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Nomad Capitalist
Americans Are Fleeing Portugal
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During the pandemic, Americans flocked to countries like Portugal for a lower cost of living, great real estate opportunities, and in some cases, the more openness of Europe. But now many of those Americans are coming back. And so as a former American who's been living overseas for a long time, I wanted to tell you exactly what I make of this and how you could avoid choosing the wrong place to move overseas. There was a headline at a recent Bloomberg article that said Americans are leading Portugal as the golden visa honeymoon ends, saying that some expats are departing the country as rising home prices and bureaucratic hurdles make life difficult.
What's actually interesting is that Portugal, since the introduction of their golden visa, has seen house prices soar, while other countries with golden visas like Spain, for example, just really haven't. In some cases, some of these countries actually had real estate prices go down or just stay flat. Greece is starting to see some traction, but they haven't seen nearly the gains in property values that Portugal has over these years. And so one reason why perhaps people should consider other golden visa programs if they're looking to buy in property, besides the fact that Portugal's golden visa has kind of sort of gone away and now they're bringing it back, but it won't be with property.
But what Bloomberg said was, for many Americans, a love affair with Portugal blossomed over the last three years. The Iberian nation offered cheap real estate, miles of beautiful coastline, and a reprieve from divisive U. S. politics at a time when remote work was flourishing. Now reality is settled in and the honeymoon over. It talks about language barriers, bureaucratic challenges, housing costs, and more that turned Americans off to the idea of going there. Now, the first thing that comes to my mind here is I'm not really for or against most countries. I can see the pros and the cons. In a place that I might go to, you might not want to go to.
So people say, you recommended that place or I thought you hated that place. What I don't like is people who follow a herd. Now, this article from Bloomberg talks about the golden visa. And what is true is that the Portugal golden visa was for someone who did not want to relocate to Europe full time, but wanted the option to spend as much time as they could in Europe, but also have the ability to get citizenship in a matter of years. The Portugal golden visa was really the one to do that. Spain's golden visa is a longer timeline to citizenship and you have to move there. That involves taxes.
Greece has a golden visa, which was one of the most affordable ones all these years, but naturalization was really not so certain. And so for somebody who wanted that plan B, but they weren't willing to go to the Caribbean and spend a hundred and some thousand dollars on citizenship in a matter of months, they didn't want to go to Malta and spend a million dollars on European union citizenship in 15 to 18 months. The Portugal golden visa was, Hey, we'll invest 350 or 500,000 euros and we can get that money back eventually. Maybe we can get a property to use. We'll spend a couple, you know, a week or two in Portugal every year.
And in a number of years, we'll learn some basic Portuguese and we'll get our high quality tier A second passport. That's what made Portugal work. Now, the bureaucratic challenges is they haven't kept up with the backlog of applications. It has been slow. It does seem to be good news now for people who have golden visas. They're going to honor the terms of the original golden visa and people have been naturalized through their golden visa, even without spending very much time in the country every year. So for Americans looking for a plan B, Canadians, Australians, the Portugal golden visa was indeed alluring in a very unique way. But again, property prices got driven up.
It's one reason that why we do help people buy property in dozens of countries around the world. I was always personally more of an advocate of an investment fund option. People went to Portugal because it became the it place to go. Now they're going to Dubai because it's the it place to go. And I'm just against it places to go. I'm a bit of a contrarian.
You don't have to be against the grain, but I don't want you to go to a place that you may not like just because your friends are going there, just because it's in the media, because what's going to happen is you're going to say, I give up and you're going to come home. You're going to waste money. You're going to have wasted potential at the time, depending how you look at it. And you're not going to get things like long term tax benefits. You're going to give up on potentially very substantial tax savings living overseas. You're going to give up on naturalization opportunities to obtain second citizenships.
You're going to give up on any of the benefits that come from living overseas because you just follow the herd to a certain place. And so is Portugal dead? I have said that Portugal with its being kind of squirrely now with the golden visa, but it's being squirrely on crypto tax exemptions. That has frustrated me. That does not necessarily represent the opinion of everyone at Nomad Capitalist. Everyone's allowed to have their own opinion, but I have felt like, listen, anytime you go to Southern European countries, it's going to be a bumpier road than if you go to Northern European countries. It just still happens to those Southern countries had a lot of problems.
