Leader among the best real estate investment destination with higher profitability in the euro zone
The real estate sector has been evidencing a certain level of confidence displayed by several of the main operators.
Country profile – Statistics 2014
- Population: 10.487.289
- GDP growth: -1.50%
- Consumer Spending Growth: -2%
- Inflation: 0.50%
- Unemployment rate: 15.60%
- Active Labor Force: N/A
- Interest rate short term: 28%
Source: Bank of Portugal
Most important cities – Population 2014
- Lisbon: 524.282
- Greater Lisbon: 2.035.859
- Porto: 227.535
- Greater Porto:1.278.941
Source: INE
Prime Rents – €/M2/Year 2014
High street: 925
Shopping Centers: 725
Retail parks: 85
Prime Gross Yields – (%) 2014
High street: 6.25%
Shopping centers: 7%
Retail parks: 7.5%
Investment market
Investment volumes for Portuguese commercial property during 2014 confirm the massive increase of investors appetite in Portuguese assets. Between January and November 2014, approximately €600 mln was traded in commercial property assets. International investors are responsible for 83% of transactions.
What/Where is investment going in 2015?
Investment market:
Office market;
Retail market;
Hotel market / Touristic sector;
Urban regeneration;
Residential / Rehabilitation.
Why Portugal?
Corporate market at its lowest prices;
Rent valorization for prime locations;
Premium yields for prime properties in Western Europe:
Commercial yields at their highest values: from 5% to 8%;
New leasing law reflecting the best global practices;
With the economic recovery and yield compression, Portugal delivers one of the highest returns on commercial Property investment.
Consultants contacted by VI confirmed that investment in regeneration is likely to continue to increase, especially in the town centres of Lisbon and Porto. In these areas, residential and street shopping sectors are favoured, in order to profit from the increasing demand for medium and high-end housing by foreigners.
Source: V.I.
Investment volumes for Portuguese Commercial Property confirm massive increase of investors appetite at Algarve, Cascais, Estoril and Sintra as well.
New task regime for real estate investment funds
Decree-law No. 7/2015, dated 13 January (DL 7/2015) introduces major changes in the taxation scheme of collective investment entities, including Real Estate Investment Funds (REIFs) incorporated and operating in accordance with national legislation, whether as corporate funds or as contractual funds.
Under the new regime, REIFs become subject to corporate income tax (IRC) – the general rate applicable is currently 21%, without any municipal surcharge – on taxable income for each year. Taxable income such as revenue from capital, rental income and capital gains obtained by the REIF (unless such income originates in countries, territories or regions with a more favourable tax regime – “off shores”), or the expenses related to such income are not contemplated.
It appears, therefore, that the typical REIF income, especially rental income and capital gains (currently taxed at 25% and 12.5%, respectively), are no longer subject to tax in the new taxation scheme.
However, the net asset value of REIFs shall be now subject to Stamp Duty taxation at a rate of 0.0125% per quarter.
Non-resident investors will be subject to a permanent withholding tax of 10% on income distributed by the REIFs or resulting from redemptions. The remaining income derived by non-residents with reference to REIF investments will be taxed separately, also at the rate of 10%. If the non-resident entities are based offshore or if more than 25% of the entity is owned, directly or indirectly, by another entities with a tax residence in Portugal, the special rate of 10% does not apply (the income will be taxed under general terms).
The Decree Law 7/2015, it will only take effect on July 1, 2015. Additionally, a transitional period was implemented.
Income earned by investors after July 1, 2015 in relation to REIF participations will be taxed under the new regime only as far as the income from the REIFs, from that date forward, is concerned (applying for this purpose, the first-in first-out rule). In the case of participation transfers, the gain or loss will be determined by assuming that the market value on July 1, 2015 is the acquisition value or, if higher, the actual purchase value.
Source: V.I.
New Residence Permit for Non-EU Citizens:
Golden Visa attracting investments and capital:
– Freedom to travel in all countries of Schengen Space.
– Freedom to live in Portugal.
“GATEWAY TO EUROPE”
TAX REGIMEN FOR NON HABITUAL RESIDENTS – RRNH
The RRNH statute will be granted to an individual who qualifies as tax resident in Portugal and has not paid any taxes for the last 5 years.
The RRNH applies for 10 consecutive years.
20% x net income from high value added activities.
0% x pension income may be exempt in both countries.
Inheritance tax;
Gift tax;
Wealth tax.
WELCOME TO PORTUGAL,
a legacy for future generations,
a fiscal paradise.
