I know a few non-crypto entrepreneurs who came here for the NHR (non habitual resident scheme - the scheme mentioned in the article which allowed for the 20% tax cap on foreign income).
I can confirm that a lot of them were incredibly frustrated with the bureaucracy they encountered, not just when dealing with the government, but generally in everyday life. Most people have war stories related to accountants, lawyers, banks, telecom companies or landlords. The real kicker was when they realised that the 20% didn’t include social security payments, bringing most of them (those that didn’t pay hefty fees to set up companies in tax havens, and pay themselves exclusively in dividends) to an effective rate that wasn’t that far off what they’d be paying elsewhere. Needless to say the expat churn has been quite high.
Regarding Airbnbs and rising housing prices - I’m no economist but intuitively, I’ve always thought it made more sense to blame the explosive growth in tourism Portugal has had in the last decade or so (6M tourists visiting Lisbon, a city of 500k people) rather than the 10-20k digital nomads. Would be curious to know if anyone has better numbers or studies.
It does not mean anything. Expats complain about everything.
- over the years
- step by step
- with the help of their parents
Then they arrive in a new country and realize what it's like to administratively become a functional resident. You probably got your first bank account in your teenage, your national IDs as a newborn, etc. Then you move elsewhere and you need to create all these things from scratch and discover them also.
It’s also very common for administrations to have no one answering the phone/email. And most administrations are appointments only. So often, you kind of have to drive to different places, maybe different city halls, and hope that someone has a contact with an internal e-mail address and can hook you up. That’s just how it works. It’s the most barbaric administration and closest to a third world country I’ve experienced, and I’m French, so I know something about red tape.
Here is an example: Malaysia and Indonesia. Each country has its own bureaucratic nightmares but you can make useful comparisons.
Malaysia: Easy to get a phone number. Easy to get an internet hotspot to get data. Reliable internet. Internet is fully open (no censorship).
Indonesia: Hard to get a phone number. Confusing choices and prices with Whatsapp/FB mingled in the choices. Have to submit your passport photo to some dodgy dude, who has to get a certain authorization. Took half a day for the Internet to activate. Data is not very reliable. Heavy censorship (not even Reddit works!) so have to get a VPN to do any meaningful browsing.
So sure as an expat you'll face bureaucracy but some countries' issue is beyond bureaucracy, it's that the process is fundamentally broken and no one gives a shit. This makes you lose significant time for relatively simple things (at least in other countries).
For example we wanted to get internet in the apartment we were renting. The local ISP (Orange) said that we needed a Spanish bank account, we said that we had a European account so could make an IBAN transfer, but apparently that wasn't an option. So we went to the bank and they said my wife needed a letter from the police. So we went there, and after showing all her university documents and waiting there for half a day, she got that. By that time the bank was closed, so we went back the next day, and after another few hours she had a bank account. We made a transfer of a few hundred euros from our other European account at home, then once it arrived a few days later, went back to the ISP. They took our details and the first payment, and then we figured everything was fine.
A month later the first bill came and we tried to pay but it was declined, tried to log into online banking and that was blocked too. We went back to the bank (BBVA) and they said our account had been closed due to suspicious activity (the only transaction we made was the initial payment for the internet) and there was nothing they could do. So we went to visit the ISP with the intention of paying in store, but they said it wasn't an option. We explained the situation and said there was nothing they could do, we could only pay with a Spanish bank account. In the end we had to get a friend to make the ISP payment for us, every month while we were living there.
Compare this to where we live now. You simply make payments to an IBAN bank account, so it can come from anywhere in Europe. If you need a local bank account, you can easily do so in any bank (I opened an account before I was officially living there, i.e. without any local ID, just my passport) or use something like Revolut. If you need to get a local phone number, you just go to the supermarket and buy a prepaid SIM for €1 - no ID needed.
For reference, I found the UK pretty sensible, Spain frustrating, and my native south american country a nightmare.
I think that due to the high cost of labour (highest minimal pay in the world) and lack of labour due to higher speed of development - whatever that can be automated has been automated.
I suppose it depends on your definition of "hefty" but a couple of thousand USD is usually sufficient, depending on jurisdiction, and obviously is expected to pay for itself many (, many, many) times over.
It's not that hard and it's not just for the 1%. Especially if you're anything approaching a "digital nomad" I can't think of any reason why you wouldn't establish a consulting company somewhere offshore, bill from that, pay yourself a quarterly dividend and then import only the money you actually need.
In one case one person, as you say, did everything on their own and pays a couple thousand every year to keep the entity in the favourable jurisdiction. When asked if it was all above-board, they said it was one of those grey areas where they hoped the govt didn’t look too deeply into it, but so long as they weren’t making millions they weren’t worried about an audit.