They were part of the pigs back in the day. Things are more affordable. Immigration was a little bit more open. Tax incentives are a bit more plentiful. You have tax incentives in Portugal to a limited extent in Spain, in Italy, in Greece, those countries, Cyprus and Malta, those countries all have tax incentives. Germany doesn't really have tax incentives. There's a reason people went to these Southern European countries. Real estate prices are now up. Remote work is not out of favor, but it's a little bit less common. The bubble of remote work has somewhat burst. And reality, as Bloomberg says, is settling in.
And so a lot of these Americans are heading home. Here's the thing I want to bring to your attention. A lot of people that I've talked to over the years, you'll propose a country like an Ireland or a Switzerland, which I believe are two very well-run countries in Europe in terms of efficiency and getting things done. Obviously in Ireland, they speak English, which I think for a lot of Americans or other English speakers is a concern when going somewhere. You don't realize how on a long-term basis it's going to be to be in a country where they speak a different language.
Yes, in Lisbon, many people do speak English, but I would imagine if you were to live there for a substantial part of the time and you kept going back to the same places, that might be like, why don't you learn a few Portuguese words? I would be looking at places that may not be as attractive weather-wise, for example. People have always said, oh, okay, I like Ireland. It seems like there's many good things. They have tax friendliness for foreigners. I can get citizenship even faster probably than I could in Portugal if I'm going to live there. Not if you're not going to live there. But you can naturalize in Ireland.
Again, the language is one you already speak, but the weather is not good. And yes, the weather is colder in Ireland than it is in Portugal, but there's something to be said for efficiency. There's something to be said perhaps for a similar culture. And what I think is it's worth considering for Americans where it is that you're going, what the culture looks like. As much as many Americans think that Mexico is so much different, I've been proud that we said move to Mexico, not to Canada, if Trump gets elected back in 2015. A lot of Americans have indeed gone to move in Mexico. And I think that they've seen the culture.
It's actually not that different in many ways from American culture, even though the language is different. And you've seen American enclaves in places like Baja California. You've seen people go into places like Playa del Carmen, even Mexico City, that people have become more English-speaking. But you want, when you're looking at a place to move, you know, Portugal and Italy are not going to be as efficient. I was just in Italy recently, and every bloody time I've been to Italy in my life, you're contending with, oh, did you know there's a strike at the airport tomorrow? Oh, bloody hell. Is it going to continue the next day? Because that's where my flight is.
Or did you know there's a taxi strike this week in Milan? And I have to get a car service to go two kilometers, and it costs 100 euros. I think it's worth really evaluating where you're going. There was never a big herd going to countries like Ireland, but I think it's worth evaluating. We've helped our clients move to 31 different tax-friendly countries, including many countries that you think aren't tax-friendly. We've helped them get citizenship in almost that many different countries. It's worth evaluating all those different options and all the permutations there before you to say, everyone's going to Portugal, let me do that. Because Portugal does have some tax advantages.
For Americans, it is a bit of a system where you have to really manage two different tax systems. We've had Americans who moved there, they can pay generally in something like the low double digits in taxes, so it's still dramatic savings for them. But there are complications in structuring it. If you hire us, we manage the US, we'll manage Portugal, we'll manage wherever your company is. You need to have multiple different countries involved if you're going to live in Portugal, especially as an American for tax purposes. And so we bridge that gap for our clients rather than hiring eight different people to do all the different work, and you have to bridge the gap.
But if you make more than 2 million euros a year, Portugal's tax system is not the best. Portugal may actually get worse in terms of things like tax incentives, because the places where a Portugal resident needs to incorporate in order to be compliant with Portugal's blacklist, countries like Malta, for example, are talking about raising their tax rate. There are rumors that Malta might increase a corporate tax to 10 to 20% rather than its current 35%. But certain people can get a refund of 30% for a net 5%, which creates complicated structures. The bottom line is if you're going to live in Europe, there is complicated structuring.
