In recent years, Portugal has become the favorite destination for thousands of people, especially Americans, who seek to reside in Europe, somewhere with sun and sand and low taxes. Telecommuting was able to make that a reality. Until now, however, there was no easy way for these temporary residents to work remotely in Portugal, as previously expatriates had to apply for a D7 visa, which was mostly aimed at retirees.
Now, the Portuguese government has kicked off a new visa for digital nomads to reside in the country for up to one year.
The new visa. As of October 30, those who work remotely can apply for a temporary stay permit or visa for up to one year that can be renewed for up to five years. The requirements are not many but varied: from presenting proof of tax residence, the employment contract or, if you are self-employed, another form of employment contract. And what is more important: the average monthly income during the last three months must be equivalent to at least four times the national minimum wage in Portugal, which is currently €705 per month.
Until now, one way to acquire the visa was to get the D7 permit, which requires applicants to earn just €7,200 a year. But unlike the new digital nomad visa, the income must be the result of passive investment streams, such as real estate or shares in a company, rather than a monthly salary. The new visa also allows people to move freely throughout the Schengen Area of 26 member countries of the European Union.
Why? For years, Portugal has become a popular destination for teleworkers for quite obvious reasons: low cost of living, sunny weather most of the year and mild temperatures, abundance of coworking spaces, air connection to most European countries and a good level of English, compared to other destinations such as Spain, Italy or France. As mentioned in this Business Insider article, Portugal is becoming the “next California.”
birth problems. One of the reasons why Portugal has promoted these permits is that it has had a major birth problem for years. It is one of the countries in Europe with the fewest births (eight per 1,000 inhabitants per year), a figure that has not stopped falling since 2018, according to World Bank data. In fact, some studies they point out that by 2070 they will have lost 23% of their current population due to the few children they have. For that same year it is estimated that only 34% of the population will be active, which will have to support the remaining 66%.
That is why the batteries have been put into launching different regulations to facilitate the legal arrival of foreigners from any country and condition to work, from people looking for a job in Portugal to professionals who work remotely abroad.
A trend. As we have told Magnet throughout several articles, digital nomadism is a trend that has been gaining strength since the beginning of the pandemic. In Europe, several countries have similar laws and visas, such as Estonia, Croatia or Spain. A way to choose a place of physical residence where bureaucracy is minimal and tax benefits are the best.
In Estonia, for example, the digital nomad must pay for his own health insurance but does not contribute or pay taxes (IRPF). Of course, applicants must earn at least € 3,500 per month. In Croatia, €2,300 per month. In other countries like Iceland things change: €7,100. Greece introduced a digital nomad law in 2021, offering residence for one to three years with a monthly rent of €3,500. Some countries they require you to have cash in the bank (€5,500 in the case of the Czech Republic), in addition to income.
In Spain. here the government is also developing a new visa for digital nomads which will allow people to work remotely for foreign companies (and collect 80% of their income from them) and settle here without the need for a regular work visa. As it has not yet been approved, details remain to be defined, but it is expected to be valid for one year and renewable up to five in some cases.
Although the international teleworker visa is open to all nationalities, there are certain requirements to be able to request it that we have summarized in this article. One of its strengths lies in a specific tax regime for these people to submit to the non-resident income tax (those who do not remain on Spanish soil for more than 183 days a year). Currently, its tax rate for people with annual income of up to €600,000 is 24%, but with the law, it will be reduced to 15% for 4 years.
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