With a pleasant temperature, delicious cuisine, and friendly locals, Portugal is a wonderful place to visit. As of February 2022, it will serve as a gateway to Europe for 10,442 investors and 17,426 members of their dependent families from throughout the world thanks to the Portugal Golden Visa program.
Even while the majority of these families invested in Portuguese real estate to earn their residency permits recently, another investment technique is becoming increasingly popular: Portugal Golden Visa Investment Funds.
It is possible to obtain a Golden Visa, a resident visa, by making a qualified investment in Portugal. There must be no criminal record on the applicant’s criminal record.
The initiative was launched in October 2012 by the Portuguese government. More than €6 billion of foreign direct investment was brought into the country as a result of the initiative by 2022.
A modification to Portuguese Law No. 102/2017, which took effect on August 28th, 2017, added the investment fund path to the Portugal Golden Visa. It is written as follows:
“Capital transfer of €350,000 or more, for the acquisition of units of investment funds or venture capital Portugal fund is a fund dedicated to the capitalization, the investment made under Portuguese legislation that is at least five years old at the time of investment and at least 60% of investments are made in commercial companies with the potential to grow to at least €350,000*.”
You must first be eligible for a Golden Visa in order to apply for the Portugal Golden Visa program through the investment fund Portugal. Initiating the evaluation process are the following first principles:
- Being a non-EU-EEA citizen and a non-Swiss national.
- Not having any felony convictions on your background.
- Applicants to investment funds in Portugal may face additional requirements depending on the investment funds and the fund management business. The investor is usually referred to as:
- It is important for investors to be knowledgeable about various financial instruments, such as stocks, bonds, and mutual funds.
- Show that you have a significant amount of money and where the money is coming from.
A Golden Visa in Portugal can be obtained by investing in an investment fund in the United States. It’s also required by the IRS to report on the overseas assets held by U.S. account holders in foreign financial institutions and some non-financial companies. As a result, any Portuguese bank, fund, or fund manager with an American customer or investor must comply with the stringent regulations imposed by the United States government.
Some banks and investment funds in Portugal are wary of engaging with investors from the United States because of this. In any case, there are banks and funds in Portugal that accept US citizens.
To learn more about these funds and the Portugal Golden Visa investment fund list, please feel free to contact us.
For the Portuguese Golden Visa program, an investment fund option requires a smaller investment amount of €500,000 than the capital transfer option (€1.5 million).
In contrast to the buying of real estate, the purchase of investment funds does not necessitate hefty fees and tax payments. The IMI transfer tax (avg. 6%), stamp duty (0.8%), and annual municipal taxes (between 0.3-0.5%) are all included in the purchase price of a property in Portugal.
The CMVM (Portuguese Securities Market Commission), the Bank of Portugal, and the external Fund Management business are all involved in the regulation of a likened Portugal fund. The fund is also subject to audit by the Portuguese Tax Authorities. The fund’s compliance with Portuguese law, tax rules, and the proposed investment plan approved by the Portugal investor fund are ensured by such high levels of regulation.
In some cases, an investment in a mutual fund can result in significant tax advantages. Investors who aren’t Portuguese tax residents may be spared from paying withholding tax on the fund’s earnings under certain circumstances. Portugal, on the other hand, taxes all rental income from real estate at a flat rate of 28%.
In order to achieve a particular degree of financial diversification, Portuguese law regulates the funds. A certain asset or investment in the fund can only make up a certain percentage of the whole fund portfolio, and this is governed by quotas. In this way, the fund diversifies its investments and reduces the risk for its investors.
In some cases, the annual rates and capital appreciation might be much higher than other investment possibilities associated with the Portugal Golden Visa Program.
Ownership of a participation unit in an investment fund is a hassle-free investment, unlike owning a piece of real estate. The fund managers take on the bulk of the management responsibilities. Additionally, control-obsessed investors may be put off by this point as well.
While real estate or bank capital can be kept in trust, an investment fund requires investors to hand up control of their money to a third-party fund manager. Some investors may feel uncomfortable with such a lack of control.
By signing a contract with the participants, most funds guarantee that the fund will not be terminated early for any reason. So that the participant can apply for permanent residency or citizenship in Portugal, this is a requirement. Reselling the participation unit before the fund dissolves is often highly difficult; funds typically have extension periods that can only be initiated by the fund administration and the participant has no vote in these extensions; and, finally, there is no certainty that the fund’s ultimate goal is to sell the portfolio at a target appreciation when the fund decides to sell the portfolio.
