese lessons). You then have the security you seek, of a second national status which you can take up at any time — taking the final steps when whatever events you fear might happen do happen.

This status as a Portuguese (or other foreign) resident may bring you valuable tax advantages, as suggested below.

The investment in Portugal

The prime qualification for residency is the ownership of a “hearth” in Portugal. This house or apartment can be of any value provided it qualifies as a residence.

However the property should have a certain minimum value on the basis that a man of means is likely to have a residence that is worth a certain minimum. The authorities do have an element of discretion in assessing whether you are a man of means — and have become more stringent in making that assessment.

There is a second reason why you should consider property that is worth more than a bare minimum: the principles of investment. While what we might call the entry price may turn out to be higher than, for example, the amount you have to pay to get a Belize passport, there is an important difference.

What you pay for your Portuguese property is put into an asset which will always have a market value — and. if well-selected, a rising market value.

This not the case with your Belize government bond. Its market value is immediately a mere fraction of what you paid for it, as the Belize government retains the interest, while you receive the principal sum in ten years’ time. That is something you can sell — but only at a substantial discount from its face value.

Provided you comply with Portuguese exchange control when you first purchase the property, you can repatriate the proceeds of any sale, and in the meantime repatriate the rent you may receive. If the mention of exchange control worries you, bear in mind that Portugal is under an obligation to relax such controls by 1 January 1993 as a condition of its membership of the EEC.

So long as you continue to own your Portuguese property, I am assuming that you will want to rent it, or at least to be able to. This means you should buy a property that will be attractive to prospective tenants.

If carefully selected, the property should appreciate in value over time and could repay the entire legal and other costs associated with the seeking of residency and ultimately citizenship.

Naturally, were you to sell your Portuguese property without replacing it before acquiring Portuguese nationality, your principal claim to residence would lapse. But that is an option you always have. Your investment in Portugal is not dead money, but, if you have bought well, an asset which in normal circumstances can be expected to grow in value and produce income.

Once you have become a Portuguese citizen, you no longer need to own a Portuguese property: such ownership is only a requirement of your obtaining and maintaining your residency status.

A passive real estate investment can also be more secure than a business investment in a new country. So the price of entry into Portugal — price of the property — can be far less expensive than, for example, the minimum of $C100,000 required under Canada’s business/investment scheme.

In Chapter 9 I will try to demonstrate how, by the time you get your Portuguese citizenship papers after six years, your net cash outlay could fall to zero — or even represent a modest profit.

But, to return to the earlier question, what is that minimum value for your house or apartment that will safely render you a man of means in the eyes of the Portuguese officials dealing with your case?

In the previous edition of this Report I suggested a minimum of $US30,000 for the purpose of demonstrating that you were a man of means, but for investment purposes a practical minimum in the range of $US50,000-$60,000. This needs to be revised in light of the depreciation of the dollar, but it seems advisable to put the figure up by more than just the amount that an adjustment for that depreciation would involve. This is because of the change in attitude referred to in the second paragraph of Step #1, under the heading “The eight steps to citizenship,” and because at the same time property prices have risen since the last edition, seemingly rather more than the dollar has gone down. All in all I am inclined to suggest that, so long as your pocketbook allows you a choice, go for a property in the $US100,000 price range.

The cost of living in Portugal

Tens of thousands of retired people from England, Germany and elsewhere in northern Europe live in southern Portugal. Hundreds of thousands more go there on holiday. One attraction, especially for retired people on fixed incomes, is the relatively low cost of living, as well as a temperature that is reasonably bearable all the year round. relative to what they are accustomed to suffer in the northern winters.

An article in the British magazine Resident Abroad has put the point about the cost of living in this way: “Expatriate settlers who wish to escape the invasion [of tourists in the summer months] will often arrange to let their property for the high season. . . so covering their expenses for much of the rest of the year [i.e., the other ten months].

Assuming you own your house and a car, you can live in relative luxury for around $US500 a month. This is for a couple without children. Such a budget includes eating out about twice a week (with wine, naturally), and generally not stinting on the luxuries of life, at least by northern European middle-class standards. You could live much more cheaply if you wished.

It is likely however that the very low cost of living will rise following the effects on Portugal’s economy of European Community membership. But its major competitor in this retirement market, Spain, will be similarly affected. So Portugal should remain cheap — relative to the countries of Northern Europe.

Taxation

You are deemed to be fiscally resident in Portugal if you live there for more than 180 days (yes, 180, a slight variation from the more usual 183-day rule referred to elsewhere) in any fiscal (which in this case is the same as calendar) year.

Alternatively, you are deemed to be fiscally resident if on 31 December in any year you maintain residential accommodation in Portugal in circumstances that indicate that you intend using it as an habitual abode. In view of the possibility of wide interpretation of this alternative condition (which may be done away with in the tax reforms currently expected to be effective from 1 January 1988), you would be well advised to seek expert tax advice on your specific circumstances and intentions.