The other cases asked various accounting companies to set this scenario up for them (one to establish a software engineering consulting company, others to set up other companies). The responses ranged from “yes we can do this, it’ll cost you 15-20k upfront, then 5k in annual upkeep” to “no this isn’t looked upon too well by the Portuguese govt”.
You need someone (in Spain it's called gestor) who does all of that for you. I live in Portugal, by now I speak the language but I don't get the rules etc. I have a guy who does everything, never had any issues. It's very cheap.
Didn't they recently crack down on Airbnb's, adding requirements that should theoretically lower the drive to turn unoccupied housing into Airbnb's (essentially limiting people purchasing flats with this intention)?
So I would not underestimate the impact even if it is only 10 to 20K individuals. Finally: tourists spend a lot, typical budgets are many 100's of euros / day for a family. Digital nomads comparatively little.
The "housing crisis" is 100% a political choice by portuguese voters.
What also chocked me when visiting Lisbon or Porto is the number of old abandoned buildings in what I would consider nice areas. I have always wondered what was the reason for that...
So landlords have no option to evict them, don't make enough money for any kind of renovations, have no option but to wait until the elders pass away and the units become available
My guess is most families that emigrated to the US and have some inheritance right to property back in Portugal do not care to go through this legwork.
Demolition permit are hard to obtain but if your building is too decrepit, the city will force you to destroy it.
The loophole is that if building is too damaged, that there is no viable way to repair it, then it can be destroyed and new one can be built. So you can just let it be as is and wait you can help the decay by removing roof and let rain and cold do the work. Or in most extreme cases, just set it on fire "by accident".
One factor was the social protection that renters (especially elderly) are afforded by law, especially keeping rents very (and I mean very low). This protection is in itself a good thing, but the downside was that landlords had no incentive to do renovations in the order of million euros for a building full of renters paying fifty euros per month each (I can't recall exact quantities). As I said, the protection of elderly is a good thing, but a balance was never achieved.
Another factor (and this ties with the bureaucracy theme) was that for some buildings, the state and municipality couldn't even locate the owner. So you might have this grade I building with a name as the legal owner, but it could be someone that emigrated to Brazil 50 years ago. Couple that with the slowness of judicial process and the building is in a limbo state for a century.
Likely property that is inherited to families that emigrated.
Second, there is indeed backlash against the golden visa program, but the most meaningful bits are due to visas being granted to people who do zero actual investment in the country.
As to real estate, this is just the peak of a long crisis brought upon by idiotic zoning laws that favored high-value condos and villas, under pressure from a bunch of lobbyists from the building industry (we have at least two major cement lobbies here, each driven by its own influential family).
That, an emphasis on tourism and landlords’ resistance to maintaining or rebuilding existing buildings (partly due to inheritance laws, yes, but mostly driven by greed) has made it impossible to buy new flats in Lisbon even before “gentrification” from techies began.
(AirBnB is just another factor in this - a lot of those nice villas and flats are priced outside local affordances, and whoever buys them does so to rent out and drive a quick profit, since a lot of AirBnBs aren’t even taxed…)
The only thing the article gets right is that we have a completely bullshit legal and tax system that takes far too long for anyone to sort out - even natives. As an example, it is _much_ less sensible to work as a tech contractor here (unlike, say, the UK) because the fiscal load and legal protection are all stacked against you.
Even with “instant company” fast-tracking (which gives you a working legal entity in a few hours, provided you know where to apply to and how to do the paperwork), setting up a business and having official accounting requires some effort for a random Jane/Joe, especially if foreign.
But those barriers are fixable if you hire a local relocation/setup service, so real startups and savvy techies can breeze through those. The real trouble comes when you need to do contracts, pay taxes, etc. and there is a legal issue — courts here are slow, Byzantine and can take years to close a case, so brokerage (which can be fraught to navigate) is often the only option.
Anyway, the country isn’t broken because a few thousand crypto bros decided to settle in nice villas here. I know of several companies that are thriving here (hi Cloudflare!), even if there are constant paper cuts regarding bureaucracy.
Surprised nobody saw gentrification and rising CoL coming when they invited crypto asset holders and workers who earn several times more than the locals while contributing much less in taxes.
Seems like a move that only benefited the Portuguese landlords and real estate owners at the expense of the rest of the population.
If I was a Portuguese citizen I'd be pissed at such a decision that prioritizes wealthy foreign crypto and tech bros over its own citizens and make sure to vote those politicians out.
Portugal is not Dubai. It can't afford to be a tax heaven with government revenue funded by oil instead of taxes. A country like Portugal should seek to attract businesses and investors who create jobs and pay taxes there, not attract wealth hoarders who dodge taxes and who's only contribution to the local economy is making landlords richer and buying cocktails on the beach.
