How you can retire in Europe with Portugal’s passive income visa

Portugal’s D7 visa offers an option for retirees to gain residency if they meet certain passive income requirements. Mint takes you through what you need to apply for the D7 visa, which is also known as Portugal’s passive income visa.

Financial eligibility

As mentioned earlier, the D7 visa requires applicants to meet certain minimum passive income thresholds.

These incomes could be from various streams: rentals, dividend, interest income, pension, etc. The minimum income requirement is linked to the minimum wages in Portugal. While the minimum wage in Portugal now is €820 per month, it is recommended that an applicant maintain a passive income of €1,000 per month ( ₹93,000), as the minimum wage keeps fluctuating. On an annual basis, this amounts to €12,000 ( ₹11.16 lakh).

If the spouse needs to be added in the application, the passive income requirement goes up by 50%. So, the total passive income requirement for a couple adds up to €1,500 ( ₹1.39 lakh) per month, or €18,000 ( ₹16.74 lakh) per year.

But given that these figures are linked to minimum wages in Portugal you may need a higher income stream depending on your living costs and lifestyle needs. So, higher the income stream the better. It also adds weight to your D7 visa application.

You can add a dependent minor or an adult dependent (unmarried and studying) to your D7 visa application, but then the total passive income requirement would be slightly higher.

Starter’s kit

You can apply for the D7 visa through the Portugal embassy. The application fee for a single adult is €90 ( ₹8,370). However, even before you start the application process, you need to have certain things in place.

First, you need to find a Portuguese lawyer who can remotely help you obtain an NIF, which is the taxpayer identification number in Portugal.

Apart from this, you need to open an account with a Portuguese bank. Once you open the bank account, you will need to deposit the minimum required passive income for the first year of your stay in Portugal. So, you would need to deposit €12,000, as per current wage trends in Portugal, if you are applying for a D7 visa only for yourself.

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You also need to secure a proof of accommodation in Portugal. This can be done via getting a property on lease for a minimum contract of 12 months or getting a ‘term of responsibility’ signed by a local friend or relative in Portugal, stating that they are willing to provide you accommodation for 12 months.

Once your application is approved, you are granted a four-month double-entry visa into Portugal, on a temporary D7 visa. You are required to visit Portugal to apply for the final D7 residence visa, register your biometrics and furnish other documents.

“Within four months of your arrival in Portugal, schedule an appointment with AIMA (The Agency for Integration, Migration and Asylum) for interview and biometrics. You need to carry documents such as proof of passive income, accommodation, a criminal record certificate, health insurance, and a valid passport," says Himani Negi, associate partner at Multipolitan, a global migration platform.

Stay requirements

The D7 visa is initially issued for two years. However, the minimum stay required during the initial two years is 16 months. A D7 visa holder cannot leave the country for six consecutive months, or eight months in total.

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After the initial two years, the visa can be renewed for three years. During this three-year period, the D7 visa holder needs to be in Portugal for 28 months. The visa holder cannot leave the country for six consecutive months or eight months in total during this three-year period.

Working rights

As the D7 visa is given to individuals who are financially independent and can support themselves without working in Portugal, you cannot work for a local Portuguese company on a D7 visa.

In addition to residency rights in Portugal, the D7 visa also gives visa-free access in the Schengen Area, which includes 29 European countries.

However, after obtaining permanent residency, you can work for a Portuguese company.

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One can apply for permanent residency or citizenship after five years on a D7 visa. In addition to condition-free residency in Portugal and visa-free travel in the Schengen Area, the permanent residency also allows one to work in Portugal.

Portugal citizenship gives maximum rights as it fully opens up access to the European Union. As a Portugal passport holder, one can freely live and work across the Schengen Area. The Portugal passport also gives visa-free/visa-on-arrival access to 188 countries.

Tax implications

India and Portugal have a Double Taxation Avoidance Agreement (DTAA). Speak to a Portugal-qualified chartered accountant to understand the taxation applicable for different types of passive income. For example, if you are getting pension from a National Pension Scheme (NPS) in India, you will get taxed as per Portugal taxation, according to Harshal Bhuta, partner at chartered accountancy firm PR Bhuta & Co. “NPS doesn’t fall under pension income, as defined by DTAA. Hence, it will be considered as ‘other income’, which gets taxed only in Portugal as per DTAA," he says.

Who is it suitable for the D7 visa

The Portugal D7 visa is suitable for individuals who are serious about relocating to Portugal as it has high minimum stay requirements. Paresh Karia, a Mumbai-based chartered accountant who tracks the immigration space, says this visa programme is suitable for senior officials drawing large pension income or traditional investors with real estate investments and rental income.

“Even heavy equity investors or retired corporate officials drawing large dividend income from their stocks would be able to qualify for this programme through adequate dividend income," Karia adds.

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