In October 2022, the Portuguese government announced the launching of its much-awaited digital nomad visa. The new immigration route is open to remote workers who are employed by a foreign entity and obtain their income from abroad.
The digital nomad visa marks another major milestone in the government’s plan to bring in more skilled professionals to Portuguese shores. The EU nation already has a plethora of visas in place for all types of immigrants, but the digital nomad visa is the only one specifically designed for remote workers. Let’s see who can qualify for this new visa and how is it different from other popular options to obtain a residence permit in Portugal such as D7 and Golden Visa.
What is the Portuguese Digital Nomad Visa
The digital nomad visa is a one-year temporary visa that allows its holder to live and work remotely from within Portugal. It is indefinitely renewable as long as its holder continues to meet the required criteria, and after five consecutive years of residing in Portugal as a tax resident (six months a year), the digital nomad can apply for permanent residence and citizenship.
How can you qualify for the Digital Nomad Visa?
The criteria to qualify for the digital nomad visa is quite straightforward, as an applicant must:
- Be an employee of a foreign company, or be a self-employed person deriving their business income from abroad
- Have an average monthly income of at least four times the minimum wage or €2,820 for a single person.
- Be a non-EU or EEA national
Who is the Digital Nomad Visa aimed at?
The Portuguese government created the digital nomad visa intending to attract more highly skilled remote workers.
The digital nomad has grown remarkably since the pandemic, with a study group estimating that the number of digital nomads worldwide exceeds 35 million professionals, more than double the amount in 2019.
Digital nomads come in a variety of professions; however, the average salary is situated in the – quite extensive – range between $40,000 to $99,000 a year, putting the vast majority of them within Portugal’s digital nomad visa’s criteria for income.
What is the difference between the D7 and the Digital Nomad Visa?
Many people would have assumed that Portugal already had an adequate immigration option for digital nomads in the shape of its D7 visa. However, that is a common mistake.
Much like the digital nomad visa, the D7 targets people who want to reside in Portugal but earn money abroad, and similar to its newer counterpart, the D7 is a one-year visa that is indefinitely renewable.
But that is where the similarities end.
The D7 requires a lower income threshold, starting at €705 for a single applicant. But it is the visa’s core delimitation that highlights the most significant difference, as the D7 is geared toward those who earn passive income.
That passive income can take the form of rent, dividends, pensions, or otherwise. However, the core idea is that it remains inactive, not requiring people to work in a daily capacity to earn it.
The digital nomad visa targets those who earn active income and work on a day-to-day basis to achieve their monthly salary or earnings.
While people may qualify for the D7 based on savings alone, opening the door for digital nomads to obtain a D7, it is much more difficult to do so rather than showing proof of stable, passive income.
The digital nomad visa fixes that issue, as digital nomads no longer need to rely on an impressive savings account and a bit of legal cunning to relocate to Portugal, as they now have a dedicated, simplified route to do so with ease.
Should investors choose a D7, Digital Nomad Visa, or Golden Visa?
Portugal’s most impressive immigration goliath remains the Golden Visa. The residency by investment program, which offers a simplified route to obtaining residence with a minimal physical presence requirement for those who invest in the nation’s economy, is one of the most popular programs of its nature worldwide.
Over 11,000 investors and 18,000 of their family members have received residency permits through the golden visa, as it remains an extremely attractive route into Portugal, especially due to its fast track for citizenship.
Unlike the digital nomad visa or the D7, the golden visa requires applicants to make a qualifying investment to qualify for the program, and it offers them a wide array of options to choose from.
However, the most popular have been the real estate investment category starting at €280,000 (92% of all applications), and, more recently, the mutual investment bond category (2.65% of all applications since 2012, but 10% of all applications in the past three years).
The Portuguese immigration framework’s diversity has been magnificent for the country, allowing it to attract a wide array of immigrants that fit into various categories. Over one million immigrants have made Portugal their home, accounting for over 11% of the total population.
However, that diversity may lead some to question which immigration route is the best for them, especially when they may qualify for more than one option, but doing that is simple, as it starts with deciding between the golden visa and its other two counterparts, and that decision ultimately comes down to one major factor – relocation.