If you are fiscally resident, you must pay Portuguese taxes.

A Portuguese national (i.e., you. after completing the eight steps) may be required to pay tax on income arising in Portugal, even if not fiscally resident. But a Portuguese citizen, not fiscally resident, is not taxed on income arising outside Portugal.

An alien residing in Portugal — say a retired Briton — with an annuity or pension arising outside Portugal should in theory, and subject to any mitigation provided by any relevant international tax treaty between Portugal and the country from which the income is received, pay Portuguese income tax. Portugal has not rushed to collect such taxes, because an exodus of retirees from the Algarve could follow. However it is a point to bear in mind.

A Portuguese national (or an alien) fiscally resident in Portugal must pay Portuguese income tax on his world-wide income (other than income from an overseas employment). This is undesirable: the tax rate rises progressively to 70% or 80% on the income above $US70,000 or $US80,000 — the different rates and different levels here result from different treatment for married couples and single people.

How Dual Citizenship Can Save Your Life

Anyone (wherever resident) with property in Portugal must expect to pay contribution predial, or real estate tax. This is not a personal tax, and so does not, so far as I have been able to ascertain, come into the progressive tax scheme, but it is something on which advice should be taken nevertheless. I will refer to it in slightly greater detail in the chapter dealing with Portuguese property.

The (relatively) good news however is that Portugal is currently overhauling her tax laws, and it is forecast that with effect from 1 January 1989 the maximum rate of tax applied to personal income will fall to 45%.

It cannot be emphasised too often that before making any irrevocable decisions you should obtain expert advice on the tax consequences.

Doing business in Portugal

In the next few years, Portugal could be one of the faster-growing economies in Europe, as a result of its entry into the European Community.

It is a low-cost manufacturing location for European Community and other markets where Portugal has preferential access. As a gauge of labor costs, Portugal’s average per capita income was $US2,247 in 1983 — about 20% the level in Germany or France. Many Japanese, US, South Korean and multinationals have set up plants to benefit from these and other advantages.

For example:

  • a foreign investor can qualify for a 10-year tax holiday (negotiate it first); and,
  • there has been an influx of skilled labor from France — Portuguese citizens who have been bribed to go home to help solve France’s unemployment problem.

Doing business in Portugal is worth considering — on grounds completely different from the purpose of this monograph.

Political stability

The Social Democratic party’s victory in gaining 148 of the parliament’s 250 seats, in 1987, has given Portugal perhaps the first really stable government for fourteen years. Mr. Cavaco Silva’s conservative administration is thought to offer the country its best chance in years to solve the problems of red tape, inadequate infra-structure, and high public-sector deficits that have discouraged investment. 1987 will see an increase in corporate investment of about 15%.

Nevertheless, one should always be cautious, and particularly about just where you buy your property. An Algarve property is probably safer than in Lisbon — the Algarve is entirely dependent on tourism (foreigners) while demand for property in Lisbon is largely domestic, apart from demand generated by Portugal’s new membership of the European Community. Only the most oppressive government would destroy a major foreign-exchange earner such as the Algarve. But even a conservative government might place rent controls on your Lisbon property.

Although it is only fourteen years since Salazar’s dictatorship was overthrown, it seems unlikely that oppression from either left or right could succeed.

Why you should act now

As one observer put it: “Portugal is a giant loophole in the British Nationality Act.” Portugal has an open door: qualify and you are a citizen. Portugal’s nationality laws, coupled with the freedom of movement within Europe that is enshrined in the Rome Treaty enable almost anyone to reside — eventually — in any country in the European Economic Community. I am pleased to report that since How Te Get A Second Passport was first published dozens of people I know of (and no doubt many others) have followed the guidelines I have laid out and become legal residents of Portugal.

However, I also forecast at that time that Portugal would come under pressure from Britain to tighten its citizenship rules. Britain is paranoid about hordes of Hong Kong Chinese coming to the UK. Not long ago the British government focused on the supposed ability of Hong Kong Chinese to gain a Portuguese passport via Macau. That door has already been shut. The Portuguese have, however. given into this British pressure in one way: by tightening up their definition of a “man of means.”

Other nations in the European Community are not much better than the British when it comes to the prospect of foreigners, especially non-white foreigners, gaining the right to live and work in their midst. The Germans have been trying to send back the Turks. The French have tried to send back the Portuguese. The British do not want any Chinese, Indians, Tamils, or blacks — or even Americans, probably, unless they are very rich (and maybe not even then). It seems inevitable that sooner or later the Community will put more pressure on Portugal to make it tougher for someone like you — whether you be white, black, coffee-coloured, yellow or any other description — to become a citizen.

If you act now, and complete the process, you wil1 be protected by the Roman law prohibition of retroactive laws. Wait and you may find the door will be closed.

[Please note: for guidance on certain aspects of the tax situation in Portugal, I am indebted to the international accountancy firm of Arthur Andersen, which has offices all over the world including Hong Kong and Lisbon.]

Chapter 7