Portugal is considered an attractive investment destination for foreign investors looking to acquire a residency permit or citizenship in a European country.
The country provides a favorable investment landscape due to its stable economy, proximity to Europe, and tax benefits. It also provides a high standard of living with pleasant weather, welcoming people, rich cultural heritage, and safe surroundings.
These conditions in conjunction with the possibilities of acquiring Portugal Golden Visa based on substantial business investments or scientific research make Portugal an ideal choice for investors looking for both financial returns and quality life at the same time.
Key Facts about Portugal foreign investment
Stable economic growth
According to the International Monetary Fund (IMF), Portugal’s economy[1] is expected to grow 2% in 2024 and rebound slightly to 2.25% in 2025. The Gross Domestic Product (GDP) in Portugal was worth $287.08 billion in 2023, according to the World Bank[2]. Headline inflation is projected to fall to 2% next year. To balance growth and inflation objectives and further reduce debt, fiscal policy should aim to achieve a surplus in 2024 and stay broadly neutral after that.
For 2025, a broadly neutral fiscal stance, combined with the expected gradual loosening of the ECB’s monetary policy, will help achieve a soft landing of the economy. The IMF noted that Portugal achieved a large fiscal surplus last year, while public debt was reduced by 36 percentage points of GDP since 2020. Portugal’s economic growth in 2023 continued to exceed the euro area average, while inflation decelerated faster, it added.
Remarkable hike in FDI
Foreign direct investment in Portugal[3] was €180,411 million in 2023, 6.24% more than in 2022, with Lisbon receiving more than half, according to data from the Bank of Portugal (BdP). Lisbon region was the destination for investment of €99,614 million, equivalent to 55.2% of the total. The Northern region recorded a foreign direct investment of 16.5%, with €29,848 million, and the Algarve received 9.9% of the total FDI in Portugal foreign investment.
Europe was the continent that originated the majority of FDI in Portugal foreign investment in 2023, being responsible for €156,284 million, equivalent to 86.6% of the total, followed by Asia (6.2%, €11,098 million), America ( 5.2%, €9,365 million), Africa (1.9%, €3,468 million) and Oceania (0.1%, 91 million euros).
It is worth noting that the government of Portugal maintains an open-door policy toward foreign direct investment (FDI) while requiring prior approval for certain sensitive sectors due to national security considerations. Portuguese law is based on non-discrimination principles, meaning foreign and domestic investors are subject to the same rules.
Booming tourism sector
The World Travel & Tourism Council (WTTC) 2024 Economic Impact Research has revealed Portugal’s Travel & Tourism[4] sector is on the brink of a historic year, with its economic contribution expected to exceed €54 billion. Data points to a surge of 24.3% compared to 2019, representing 20% of the national economy, and cementing the sector’s role as a key economic driver. According to WTTC, the sector is set to support 1.1 million jobs, representing an increase of 126,000 jobs compared to 2019 levels. As the government continues to prioritize this sector, spending by both international and domestic tourists is expected to reach €30.7 billion and €17.9 billion, respectively.
The outlook for the next decade is exceptionally bright, according to WTTC forecasts. By 2034, the sector is expected to significantly boost Portugal’s economy, contributing an estimated €66.5 billion, representing 22.4% of the total economy.
Robust real estate market
The Real Estate market market in Portugal[5] is expected to see impressive growth in the coming years. By 2024, the market is projected to reach a value of US$1.64 trillion. Among the different segments of the market, Residential Real Estate holds the largest share, with a projected market volume of US$1.33 trillion in 2024. The real estate market in Portugal is experiencing a surge in demand from international investors seeking attractive Portugal foreign investment opportunities in the country’s growing economy.
House prices in Portugal continue to rise, having increased by 6.5% over the past year, according to the Knight Frank Global House Price Index[6]. Portugal ranks 14th in the index among 56 countries analyzed, ahead of countries such as France, Germany, Switzerland, and the USA. This growth shows that Portugal remains an attractive country for Portugal foreign investment and that its economic stability gives positive signals about the market.
