Portugal’s Golden Visa investment funds program presents a compelling opportunity for astute investors seeking a secure pathway to residency, capital growth, and access to a thriving European market.
The Portugal Golden Visa Program
The Portugal Golden Visa is a highly sought-after residency by investment program and is consider one of the most popular programs of its kind globally. It provides investors with the unique opportunity to obtain Portuguese residency in exchange for specific investments in the country such as investment funds.
One of the program’s most enticing features is its access to the Schengen Area, which encompasses 27 European countries that have abolish internal borders, allowing for seamless travel within the region. Additionally, Portugal’s Golden Visa offers visa-free access to a staggering 174 countries worldwide, making it an attractive choice for individuals seeking global mobility and expanded international opportunities.
What is the Portugal Golden Visa Investment Fund?
The investment fund option for the Portugal Golden Visa was implemented through an amendment to Portuguese Law no. 102/2017, enact on August 28th, 2017 with the following characteristics:
- Capital transfer of the amount of €500.000 or higher
- Acquisition of units of investment funds or venture capital Portugal fund of funds dedicate to the capitalization of companies, capital injected under the Portuguese legislation
- Maturity, at the moment of the investment, is, at least, of five years
- At least 60% of the investments are realizes in commercial companies with head office in the national territory.
Who can apply for the Golden Visa investment funds?
In order to meet the requirements for the Golden Visa fund option, the eligibility criteria encompass the following:
Non-EU/EEA or Non-Swiss Citizenship: This criterion forms the cornerstone of Golden Visa eligibility. To participate in the program, applicants must possess citizenship from a country outside the European Union, European Economic Area, or Switzerland. It’s imperative to confirm your citizenship status before proceeding with the application.
Unblemished Criminal Record: Ensuring that applicants have a pristine criminal record is a fundamental requirement. Prospective Golden Visa holders should not have any prior criminal convictions or pending criminal charges. This stipulation underscores Portugal’s commitment to maintaining the program’s integrity and security.
Age Requirement: An often-overlook but vital detail is the age criterion. To qualify for the Golden Visa fund option, applicants must be at least 18 years old. This age threshold serves as a clear indicator of legal capacity and responsibility within the program.
Advantages of the Portugal Golden Visa Investment Fund
1. Diversification
Investment funds typically invest in a diversify portfolio of assets. By investing in a fund, you gain exposure to a range of investment opportunities, such as stocks, bonds, real estate, or private equity. Diversification can help spread the risk and potentially enhance your investment returns.
2. Professional Management
Investment funds are manage by professional fund managers who have expertise and experience in selecting and managing investments. They make inform investment decisions on behalf of the fund, aiming to achieve the fund’s objectives and maximize returns.
3. Regulatory Compliance
Regulate investment funds operate under the oversight of regulatory authorities, which helps ensure transparency, accountability, and compliance with legal and regulatory requirements. This can provide investors with a level of confidence and security, knowing that their investments are being managed within a regulated framework.
4. Tax Advantages
For non-residents, the withholding tax rate is 0%, meaning no tax is deduct from their income at the source. However, residents are subject to a 10% withholding tax rate.
5. Simplified Administration
Investing through a fund can simplify the administrative process for investors. The fund takes care of the day-to-day management, record-keeping, and reporting requirements, reducing the administrative burden on individual investors.
6. Potential for Capital Appreciation
Depending on the investment strategy and market conditions, investment funds have the potential to generate capital appreciation over the investment period. This can be an attractive feature for investors seeking to grow their wealth and achieve long-term financial goals.
Disadvantages of the Portugal Golden Visa Investment Fund
1. Limited control
When you opt to invest in a fund, it’s important to recognize that this choice often entails ceding a portion of your control over the specific assets or ventures where your capital is allocated.
This delegation of authority is a fundamental aspect of investment funds, as professional fund managers typically assume the responsibility for making crucial investment decisions on your behalf.