The fund managers get a piece of both the potential dividend and the eventual capital appreciation. Each fund has its own management and performance fees.
Investment Fund: €500,000 (approximate without Exit Fees, Management Fee, or Legal Fee).
Legal expenses vary substantially between legal firms, the number of family members, and other variables; they would not range greatly between different investment options.
Investors from all over the world can choose from more than 20 different funds here in Portugal. An online advice call is being offered to help us better serve you.
During this 45-minute phone session, you’ll be able to talk about:
- Learn how to evaluate a fund’s risk and return characteristics.
- Make sure you’re aware of what to look for in a financial institution.
- Get advice on how to invest in mutual funds.
- Be sure to express any doubts or questions you have to the person you are speaking with.
- Our team will contact you to set up a date and time after you book your request.
According to the pros and disadvantages of investing in a Portugal Golden Visa fund listed above, it is worthwhile to go deeper into the topic of exiting an investment fund.
Investment funds that are eligible for a Golden Visa will often have a term of at least six years included in their contracts. To put it another way, you may rest easy knowing that your investment will remain legitimate while you work on obtaining Portuguese citizenship.
Such a collaborative strategy may be seen in the investment fund for the Golden Visa route and should be sought after. The story doesn’t end there, however. Assessing and questioning the following aspects is critical.
Investors can transfer or sell their participation units in most Portuguese investment funds. The demand for participation units in a fund that is designed specifically for the Golden Visa deadlines is often difficult to locate unless it is at the fund’s inception.
Investments in these funds are therefore relatively difficult to come by until the fund manager decides to disband the fund altogether. There are funds that offer to purchase back their participation units at a discount in order to get around this problem.
It’s not uncommon for funds to have a specific timetable for when they want to withdraw their capital. A lot of Portugal Golden Visa investment funds have a six-year time frame for investing.
At the same time, most of the funds offer an optional extension period that can be triggered at the six-year milestone. The fund management, not the investors, determines the fund’s optionality. As a result, you may be stuck in Portugal for a longer period of time than necessary to apply for Portuguese citizenship. The best thing to do is to contact the fund.
Most Portuguese Golden Visa funds have as their ultimate goal the sale of their portfolios at a profit. Performance fees depending on the value of the fund are common for most fund managers. In a positive way, this means they are motivated by the same goals as the investors.
To be clear, they’re sharing your profits, but they’re keeping the loss they might cause you. As a result, the entire downside risk rests with you.
In order to apply for the Portugal Golden Visa through an investment in a fund, the same documentation is necessary as for any other application for a Golden Visa in Portugal.
- The only acceptable form of identification is a government-issued passport.
- Proof of health insurance coverage. An official document demonstrating that you are covered by the Portuguese National Health Service or an internationally recognized health insurance.
- Criminal History Record, retrieved from the country of origin or current place of habitation. Issued three months or more in advance of the application deadline. It should be translated into Portuguese.
- An individual’s country of origin or tax residency’s tax identification number
- Completed application form authorizing Portugal to consult one’s criminal history.
- A declaration that you will meet the minimum time requirements for your investment activity in Portugal by signing this letter.
- ARI application fee payment receipt.
You’ll need to show that you’ve invested the minimum amount of money yourself by submitting supporting paperwork. You need the following documents:
- Statement from a Portuguese financial institution stating that the minimum investment amount has been successfully transferred.
- Proof of ownership of the participation units, free from any obligations or costs, as stated in the supporting document.
- A declaration published by the investment fund’s managing company, detailing the business plan, maturity dates, and deployment of at least 60% of the fund assets in Portugal.
The length of time it takes to obtain a Golden Visa varies in a wide range of circumstances. The speed of your decision-making, the efficiency with which you gather the necessary documentation, the expertise of your legal firm, and the volume of applications at the SEF office at the time of your application are all examples of these variables.
- You select an appropriate investment fund for Portugal.
- You hire a legal team.
- In Portugal, you obtain a tax identification number (NIF) and a bank account.
- Documents for fund subscription are signed and completed by you.
- If you’re accepted as an investor by the fund manager, you’ll get your money.
- Move funds from your bank account into a fund account as needed (6)
- Subscription declarations are issued by the fund manager.
- You pay the SEF application cost and submit all GV documents to the law firm.
- You show up in person at SEF for your SEF Biometrics Appointment.
- SEF issues the initial two-year residency visa.
- The residence permits issued under the Golden Visa program are renewable every two years, and they allow you to progress toward Portuguese nationality.