Law No. 29/2012 of 9 August amended Law No. 23/2007 of 4 July, governing the legal Framework of the entry, stay, exit and expulsion of foreigners from the Portuguese territory.

Having as its main purpose to attract investment and foreign capital, Law No. 29/2012 added a new article 90-A to Law No. 23/2007, which, subject to the fulfilment of certain requirements, provides for the granting of a residence permit to nationals of third countries seeking to pursue an investment activity in Portugal. Moreover, article 90-A(3) sets out that the conditions for the application of this legal framework must be established by order of the areas in charge of this question.

In this connection, the legal framework of the "Residence Permit for Investment Activity" (hereafter shortly referred to as "ARI") was completed with the publication of the joint orders of the Ministries of Foreign Affairs and of Home Affairs.

On 8 October 2012, Decree No. 11820-A/2012 of 3 September, defining the conditions of application of the special ARI framework, came into effect. A little more than three months after that, Decree No. 1661-A/2013 was published on 25 January, taking effect the following day; the purpose of this Decree is to adapt and to make the ARI concession framework more flexible, by improving it and seeking to adapt it to the actual investment needs in Portugal.

This change of the legal framework of the ARI concession is a relevant measure for the attraction of foreign investment. This permit to reside in Portugal may be applied for by citizens of third countries, that is, countries that are neither in the European Union, nor members of the Convention implementing the Schengen Agreement, who pursue an investment activity, either personally or through a company, leading to at least one of the following situations in the national territory and for a period of at least five years:

  1. Transfer of capitals in an amount of 1 million euros or more;
  2. Creation of at least 10 jobs;
  3. Acquisition of immovable assets of a value of 500 thousand euros or more.

Therefore, this new framework concerns, in certain investment situations, holders of the share capital of a company with registered address in Portugal or in another Member State and with permanent establishment in Portugal, having their tax and Social Security situation in order.

Additionally, Decree No. 1661-A/2013 introduced the following minimum requirements: possibility of the financial investment being made in non-listed companies and the reduction of the minimum number of jobs to be created for these activities to be considered "investment activity" from 30 to 10.

Applicants to the ARI benefit from a special scheme of granting and renewal of the residence permit without the need to previously obtain a residence visa, provided the type of investment activity chosen by the applicant is carried out at the time the application is submitted.

From the time the ARI is granted, applicants become entitled to certain privileges and rights, such as: right of access to education and teaching in Portugal, right of taking up a subordinate and independent activity, right of access to the health system; right to family reunification, right of access to the permanent residence permit in accordance with the provisions of Law No. 23/2007 of 4 July, right to apply for the Portuguese nationality, in accordance with the legislation in force, among others.

Let us go into each of the investment activities provided for:

  1. Transfer of capitals of 1 million euros or more:

In investment situations involving the transfer of capitals of 1 million euros or more, the applicant must produce a declaration issued by a financial institution authorised to carry on its activity in Portugal certifying the actual transfer of the capitals to a bank account held by the same as the sole and first holder or for the acquisition of shares or holdings in the company.

Where the investment was made through a company, the applicant should also produce a certificate of the commercial registry certifying that it is the holder of the corresponding holding, evaluated in the amount of the required investment.

In terms of the renewal of an ARI granted through the transfer of capitals, the investor must produce evidence, by reference to the minimum value of 1 million euros and depending on the method chosen, of the fulfilment of one of the following conditions: holding of an average quarter balance in its favour in that amount or ownership of a holding in a company, by means of an updated certificate of the commercial registry.

In the latter case, the holder of the ARI must also produce a document issued by the Securities Market Commission or by a financial institution certifying the holding of shares of companies listed on the Stock Exchange or, in the case of non-listed companies, a declaration of the administration or management of the company and report of the certified presentation of accounts attesting to the ownership of such holding and to the investment to be carried out.

  1. Creation of, at least, 10 jobs:

Where the ARI is obtained by means of an investment in an activity leading to the creation of, at least, 10 jobs, the applicant must provide evidence that the employees are registered with Social Security. To that effect, it must produce an updated declaration issued by this entity.

  1. Acquisition of immovable assets of 500 thousand euros or more:

The activity which, in practice, has been the most viable and accessible for the granting of an ARI is the real estate investment, namely through the acquisition of immovable assets in an amount of 500 thousand euros or more.

Where the investor chooses this activity, the same must prove that he owns the property, albeit as co-owner, provided that each co-owner invests at least 500 thousands euros, or as promissory purchaser of immovable assets, provided that the advance payment of the price made by the applicant is, at least, the minimum amount referred to above.

To verify the minimum requirements established for this investment activity, the applicant must, upon submitting the application, produce a document evidencing the acquisition or promise concerning those properties, which document must include a declaration issued by a financial institution operating in Portugal attesting to the actual transfer of capitals for one of those purposes, that is the final acquisition or the payment of a down payment, or also an updated land registry certificate showing the registration of the acquisition or, possibly, the promise of purchase and sale in favour of the investor.

Whenever the granting of the ARI was based on a promissory contract of purchase and sale, the final contract must be produced at a later stage, but, in any case, before the application for renewal.

However, it should be emphasised that the properties purchased for the purpose of this investment activity may be encumbered, provided the same have a value of more than 500 thousand euros and are encumbered for a higher value, or may, possibly, be rented out or their operation be assigned for commercial, tourist or agricultural purposes.

Also in connection with the acquisition of properties for the purposes of obtaining an ARI, it is important that the applicant bear in mind the need to pay the charges associated to the acquisition of property, in the particular taxes and duties, notably: municipal tax on real estate transfer, stamp duty and municipal tax on real property.

With regard to periods of validity, the legal framework under consideration sets out that

ARIs are valid for one year from the date of issue, and can be renewed for successive two years periods, provided the conditions that let to its grating are met.

In order to obtain the ARI, citizens from third countries should have their stay in Portugal regularised within a 90-day period from their first entry into national territory. For such purpose, in certain cases, they will be required to obtain a short-term visa, commonly known as Schengen Visa, from the Portuguese consulate in the country of origin; they must also prove compliance with the minimum quantitative requirements relating to the investment activity chosen.

It should also be explained that, after the last legislative change, in order to obtain a renewal, holders of ARIs must prove that their stay in the national territory was longer than 7 consecutive or non-consecutive days, in the first year, and 14 consecutive or non consecutive days in each two-year period thereafter.

However, the law is demanding on other points concerning the personal situation of investors. There must be no conviction for crimes punished in Portugal with a term of imprisonment of more than one year and the applicant should not find him or herself in the period of prohibition of entry into Portuguese territory. Finally, there must be no negative information relating to the applicant in the Schengen Information System, nor in the SEF Integrated Information System for the purpose of admission.

The advantage of the granting of this authorisation is that, like with any other person residing in Portugal, the investor holding an ARI does not need a Visa to enter and travel around in the Schengen Space.

We hope to have clarified the essential aspects of the legal framework in force concerning the concession of ARIs, which we consider is an important incentive to the investment by citizens of third countries.