In a historic turn of events, Portugal's legislative elections held on Sunday, 10th of March 2024, have not only reshaped the nation's political landscape but have also garnered significant international attention. The unexpected outcomes and a remarkable decrease in abstention rates have left political analysts and leaders reflecting on the implications of this pivotal moment.
Portugal's 2024 Election marked by the lowest abstention in 30 years
In a historic shift, the right-wing has gained significant power in Portugal, with the AD's (Aliança Democrática) central right-wing party, winning the 79 parliamentary chairs. The result leaves its rival PS (Partido Socialista), the central-left-wing, with 74 chairs. The far-right-wing party, Chega, appears for the first time as a significant power, with 48 seats. Although the AD leader reinforced that the party will not partner up with Chega to form the new government, the decision is still being analysed.
This year's election holds particular significance as it coincides with the 50th anniversary of the Carnation Revolution, which took place on April 25, 1974. The closely contested nature of this election underscores Portugal's journey towards becoming a mature democracy. The nation has undergone significant transformations, notably with its well-equipped plural society boasting a Class A credit ranking, a highly skilled human resources, recognition as one of the world's premier destinations, and a reputation for stability and safety.
One of the standout features of the elections this year is the notable decrease in the national abstention rate, which settled at 33.8%. This marks the lowest abstention rate since 1995, showcasing a strong voter turnout that defied expectations. Notably, this achievement becomes even more significant as Portugal celebrates the 50th anniversary of the country's democratization, a milestone in the country's political history. Several party leaders have celebrated this achievement, emphasising its importance in a year of historical significance and highlighting the strength of the Portuguese democracy.
International Perspectives on the Portuguese Election
The international community closely observed the elections, with media outlets across Europe highlighting the rise of the right-wing. European publications pointed out the challenges that will be faced by the centre-right Alternativa Democrática (AD) in forming a stable government, given the increased influence of the far-right party Chega. According to the BBC's website, the centre-right in Portugal is asserting a narrow electoral triumph but faces limited prospects of establishing a majority government. This results in the nation having "the most fragmented parliament since the conclusion of its dictatorship fifty years ago". The challenge situation emerges as a reinforcement of Portuguese democracy, fortifying the idea of a change of government and political balance and stability.
While the election is almost decided, with 99,01% of the votes counted, delays in counting the votes from the Portuguese living abroad might not be enough to present any significant change in the number of seats for the Parliament. Portugal's 2024 elections have not only witnessed a historic shift in voter turnout but have also sparked discussions about the country's political future. While the shifts in Portugal's political landscape appear as a surprise, another significant aspect of the country's future is also being shaped – the residency by investment programs, particularly in real estate through the Golden Visa.
Golden Visa through Real Estate and NHR back to the table
During the election, the AD campaign promised to review the Golden Visa program and analyse if the Real Estate option, discontinued last October, can be reinstalled in the country's policy. Aliança Democrática (AD) party's electoral program highlighted the need for a nuanced approach to the Golden Visa program. The party expressed that reverting to or returning to the original broad real estate investment terms of the Golden Visa might not be sensible, as the program has undergone a cycle that has generated effects, now in the past. However, he sees room for improvement in the mechanisms, steering the regime towards addressing market gaps or the need to increase the supply of affordable rental housing.
Discussing the changes to the Golden Visa and the Regime dos Residentes Não Habituais (RNH) – the Non-Habitual Resident programme – AD party envisions a refinement of mechanisms to the immigrant programmes, aiming towards increasing the availability of affordable rental housing. AD's approach aims at reducing taxes for those residing in Portugal, fostering a trajectory of tax reduction for residents.
Portugal Tax Reforms: AD's Vision for Fiscal Policies
Anticipating a fiscal overhaul, AD proposed during the election for tax reductions in both Individual Income Tax (IRS) and Corporate Income Tax (IRC). The party's vision includes a revision of IRS tax brackets and a reduction of the IRC rate to 15% by the end of the legislature. The party seeks to strike a balance between attracting foreign residents and ensuring equitable tax policies within the national context.
As Portugal navigates in this new political and economic scene, the decisions made regarding the Golden Visa program and other investment-related policies will play a key role in shaping the nation's future - as it already did in the past. Political agendas and foreign investment strategies continue to grow, promising a dynamic landscape that will define Portugal's trajectory in the years to come.
Portugal Homes following the political situation in Portugal
Portugal Homes maintains a dedicated team that meticulously monitors and analyses the political and economic landscape in Portugal. This approach allows us to provide optimal advice to our clients and partners. Our distinctiveness lies in our ability to adapt to both political and market challenges. Continuously innovating, Portugal Homes ensures our clients have various avenues to secure Portuguese residency through investment, be it via the Portugal Golden Visa, the Portugal D2 Visa, or other residency programs tailored to our client's needs.
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