>The center-right Moedas, for his part, said that while clarity on crypto and taxes is welcome, “when you start taxing innovation too soon, you can kill innovation. And so I'm not aligned with the government on this.”
Oh please, taxing crypto assets is not taxing innovation. WTF are you talking about? I feel like I'm taking crazy pills when I read stuff like this.
I live in a former socialist country that somehow managed to build A LOT of housing in the 70s and 80s, with shitty equipment, but somehow cannot build anything in the last few decades. And not just the government building stuff... normal people could buy a plot of land, get their friends to help, dig a hole and start building... a small loan for bricks and cement, and the basement + a concrete slab was built... then a month or two went buy, and what was left from the paychecks went for a pallet of bricks plus a few bags of cement, and half a floor was made. Repeat for a few years and a house was there... no insulation or a facade, but people could live inside and deal with that later. Papers and permits? As long as you built within some basic rules (far away from the property line and not a too unusual shape), you could basically ignore them, and deal with the "legalization" later. Now you're not allowed to build basically anywhere, papers cost more than the whole material+work did back then, and you're not allowed to do anything by yourself and your friends are not allowed to help anymore. So yeah... good luck.
"Just build more houses" is not something that scales infinitely. Long commute distances and geography tends to get in the way with stuff like hills, mountains, rivers, lakes, oceans, etc. while demand from foreigners and tourists will stay virtually infinite.
At which point do you stop building and say your city can't house more people without ruining the character that makes it a desirable city in the first place?
Should we level Lisbon's 2-4 story housing and turn it into a dystopian city with hundred story megablock towers like in Judge Dredd, just so that everyone in the world who wants to move to Lisbon has a place to live there? But then people won't want to live there anymore if Lisbon is just megablocks.
It should be a huge red flag that one "nice" country has more than 20% of it's population living abroad: https://poligrafo.sapo.pt/fact-check/cotrim-de-figueiredo-po... (you might want to use Google Translate on this one).
I also saw some comments blaming the tourism for this "bubble" bursting. The portuguese can't complain about tourism since it's a huge part of our PIB.
Sounds like you have it figured out why people are moving there :)
I think it's always hard for natives to figure out why people want to move to their country, where they see mostly problems and not how much better it is than where the people come from.
I'm an immigrant as well, and wouldn't understand why people would move to the country I was born in, but people who are from the place I currently live in feels the same way but vice-versa.
Good weather and good food is surprisingly convincing, at least for me, in deciding where to live.
About 26% people are living abroad (emigrated) and many of the ones who are staying in the country end up working for portuguese companies who mostly also work abroad.
So, if those people fled a country with such great good, weather and specially their families, it should ring some red flags no?
This gentrification and tourist problem began well before Lisbon became a DN favorite.
Also it’s a global problem as wealth accumulation means individuals and companies can’t find enough places to “safely” put cash. Real estate, especially when it can generate good income, is an obvious choice.
Plus, Portugal attracts wealthy Brazilians who want a comfortable, safe, and European home.
And just as it is difficult to build more housing in an already full city, upgrading or building new transportation infrastructure is very difficult and costly (and disruptive for years to the people currently living there).
There's really little that can be done to balance things. When "everyone" decides that Lisbon is cool (and it is!), they all want to visit. So naturally any apartment or building owner who can convert from local long term rentals to tourist short term rentals (at many X the price) will just based on the profit potential.
And when property companies realized this, they began buying whatever they could - both as a good long term investment in the real estate itself, and for pretty great tourist income.
Many places in the US and elsewhere in the world have the same problem.
As for not getting EU passport even if you could get that for free, there are too many very common and valid reasons to be listed here. And in fact there are other Goan acquaintances who didn’t want to. So let’s leave it at that.
Can confirm, I’ve stayed longer than short term in many cities and am a transplant in all cities. Some places handle it better than others, every place points fingers at a the nearest most visible externality. What they all hardly consider:
- their neighbor could have set the rent super high at any point in history, and didnt gamble on doing that then and didnt have to gamble on doing that now. the rent doesnt have to be that high and you can likely peer pressure them into not raising it to its highest acceptable threshold
- I dont care what the rent is anywhere, more on this later
- anyone that can afford the current rent, set unilaterally by a gambling landlord, is usually paying more than everyone else
- and circling back, any unit in any city would satisfy me, so even if I would pay $6,000 in Miami and thats super high, the $1500 place in Austin would remove me from the market, even though thats high to people in Austin (example, I dont actually know, or care)
- all together this puts it more so on the gambling landlords in all places, yes there are some tenants that ask for higher rent just to skip the application queue but I would need that quantified
Lease prices are driven by taxes and tourism, short term (AL) accommodation is taxed at 6%, long term lease contracts go from 30% (for 1+ year contracts) down to 10% (for 10+ years contracts). Obviously landlords are pushed into short term accommodation which creates lack of long term offers. Matter of getting taxes more fair over long/short term categories would fix the market immediately.