One of the golden visa’s biggest attractions is its lax residency requirement, as its holders only need to reside seven days a year to maintain their residence status and can apply for citizenship after five years of doing so.
So basically, those who want a Portuguese residency permit and a pathway to citizenship but do not want to relocate to Portugal at the moment are better suited to the Golden Visa.
The D7 and the digital nomad visa require their holders to live in Portugal for at least six months a year to qualify for renewal, so relocation and actual residency is the main deciding factor between the golden visa and the other independent means visas.
Then, the decision between the D7 and the digital nomad visa becomes simple, as it relies on the nature of one’s income. If it is passive, then the D7 is the best option; if it is active, then they should choose the digital nomad visa.
It is also important to note that taxation is a key element here. Golden visa holders who do not reside in Portugal do not qualify for income tax. Digital nomad visa holders must pay income tax but can take advantage of the country’s Non-Habitual Residence tax scheme (NHR) that fixes income tax rates at a low 20%. However, for D7 holders, their income may qualify as capital gains, depending on how it is earned, and then they will have to pay capital gains tax instead of income tax, which may be higher depending on the amounts earned. So understanding the tax burden before choosing a visa is also a major factor to consider.
Benefits of living in Portugal on a Digital Nomad Visa
Portugal is rapidly becoming a hub for digital nomads, and it is no surprise why. The country ranks high (38th) on the UN’s Human Development Index, and it offers a high EU standard of living; Nomadlist even ranked Lisbon as the number one place for digital nomads.
The main benefits of living in Portugal on a digital nomad visa are:
High Standard of Living
Portugal offers a high standard of living for its residents. Operating on an EU standard, it is the 6th safest country in the world and has the 27th best healthcare infrastructure, overtaking countries such as Italy, South Korea, and the UAE.
The country’s roads and infrastructure are well maintained, and it boasts an outstanding education system for those with children.
Portugal has a moderate climate, with warm summers and mild winters, making it the perfect destination for digital nomads who want to get away from the snapping cold or the blistering heat.
Its diverse topography provides its residents with endless activities, whether it’s on sunny shores, lush forests, mountain tops, or bustling city centers.
A central location excellent for business
Portugal is situated as close as possible to the center of the map, allowing its residents to conduct global business with the Asian Far East and North America’s Western Coast all within the same 9-5 working day.
Those looking to expand their work on a global stage will find it much easier to do from Portugal without worrying about early mornings or late nights behind their laptop.
It is also a major global distribution hub, and being part of the EU, it opens one of the world’s most powerful markets to its residents, making it a great option for those looking to create better opportunities. Portugal’s internal market has been very active, as its GDP growth rate of 4.9% recently highlighted, and it is a great place for remote workers to expand their business.
New residents in Portugal can apply for the country’s NHR tax regime that fixes income tax at 20% for ten years. This is a massive tax cut, especially in Europe, making it one of the best places for digital nomads who want to alleviate their tax burden as much as possible.
Cost of living
Maybe one of the most important factors digital nomads consider is living costs, and Portugal offers them an excellent option in terms of value for money.
Living in Lisbon, the country’s bustling capital, costs 39% lower than London, and 29% less than Paris. Rent in Portugal is very affordable, while the costs for groceries, transportation, and activities are lower than the EU average, making it a great destination for digital nomads.
The Digital Nomad Visa for US nationals
The US remains home to the majority of remote workers, with an estimate that 15 million of them reside within US borders. However, many of them may want to consider a move to Portugal through the new digital nomad visa.
The Digital Nomad Index places Portugal 18 places higher than the US on its ranking, as the latter’s extensive living costs, rigid taxation system, and overall security issues have all affected its score.
Portugal even has, on average, quicker internet service than the US, while rent in the EU nation is typically half of that in the USA.
The cost of living is one of the major factors. Taking Lisbon as a prime example once more, the cost of living in New York is 157% higher than in the Portuguese capital, while in Los Angeles, it is 92% higher.
Portugal offers a more affordable option with a similar, if not superior, living standard in one of the world’s most pleasant environments.