This is what Nomad Capitalist does with our network of attorneys and accountants for our clients, because there are complications most people don't think about. But some of those more complicated processes may become less appealing in a country like Portugal, which if you want to live there and use their NHR tax program, there's a blacklist. And the countries that are off of that blacklist may be raising their tax. It may come the time when if you make as little as 500,000 or a million euros, Portugal will not be the most competitive tax place.
I'm not saying you should choose for a few percentage points less a place you don't want to go just to save a few points on taxes. Go where you want to go. But again, I think people were going to Portugal thinking, hey, the taxes are so low. Well, they also found is that the bureaucracy is indeed slower in a part of Southern Europe than it would be in, again, in Ireland, where you get more service with a smile, in my opinion.
Even in some Southeast Asian countries, where the procedures are just much more lightweight, or in a place in the Gulf like the UAE or Bahrain, where again, it's more lightweight, they're eager to have you there. There's not as much of a bureaucratic state in those some places. So if you want to live in Europe, I think it's worth evaluating all the different options. We've had people go to Ireland, go to the UK, go to Switzerland, go to Portugal, go to Spain, go to Germany, that person was not really saving on their taxes, go to Greece. And we've had a few people go to countries further feel like Serbia, Montenegro, etc.
All those countries could be somewhat tax friendly. All those countries offer various different lifestyle advantages. I will tell you we had one client who said, I'd rather go to Montenegro, the more simple tax code, which makes my life more simple. I can have my company where I wanted to be offshore, rather than being in the European Union for the same price as living in a smaller town with fewer amenities in a place like Portugal, I can live near Porto Montenegro, one of the great yacht clubs of Europe. For me, again, always been a contrarian.
I think that when you have too many people going to one place, sometimes it almost sucks people down to a level. I'm not sure that applies to Portugal, but I know in places like Bali, for example, I was talking to a friend recently, the people who go to Bali, they almost in a sense, you know, if you make a little bit more money than most of them, you feel like you're doing pretty well. And then you kind of give up on your dreams of building a great company. If you want to build a great company, I can tell you where you go matters.
And so a place in Southern Europe may be more of a laid back environment. That's going to encourage you to not be quite as aggressive in building your business. I don't know that this is our clients who have moved to Portugal are leaving, but I can tell you that if you are the person that the Bloomberg article is referring to where the honeymoon is over, it's worth evaluating all of the different options. So if you go to NomadCalculus. com, you can learn about our service.
If you make half a million dollars a year or more, if you have a high net worth, we can help you figure out not just the residence part, but how that applies to the citizenship. Portugal does not have a citizenship by investment program. It has a residence program. And if you meet the criteria, including some basic language skills in Portuguese, they will grant you citizenship in the future. There's always some risk with that. But from what we've seen in Portugal so far, once you actually get the process done, the bureaucratic process done, people have gotten their citizenship if they meet the criteria. But there is always some risk.
Residence versus citizenship, those two kinds of things we advise our clients on. There's many different options. There are tax considerations, which are more complicated in Europe. Are you going to move? And it's a plan A. Are you going to not move? And it's a plan B. No matter what you're doing, don't follow the herd. I've never done it. If you look at the places where I live, seven different cities, they are, people will always say, why are you in Montenegro and not Saint-Tropez? Why are you in Kuala Lumpur and not Bangkok? Because I've never wanted to follow what everyone else is doing.
I think that breeds a sense of then doing what everyone else is doing. I'd like to be exceptional. I think nomad capitalists are seeking to be exceptional. And that's why we offer more options than any other company. We are totally agnostic in terms of where you want to move, get a passport, get a residence, pay tax, what have you. If you go to nomadcapitalist. com, you'll learn how I believe you can avoid an approach of the honeymoon is over because you'll choose the right place to go to. You'll create the right environment around you.
You won't jump into something ignoring the yellow flags or red flags just because you're seeking better weather or because you don't know any other options and you're just seeing everybody talking about Portugal. That to me is a recipe for disaster. And that's what I would like to help you avoid. .
S K R Y B O T
Skrybot. 2023, Video transcriptions from YouTube
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