Quality of life and nice people are above anything else so I wouldn't change a thing from this current setup.
As for Airbnb, that’s the same is most touristy cities and it’s not just because of nomads.
Cities should be for citizens... tourists belong in hotels.
Thankfully I got my housing situation clarifyied several years ago.
Nomadism is ephemeral. The bubble will pop as soon as the new hottest place comes into the picture.
This year quite a few thousand university students had to give up their place, because they could not find affordable housing.
https://www.air-worldwide.com/publications/air-currents/from...
Fire/reduce public servants and spread them away from Lisbon, there, solved!
sources:
"highest increase in jobs can be seen in central administration"
https://www.portugalresident.com/number-of-public-sector-wor...
https://ec.europa.eu/social/BlobServlet?docId=19963&langId=e...
76% centralized government https://op.europa.eu/en/publication-detail/-/publication/b9b...
Good, because this article is about neither but easy to deflect if all you look at is the title; its mostly about the affluent and those who could work remotely (not entirely nomadic as they were already EU citizens) who took advantage of this scheme, here are the most important takeaways that support that it's scope goes beyond either for the issues seen now on PT:
> Belgian entrepreneur Jan Deruyck, who moved to Portugal in 2021 with his wife Morgane to build feminine health startup Guud in “full isolation” during the pandemic, is one of them. But a year and a half later, he’s out: “[They have] huge ambitions, but there’s little execution.”
> Thank the Web Summit for the visas' shift toward tech workers: It’s “one of the reasons why Lisbon got on the map of Silicon Valley entrepreneurs,” said Armand Arton, founder of the Global Citizen Forum, a members’ club for well-heeled cosmopolites. “Then COVID happened and we started getting calls from wealthy American families saying they wanted a residence permit to enter Europe at any time [regardless of travel restriction]. They got golden visas by investing in technology companies.”
> Not to be left out, EU citizens also flocked into Portugal to work remotely during the pandemic, taking advantage of a “non-habitual resident” tax regime that exempts foreign income from taxation and charges a flat 20 percent rate on Portugal-generated revenue from high-value professional activities. Managing a company or working in the technology field can qualify for such activities, making the scheme attractive to digital nomads.
I'm a DN and came over during COVID, in the onset PT was on my list, but after the headache I had to deal with the HR government and the sheer incompetence and abject failure to do even basic functions, I realized PT was the same but with the added headache of competing with a much broader scope of people and the longer backorders and growing wait list, the processing time went from 6 months to a year plus for approval because of the influx.
Furthermore, the main cities soon started to look like a common tourist traps and all that follows because of the crowds who came over which was one of the reasons I wanted to get out of the US in the first place and ultimately made the decision for me.
I'm not surprised locals are pissed, they should be: but they should primarily direct their anger toward their government that because of failed policy, poor economic and investment strategies have made the decades long brain-drain in PT necessary, and in turned hollowed out their entire economy in the process which led to the typical housing and property speculation and consolidation from foreign investment as big as it is, and golden visa schemes the only thing monetarily viable in their country other than tourism.
The truth is that Portugal, despite being geographically the most Western of all nations in the EU, is pretty much on par with it's E. European counterparts (made up of former Soviet satellites or fragmented Republics of Yugoslavia) economically, socially and politically so; Digital nomad visas didn't do that, it just made it more accessible in what is actually just a glimpse of what is to come: as the Global population starts to recede (gradually and then suddenly) from it's 8 billion high as more boomer start to die the unfunded liabilities within the system will have already bled it dry in pensions and medical costs and the only thing left will be to compete for citizens with favorable status--Portugal didn't just offer a DN a tax free temporary residence, but full fledged EU citizenship within 5 years with some caveats. It was essentially a longer path toward the Golden Visa that is only offered to those wealthy enough to buy-in their way into passport hunting.
Just for context, even Germany (the most non-PIIGS nation) is struggling to keep the hospitals running [0] because of the staff shortages after COVID, and even keeping up with supplies is suffering due to the supply shortages and over-dependence on imported made drugs and devices in a mainly manufacturing country is staggering, and it has been made worse since the invasion in Ukraine due to the cost hikes on everything.
how is that a thing, as a society we keep reaching new lows year after year, this is very concerning
"repeating past mistakes is our motto"