the henley & partners forum 2014 in malta

Portugal Golden Residence Permit Program Andrew Coutts Managing Partner Henley & Partners Portugal The Henley & Partners Forum 2014 29th May 2014

Presentation Contents

Welcome and Introduction

Henley & Partners Portugal

Portugal Overview

GRP – Golden Residence Permit program overview

Tax Considerations

Residence Program Comparison

The Real Estate Market

Conclusions

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Welcome and Introduction

Henley & Partners Portugal

Based in central Lisbon - Team of 15+ in-

house and out-sourced professionals

Management of turn-key services:

•  Legal

•  Investment option selection

•  Real-estate procurement

•  Bank account opening

•  Tax advisory

•  Educational advisory

•  Financial & accounting management

•  Property management

•  In-house team of specialists – accountants, valuers’, surveyors, building consultants

•  Investment portfolio – three geographies

•  Development & investment mind-set

•  Due diligence •  Bespoke procurement service

•  €100.000 to €10 million range •  Assets with gross returns 4-6% •  Property management service

Henley Real Estate Services

Portugal Overview

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Portugal Overview – The Economy Q1, 2014

•  1.6 % growth in GDP in Q4’ 13 - 2nd

highest in the Euro Zone. Shrank back

to 0.7% in Q1 2014.

•  Portugal successfully completed the 3

year TROIKA program on May 17, 2014

•  10 year bond yields - c.3.87%. 5 year

borrowing costs - < 2.757%

•  Financing needs covered until Q2 2015

•  11th “best country” to do business

within the EU - World Bank

•  20th “best country” to do business in the

world (Forbes).

•  Ease of doing business - ranked 20th

out of 145 countries – Forbes 2013

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Portugal Overview

Golden Residence Permit (GRP)

•  For non-EU citizens desiring a residence permit within a 5 year program vision

•  Provides Schengen Area circulation – 26 European countries

•  Minimum mandatory stay in Portugal or circulation in the Schengen Area via Portugal - an average of 7 days per year over the 5-year period of GRP

•  Swift (<1 month) and simple

•  Provides eligibility for citizenship after 6 years of GRP related residence

•  There are three qualifying investment options: 1.  Minimum capital investment of €1 million;

2.  Acquisition of real estate with a minimum (debt-free) value of €500,000;

3.  Creation of at least 10 new jobs.

GRP - Proposition

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The key qualifying documents required for the GRP process are:

•  Passport stamp and/valid (Schengen) visa if applicable

•  International health insurance valid in Portugal

•  Criminal record certificate from the applicant’s home or country of residence

•  Proof of investment of any of the three investment options

•  Signed Affidavit guaranteeing compliance with the investment conditions

GRP - Key Qualifying Documents

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Tax Considerations

•  GRP investors are non-resident for tax purposes assuming < 183 days/year

•  GRP investors are liable to tax only on income (IRS, IMT, IMI, IS) arising in Portugal

A 10 year tax holiday is available for “new residents” (>183 days) as Non Habitual

Residents (NHR):

•  Foreign source dividends, interest, royalties and pensions – majority* tax exempt

•  Foreign employment income and earnings from certain professions tax exempt

•  Income from employment in designated activities is taxable at 20 percent

•  There is no inheritance or wealth tax in Portugal

•  Gifts between immediate family members are not taxable

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Residence Program Comparison

Country Portugal Spain Latvia

Program Name Golden Residence Permit Program Residence by Investment Program Golden Visa Latvia

RequirementsCapital €1M financial investment €2M Spanish Govt. bonds, or €300k Term deposit or Bonds

€1M bank depositReal Estate €500k €500k €143k (in Riga) or €72k (others)

Other Creating 10 new jobs €1M in company shares

Investment Term 5 years Indefinite 5 years for Capital investment

Duration 5 Year, renewable Initial 1 year visa 5 Years, renewable

Extendable for 2-year periods thereafter Subsequent Residence Permit extendable for 2-year periods

Stay periods Average 7 days/year No minimum stay in 1st. (visa) Year, but required visit to renew permit. None

Family Unification Husband, wife & dependant children Husband, wife & dependant children Husband, wife & dependant children (max. 10 people)

Bureaucracy Rapid < 8 weeks

Citizenship Eligible to apply after 6 years as resident

Can be eligible after 10 years as resident

Can be eligible after 10 years as resident

Visa Free travel countries 170 170Volume restrictions None known 800 in 2014 - reducing after

Taxation The personal tax rates range from 14.5% (for income under €7,000) to 48% (for income over €80,000).

