Remote Workers: The D7 Visa’s purpose or the Digital Nomad Visa’s

Adriana Carreira Pereira | Lawyer

Portugal has been striving in recent years to keep up with the global dynamics on migration and trying to adapt the immigration options to match the increasingly fast changes. The Portuguese digital nomad Visa has been long in the works.

In fact, many remote workers and freelancers have applied before and had their Visas and Residence Permits approved before the new Digital Nomad Visa.

In the past, these remote workers and freelancers have successfully applied through the D7 Visa; however, this programme was not really designed for nomads, but for retirees and those that were able to live on their own passive income.

Until now, the D7 Visa was the best option for digital nomads, as applicants were required to prove a regular income that would allow them to live in Portugal. Nevertheless, the D7 Visa was not designed for remote work but it was widely used for these circumstances because it did not require the provision of a service or the existence of an employment contract in Portugal, and the applicants were able to show, in some way, that they indeed received the necessary income to sustain themselves in Portugal without having any link to a Portuguese company.

In an effort to accommodate these cases, as Portugal is becoming more and more attractive to remote workers, the government has recently created the new Digital Nomad Visa. In this article we will outline the main differences between these two types of Visas to be clear about the one that is more suitable to each specific circumstance.

I. The D7 Visa

The D7 Visa was designed to be a Residence Visa, that gives the right to a Residence Permit for retirees, individuals linked to religious organizations and for people living of their revenue. This means that the ideal applicant for the D7 Visa is someone who receives, for example, State and occupational pensions, dividends, real estate rental income or capital gains and wishes to acquire Portuguese residency and relocate to Portugal, which requires living in the country for the majority of the year, turning it into their home country, and becoming a Portuguese tax resident.

The Residence Permit that the applicant receives after successfully applying for the D7 Visa, is valid for 2 years and renewable for 3 more years. Another great advantage is that after 5 years legally residing in Portugal under the D7 Visa, the applicant becomes eligible to acquire Portuguese citizenship, which is a goal for many non-EU citizens.

II. The Digital Nomad Visa

On the other hand, the Visa for Digital Nomads is specifically designed for 1) foreign workers, independent professionals or entrepreneurs, 2) those whose professional activities allow them to work remotely, and 3) for individuals or legal entities domiciled or with headquarters outside of Portugal.

The law gives these professional Digital Nomads two options: 1) a temporary stay Visa or 2) a Visa followed by a Residence Permit. The difference between these two options lies in how long the candidate wishes to stay in Portugal.

• Temporary Stay Visa for Digital Nomads

The Temporary Stay Visa for Digital Nomads is ideal for professionals who carry out their professional activity remotely and wish to do so in Portugal for a brief period. These are the "true" nomads, known as individuals who "move from one place to another rather than living in one place all of the time". As such, this Temporary Stay Visa, that is valid for up to one year, allows the holder to live and work in Portugal for that brief period without having to become a resident, as was the case when these remote workers had to apply through the D7.

• Residence Permit for Digital Nomads

Portugal also created a Visa catered to Digital Nomads who want to "settle" in Portugal and live here for a longer period (more than one year), and maybe even decide to make Portugal their  home in the future. The applicant starts by submitting a request for a special Residence Visa for Digital Nomads in the Portuguese Consulate that serves the applicants’ current area of legal residence. This Visa will grant the applicant two entries and the right to stay up to 120 days in Portugal. Within these 120 days, the applicant can schedule an appointment with The Immigration and Border Service (SEF) and convert their Visa into a Residence Permit for Digital Nomads.

This Residence Permit, similarly to the D7 Visa, will be valid for 2 years with the possibility of renewal for 3 more years. It is our understanding that the holder of this Residence Permit, also like the D7 Visa, will have minimum stay requirements, such as during the first 2-year period, they must spend at least 16 months in the country, and during each 3-year subsequent period at least 28 months provided, in each case, that no absence exceeds 6 consecutive months. 

Portuguese NHR Tax Regime

As a new resident (that meets the eligibility criteria), the applicant will be entitled to benefit from the "non-habitual resident" (NHR) tax status, which grants a new resident a 10-year tax exemption on most non-Portugal-sourced types of income, whether or not they are taxed at source, and whether or not they are under a double taxation agreement (DTA) the tax at source is reduced (e.g. on dividends, interest or royalties) or even eliminated.

Furthermore, certain high added value activities that are related to employment and self-employment work may be eligible for a 20% flat tax rate for 10 years. The NHR status is highly advantageous to new Portugal residents so we highly recommend that they apply for it.

Although the creation of the Digital Nomad Visa, in its two types, is a remarkable step forward in the legislation and modernization of migration policies, we would like to highlight that the application process for these Visas and its granting, are still pending further regulation and clarity.

Portugal is frequently listed as the ideal choice for digital nomads, so it is our firm believe that this new Digital Nomad Visa will become a very important tool in simplifying the immigration of remote and independent workers to Portugal, and, of course, will also be very important for foreigners who want to continue working for international companies while enjoying the sun, local history and culture, beaches, natural parks, safety and, in general, the high quality of life at an affordable cost that Portugal has to offer.

If you have further questions regarding this matter, get in touch with us and we will be delighted to assist you.