Portugal’s rental sector[7] is showing robust health, with a steady uptick in rental prices, particularly in Lisbon. This trend is expected to attract more investors but also emphasizes the need for strategic choices regarding location and property type to maximize returns.
Solid job market
According to the OECD data, Portugal’s employment[8] rate is 73% of the working-age population. Average wages are around $32,000 per year. The self-employment rate represents 15% of employment. The rapid growth of the start-up sector in Lisbon has driven up the demand for English-speaking staff. Additionally, the tourism industry, particularly in Lisbon, Porto, and the Algarve, is continuously seeking English-speaking workers due to the high levels of tourism in these regions.
Infrastructure you can count on
Portugal’s infrastructure is very well-developed[9]. It is served by four international airports on the mainland – Lisbon, Porto, Faro, and Beja, offering direct flights to major destinations in Europe, Africa, the Middle East, and the Americas. Portugal offers six international ports with sea-rail intermodality, connecting to Spain and Central Europe: Viana do Castelo, Leixões, and Aveiro in the north, and Lisbon, Setúbal, and Sines in the south. Located amidst the world’s major maritime shipping routes, these highly developed facilities connect the Mediterranean region with Northern and Central Europe and enable maritime trade among the Far East, Africa, Europe, and American continents.
Portugal’s telecom infrastructure[10] is modern and reliable, ensuring access to cutting-edge technology and high-speed internet connectivity. Optical fiber already covers 90% of all Portuguese households and 70% of rural households, which places Portugal well above the EU average.
Portugal’s railway system encompasses an extensive network that covers thousands of kilometers across the country. It connects major cities, towns, and economic centers, facilitating seamless travel and transportation. The country’s geographic location in Europe further enhances the significance of its railway system, serving as a crucial transportation link between other European countries.
Tax haven
The “Non-Habitual Resident” scheme provides tax exemptions on almost all foreign income taxed in the country of origin and a 10% flat tax rate on pensions from a foreign source. The Portuguese government[11] is planning to reintroduce tax breaks for foreign residents to attract skilled workers. It has also approved recently a cut in the normal corporate income tax rate to 15% by 2027 from 21% currently, and a new mandatory minimum tax rate of 15% for all multinationals operating in Portugal and for large Portuguese companies.
Sources
1] https://www.aa.com.tr/en/economy/portugals-economy-expected-to-grow-around-2-in-2024-imf-/3263246#:~:text=Economic%20growth%20is%20expected%20to,the%202024%20Article%20IV%20Mission
[2]https://tradingeconomics.com/portugal/gdp#:~:text=GDP%20in%20Portugal%20averaged%20107.13,3.34%20USD%20Billion%20in%201960.
[3] https://www.theportugalnews.com/news/2024-02-28/foreign-direct-investment-in-portugal-increases/86440#:~:text=Foreign%20direct%20investment%20in%20Portugal%20was%20180%2C411%20million%20euros%20in,Bank%20of%20Portugal%20(BdP).
[4] https://wttc.org/news-article/portugal-travel-and-tourism-poised-for-historic-year
[5] https://www.statista.com/outlook/fmo/real-estate/portugal
[6] https://content.knightfrank.com/research/84/documents/en/global-house-price-index-q1-2024-11300.pdf
[7] https://www.idealista.pt/en/news/property-for-sale-in-portugal/2024/05/22/63953-portugal-property-market-outlook-2024
[8] https://data.oecd.org/portugal.htm#profile-innovationandtechnology
[9] https://www.portugalglobal.pt/en/investment/why-portugal/reasons-to-invest/infrastructure/#:~:text=The%20Portuguese%20road%20infrastructure%20is,to%20the%20rest%20of%20Europe.
[10] https://www.portugalglobal.pt/en/investment/why-portugal/reasons-to-invest/infrastructure/#:~:text=The%20Portuguese%20road%20infrastructure%20is,to%20the%20rest%20of%20Europe.
[11] https://www.reuters.com/world/europe/portugal-plans-reintroduce-tax-breaks-foreign-residents-2024-07-04/