Dividends, rentals etc 28%Corporation TaxInheritance Tax None

Wealth Tax NoneOther Favourable Non-Habitual Tax Regime

Observations Changes in 2014

€36k or €150k in a local company - tax and employee thresholds apply

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Residence Program Comparison

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Residence Program Comparison

Portugal

•  A well designed and efficient program

•  A highly competitive tax environment

•  Politically stable, culturally welcoming, neutral and passive;

•  A gateway, trading and investment platform for Africa and South America

•  Lisbon - international air transportation hub

•  A real estate market with tangible and diverse investment opportunities

•  Citizenship eligibility

•  An innovation based economy emerging from the global recession

•  Climate & lifestyle

Photo credits to Pine Cliffs

The Real Estate Market

The Real Estate Market

•  Restructuring of asset ownership: “turn around”, vulture and debt funds 2010 - 2012

•  Market beginning to turn-up after 6

years of falling capital values

•  BRIC consumers appetite for Lisbon – luxury brands enter the market

•  2013 international investment funds

began to acquire commercial real estate investments

•  Opportunities in urban regeneration , student accommodation, rural properties, wine estates, prime Algarve assets and leading resorts

The Real Estate Market

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The Real Estate Market

Example: Central Lisbon Apartments •  Renovation and urban regeneration

opportunities

•  100 m2 – 500 m2

•  2 to 5 bedrooms

•  Capital values: € 370.000 €1.150.000

•  Average price per/m2 - € 3.400

•  Gross rental returns – 2,5 % to 4,5%

The Real Estate Market

Algarve

•  3 hours – 300 kms from Lisbon. Faro international airport

•  The most popular tourist destination in Portugal and one of the most popular in Europe

•  A cosmopolitan international community

•  A mild temperate climate and kilometers of undeveloped coastline and beaches

•  A safe and secure environment

United Investments Portugal

Established Brand Pine Cliffs & Sheraton Algarve is owned by United Investments Portugal (U.I.P.) An established brand for over 22 years, extending five-star hotel service to residential and holiday resort ownership. UIP is part of the IFA hotels and Resort consortium with IFA headquarters based in Kuwait and Dubai. Starwood has been the Management Company responsible for Pine Cliffs resort under the umbrella of “The Luxury Collection” since the beginning 22 years ago.

The Resort

215 Bedrooms Sheraton Hotel

68 Unique townhouses

154 Luxurious Residence Apartments

Pine Cliffs Resort 72 acres Pine Cliffs is an all integrated resort, managed by Starwood Hotels through its Luxury Collection brand, with different options of accommodation, investment opportunities and a luxurious lifestyle for the whole family – awarded in 2012 the Portugal’s Leading Family Resort.

25 worthy of royalty Deluxe Villas

Award Portugal’s Leading Family

Resort

© Pine Cliffs Resort, 2014. All Rights Reserved © 2014 IFA Hotels & Resorts - All rights reserved

20 Modern & Contemporary Terraces

26 Luxurious Suites Apartments

Properties of Pine Cliffs Resort Five types of properties are available as freehold at Pine Cliffs Resort, two of which include a guaranteed annual rental return of 5% within the first 5 years (The Suites & The Residences).

SUITES TOWNHOUSES

TERRACES DELUXE VILLAS

RESIDENCES

Pine Cliffs Resort

•  Premium 5* Resort – Golf & Ocean

•  Sheraton A lgarve, a Luxury Collection Hotel, part of Starwood Hotels & Resorts

•  2/3 bedroom Apartments

•  Guaranteed Rental returns of 5% for 5 years (for freehold apartments)

•  3/4 bedroom Townhouses and Deluxe Villas

•  Prices ranging from 780.000 € to 4.5 mio €

Visa Free Schengen

Access

A Safe and Peaceful Country

Real Estate Investment Potential

Advantageous Non Habitual Tax Regime

Portuguese Culture and

Lifestyle

International Standards of

Education

A Path to Portuguese Citizenship

7 Days per Year

Average Stay

Simple, Swift Process

< 8 weeks

Conclusion

Contact Information

Andrew Coutts

Managing Partner Henley & Partners Portugal. Ltd. Palácio Alagoas Rua da Escola Politécnica 183 Bloco A, 1º 1250 -101 Lisbon Portugal T +351 213 970 977 andrew.coutts@henleyglobal.com