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Residency and visa options in Portugal and Spain for British expats post Brexit

If you are relocating to either Portugal or Spain, this article explains what you need to know about visas in both countries – which is essential information for British expats post Brexit.

Written on 14 February 2022

If you are relocating to either Portugal or Spain, this article explains what you need to know about visas in both countries – which is essential information for British expats post Brexit.

From fantastic weather, vibrant cultures and cuisines to cosmopolitan cities and stunning coastlines, Spain and Portugal have long been highly attractive destinations for British expats looking to move abroad.

Post Brexit, one of the biggest consequences for British citizens was restriction of movement. Having left the EU, we no longer have the right to freely roam the continent, and live wherever we like for as long as we like. Instead, UK nationals can only spend 90 out of every 180 days in the EU unless they obtain a visa.

For obvious reasons, this now makes a permanent move to the EU difficult and poses considerable obstacles when planning a relocation to some of the most popular nations for British expats, Spain and Portugal. Nevertheless, with careful planning, preparation and expert advice, making a successful move to these countries is still very much possible.

Obtaining Residency in Portugal

There are several different ways of achieving residency in Portugal.

Portugal’s D7 Visa

A D7 Visa in Portugal, also known as the Passive Income Visa, is ideal for those who can demonstrate that they receive a passive income. Retirees or those who obtain income from investments or rental properties would chiefly benefit from this, but a D7 Visa can also be approved for those who are working remotely as long as you have the consent of your employer.

Holders of a D7 Visa are entitled to remain in Portugal for four months, after which you can obtain a residence permit for one year. This can be renewed for successive periods of two years, and eventually, after five years, be converted into a permanent residence permit.

To qualify for a D7 Visa you will need to receive an income of at least €8,460 per year or €12,690 for a couple. This increases by €2,538 per year for every dependent child included. A successful application for the Visa is contingent on providing proof of income and address, a clean criminal record and proof of health insurance.

A D7 Visa combined with NHR (Non-Habitual Residency – more details below) is one of the best options for wealthy retirees, offering right of abode and residency in a benign tax environment.

The Golden Visa

This is a path to residency in Portugal via investment, also known as the Autorização de Residência para Investimento (ARI). Various investment options exist but the most common is to purchase real estate. Doing so enables you to apply for permanent residency and later Portuguese citizenship after five years.

Criteria for obtaining a Golden Visa includes the purchase of real estate valued at €500,000 or above. This is reduced to €400,000 if the property is located in a low-density area. Only certain areas of Portugal qualify, and Lisbon, Porto and parts of the Algarve are excluded.

The Golden Visa in Portugal is a good option for expats planning to travel or spend considerable periods of time in the UK. Retaining the residency permit only requires a minimum of seven days residency in Portugal in the first year, and 14 days in the following two-year periods.

As with the D7 Visa, you also need proof of a clean criminal record and health insurance, as well as a sworn statement that you will continue your investment for at least five years, plus official documentation of your investment.

One of the additional key benefits of the Golden Visa is the ability to travel within the 26 countries of the European Schengen Area. Your family – including spouse, dependent children and parents – are also automatically eligible for this. If you do apply for Portuguese citizenship after five years then you’ll have the right to live anywhere in the EU. Those planning to permanently relocate to Portugal can also apply for NHR (Non-Habitual Residency) status, which offers highly favourable tax benefits.

The D2 Visa

If you’re looking to establish a business in Portugal then a D2 Visa could be the best route to residency for you. Intended for freelancers, independent professionals and entrepreneurs, this residency permit requires establishment of a company (such as a limited liability company or sole proprietorship) in Portugal. Alongside this a business plan and proof of financial assets to set up the business are required, as well as criteria such as a spotless criminal record and proof of health insurance.

Non-Habitual Residency (NHR)

Once you obtain a residency permit you may qualify for Non-Habitual Residency in Portugal, which offers numerous attractive tax benefits for successful applicants in their first 10 years of residence in the country.

The most important thing to know about NHR status in Portugal is it’s essential to adhere to the strict deadline for application. Once you are resident in Portugal you have until the 31 March of the following year to apply for NHR. You also need to spend more than 183 days in one year in Portugal (and remain habitually resident in Portugal), as well as possess a home in the country (this can be owned or rented). Regardless of whether you’re employed or self-employed, occupations must be deemed a ‘high add-value activity’.

If you do successfully apply for NHR status then the tax advantages are manifold. If you earn income or are registered as self-employed then you will be taxed at a flat rate of 20%.

For pension income, taxation is set at a rate of 10%. For those who hold a QROPS or QNUPS, correctly structuring your income benefits could result in just 15% of income being subject to tax. As NHR pension tax is 10% this means an effective tax rate of just 1.5% however this would depend on how the ceding scheme prior to a pension transfer was funded as employer funded schemes are treated differently to retirement savings.

Foreign source income is exempt from taxation in Portugal under NHR (although it would be taxable in the UK).

Most importantly, dividends could potentially be tax-free in both Portugal and the UK. This is because they are categorised as foreign source income in Portugal and would ordinarily be subject to taxation in the UK but owing to the UK’s ‘disregarded income’ rules, UK dividends are exempt from tax for non-residents.

After the 10-year period of NHR ends there is no possibility of renewal, although you can continue as a Portuguese resident providing you meet the relevant residential criteria. If you do so it’s essential to establish tax-efficient structures for your assets so you can best prepare for a permanent life in Portugal.

Applying for residency in Spain

Non-Lucrative Visas

British retirees emigrating to Spain may qualify for a Non-Lucrative Visa in Spain. The chief criteria for this residency permit is that the holder must obtain their income through passive means (such as pension, investment or rental income, or savings). They must not work in either Spain or their home country, and must be able to show they have sufficient income to be self-sufficient. Successful applicants will be able to demonstrate that they have a minimum of €27,792.92 per annum in passive income or savings. An additional €6,948 is required for each accompanying family member.

A Spanish Non-Lucrative Visa is valid for one year and can be renewed for two more years and another two-year period following that, after which it’s possible to apply for permanent residency. Proof of address, income, a clean criminal record and comprehensive health insurance is also required.

The Golden Visa

Similar to its Portuguese counterpart, Spain’s Golden Visa offers a path to residency via investment, the most popular of which is the purchase of real estate worth €500,000 or more. The Golden Visa only requires one visit to Spain every year, and there is the possibility of permanent residency after five years and citizenship after 10 years. A clean criminal record and health insurance as well as proof of investment are also needed.

As with Portugal, the benefits of a Golden Visa in Spain are considerable, including the ability to live, work and study in Spain for you and your family members, visa-free travel in the Schengen Zone and a path to Spanish citizenship and the unfettered access to the EU that this brings.

Entrepreneurs Visa

More specialised in nature, this residency permit is designed for expats who want to set up a pioneering business that promotes the socio-economic development of Spain, generally technology companies.

Highly Qualified Professional Visa

Only obtainable by employers who want to offer individual employment in Spain. It’s a difficult and long application process, with employers needing to prove there is a lack of candidates available within the EU to fill the position.

The importance of expert advice when choosing the correct visa

Whether you’re moving to Portugal or Spain from the UK, and whichever visa you apply for, ensure you have your financial affairs in order and are in the best possible position to apply for residency by securing the advice of qualified experts.

Experts with extensive experience assisting people moving to Spain and Portugal will be able to discuss each of the options available for each country and present you with a plan for obtaining residency in your preferred destination, maximising the financial benefits as well as for your own lifestyle.

In association with

Fiduciary Wealth