Money Laundering: End of Golden Visas in Portugal

The Portuguese government has been offering rich foreigners 500,000 euros for a residence permit in the European Schengen area since 2012. It was used by around 12,000 investors who obtained admission tickets to Europe for themselves and their family members. Now – also because of the pressure from the EU – Portugal’s ‘golden visa program’ should be over. Prime Minister António Costa has announced that it will expire on March 16.

“It’s good that the golden visas are finally being abolished, they should never have been introduced,” says former socialist MEP Ana Gomes, who has opposed the program since its creation. “They were an invitation to launder money and allowed criminal and terrorist organizations to legally infiltrate the Schengen area.” More than half of the applicants have come from countries where the risk of money laundering is particularly high and Portugal has never bothered about the origin of the funds of these applicants.

Good deals for real estate agents

What was announced as a program to boost Portugal’s economy, which was ailing at the time, turned out to be primarily a business for the real estate industry: instead of creating new companies and jobs, it was mainly the rich Chinese who bought luxury apartments in and around Lisbon, followed by Brazilians , Turks, South Africans and Russians. Almost 90 percent of the total revenue of around seven billion euros went into buying a home. Only 22 visas were issued for job creation, according to SEF figures; Result: A meager 280 new jobs in at least ten years.

Nevertheless, Hugo Santos Ferreira, the chairman of the Portuguese Real Estate Association, is ill at ease with the planned end of the ‘golden’ residence permits: “It’s an attack on all foreign investors who want to invest their money in Portugal. Portugal is losing its credibility and its good reputation as an investment-friendly country.” However, Portugal needs international investors to strengthen its economy, it cannot do without an important instrument that brings more than 600 million euros into the country every year. “In addition, the program has created thousands of jobs in the construction and real estate sectors,” notes Santos Ferreira.

housing crisis and money laundering

But there is another catch right there: In recent years, real estate prices in Portugal, especially in the two largest cities of Lisbon and Porto, have exploded. Also, according to the critics, because of the Golden Visa program and because more and more EU citizens are buying houses and apartments in Portugal. At prices that the Portuguese can no longer pay. “Particularly in the upper market segment, the Golden Visa has caused sharp increases in real estate prices,” stresses ex-Member of the European Parliament Ana Gomes. An argument that the government is now adopting to justify the end of the Golden Visa. A pretext, says Gomes, because ultimately the EU’s increasingly harsh criticism of Portugal’s visa program was responsible for its foreseeable end.

Mainly because of the often dubious origin of the visa applicants. After all, since the Ukraine war, Russians have been forbidden to invest in Portugal. You are thus excluded from the Golden Visa. However, according to former MEP Gomes, countries like China or Vietnam are not exactly characterized by transparency. Hugo Santos Ferreira, the president of the real estate association, counters that all transactions in Portugal are strictly controlled. There are black sheep everywhere, but that’s no reason to abolish the Golden Visa: “Nobody wants to close the banks, even though it’s known that money can be laundered there too.”

What will become of visa holders?

Although Santos Ferreira is still hoping that the government will back down at the last moment and that perhaps the Golden Visa will continue in a different form, the end of the €500,000 Schengen area tickets in Portugal seems to have come. “It was simply too opaque and dangerous,” says Ana Gomes. It remains to be seen what will happen to Golden Visa holders. It is said that their residence permits should only be extended if they actually live permanently in Portugal.