IN GRAN CANARIA – Portugal is to offer tax benefits to lure start-ups to their shores as the battle to bring British entrepreneurial talent hots up, the country’s digitalisation minister said.
With its beautiful beaches and relaxed way of living, the country has for years been an attractive place to move for Britons who bought second homes but in recent years has transformed itself into a hub for digital nomads after it introduced its D7 visa scheme.
Now it wants to go one step further, however, and encourage foreign entrepreneurs to start new companies and take advantage of Portugal’s “business ecosystem”.
In a new law to be introduced next year, Lisbon will not tax stock options given to investors or employees on start-ups when they are issued but only when they are used. The new rate of tax will be lower than other European rivals.
Stock options give buyers a right to buy a share of a start up company at some point in the future. In many countries, buyers are taxed on these stock options when they are issued by the company.
Mario Campolargo, the Portuguese secretary of state for digitalisation, said the purpose of the tax concession on stock options was to lure British business talent to move to Portugal.
“Britain sees Portugal as a very nice place to visit, a very nice place to live, and there are lots of retired people who have homes in Portugal, but what we want to bring is a third dimension – come and work with us,” he told i in an exclusive interview.
“(We are) launching a challenge to youngsters in the UK who would like to maintain a strong alliance with the European Union that Portugal is the place where they will find the talent and opportunity to thrive in the digital world.”
The minister said Portugal’s planned tax concessions will beat other European rivals.
“Most countries tax stock options when the investor or employee receives them. We will come up with a new law so that they are not taxed when they are received but only when they are cashed and at a very favourable (rate),” he said.
“(The tax rate) will be very competitive at a European level. Yes, we compete with other countries but we (will) win, we are better.”
He declined to disclose the new tax rate because it has not yet been passed by the Portuguese parliament.
The minister said that increasingly large companies were attracted to move to Portugal because of the country’s business infrastructure.
“Not everybody who comes to Portugal is a digital nomad. In some cases, big companies bring people, or they contract people locally,” said Mr Campolargo.
Nokia recently invested in a competence centre in Lisbon.
One of the advantages which Portugal has enjoyed over some European countries is that almost everyone speaks English, said Mr Campolargo. Unlike neighbouring Spain where the level of English is generally lower, the Portuguese benefit from the fact that television films have never been dubbed as happens in Spain.
“Our way of working in a multinational team is so easy-going. Our experts speak English like a second language,” Mr Campolargo noted.
The alliance between Portugal and Britain is the oldest in the world and was established by the Treaty of Windsor in 1386, some 636 years ago.
The bonds are still strong and have brought thousands of Britons to live in Portugal in recent years.
Nicole Parsons, 46, who runs a postural alignment and health company, moved from Didcot in Oxfordshire to Madeira 13 months ago as she wanted to take advantage of the digital nomad hub on the island.
“I decided to move my business online 100 per cent and I wanted to learn more about remote working. Madeira is a hub for remote working,” she told i from her new home.
“Madeira is in the same time zone as Britain. I am in the same location, but I now have clients worldwide. There is a real nomad community. From a professional side there are skills and events which I can take part in here.”
Ms Parsons and her partner Derek Smith, a Canadian digital nomad, managed to get their D7 visas for €600 (£523) each. It entitles them to two years of temporary residency each.
Agencies can charge up to €2,500 to get the visas for people who do not want to go through the bureaucracy.
“To live among like-minded people has been great. There has been lots of cross pollination. I had a great life in the UK. I didn’t leave because of Brexit,” she said.
Ms Parsons plans to apply for a permanent Portuguese residency when her current visa has expired.
The D7 visa requires that a person earns around €800 per month and is simple to obtain.
Dave Williams, CEO of NomadX, a company which helps digital nomads in Portugal, said: “We are seeing a lot of Britons of all ages from nomads to retirees but the main issue for them is they can only stay three to six months with the new Brexit rules.
“But even with the greater restrictions, we are seeing a lot of them coming to work remotely and further extending stays, starting businesses, and buying real estate due to the pleasant weather and affordable living. Many are seeking full time residency so that they can stay longer to live and work while also reducing their taxes.”