2. Market volatility
Investments, including participation in funds, are inherently influence by market dynamics. The value of a fund is not immune to market fluctuations, and as such, it may experience periods of volatility.
Such market volatility carries the potential for both gains and losses, and investors should be prepared for the associated financial uncertainties.
3. Lock-in period
Certain investment funds may impose lock-in periods, stipulating that investors refrain from withdrawing their invest capital for a specific duration. These lock-in periods are design to fulfill various objectives, such as fund stability and continuity.
While they serve a purpose, they can limit an investor’s liquidity and accessibility to their funds during the designated timeframe.
4. Fund fees and charges
Investment funds often entail an array of fees and charges that investors should mindful of. These expenses encompass management fees, administrative costs, and various other charges associates with maintaining and operating the fund.
It’s important to assess the impact of these fees on the overall return on investment, as they can affect the net gains realized from your investment over time. Thoroughly understanding these financial aspects is crucial for making informed investment decisions.
List of Qualified Funds for the Portugal Golden Visa
For the Golden Visa program in Portugal, there are several types of investment funds that applicants can consider. These investment funds are structure to meet the requirements of the Golden Visa program, which grants residency in Portugal to non-European Union (EU) citizens who make qualifying investments. Here are some common types of investment funds used for the Golden Visa program in Portugal:
Venture Capital Funds
These funds invest in innovative businesses and startups in Portugal. They provide capital to companies with high growth potential and contribute to the development of the Portuguese economy.
Private Equity Funds
These funds invest in establish companies with growth potential. They typically acquire a significant ownership stake in the target company and actively participate in its management and strategic decisions for an eventual sale with profit.
Tourism Funds
These funds target investments in the tourism sector, including hotels, resorts, and other relate projects. They aim to support the growth of the tourism industry in Portugal.
Social Impact Funds
These funds invest in projects that generate social and environmental benefits. They focus on areas such as renewable energy, sustainable development, affordable housing, and community development.
What you should ask before investing in the Portuguese Golden Visa Fund?
- Do I meet the eligibility criteria for the Golden Visa program?
- Am I comfortable with the minimum investment amount?
- What is the investment strategy of the fund?
- Is it aligned with my risk tolerance and investment goals?
- What is the historical performance of the fund?
- What are the potential risks associated with the fund?
- Who are the fund managers responsible for managing the fund?
- What is their track record and experience?
- Is the fund registered and regulated by the appropriate authorities?
- Are there any red flags or concerns regarding the fund’s reputation?
- What are the terms and conditions related to liquidity and exit options?
- Can I easily sell my investment or exit the fund if needed?
- Are there any restrictions or lock-in periods associated with the investment?
- How long am I committed to keeping my investment in the fund?
- How will my investment and residency status impact my tax obligations?
Regulation of the Portuguese Funds
Portuguese Golden Visa investment funds are regulate by several entities and frameworks to ensure transparency, compliance, and investor protection. Here is an overview of the regulatory aspects:
Portuguese Securities Market Commission (CMVM)
The CMVM oversees and regulates investment funds in Portugal, including those eligible for the Golden Visa program. They establish rules and requirements for fund registration, operation, disclosure, and investor information.
Golden Visa Program Regulations
The Golden Visa program itself has specific regulations that govern the investment funds qualifying for the program. These regulations set forth the criteria, minimum investment amounts, investment periods, and other requirements for funds to be eligible for the Golden Visa.
Fund Management Companies
The fund management companies responsible for operating the investment funds are subject to regulatory oversight by the CMVM. They must adhere to specific rules regarding fund management, risk management, reporting, and compliance with relevant laws and regulations.
European Union (EU) Directives
As a member of the EU, Portugal must comply with EU directives and regulations related to investment funds. These directives provide a framework for investor protection, disclosure, and harmonization of fund regulations across EU member states.
Portugal Golden Visa Investment Fund Fees
The fees associates with Portugal’s Golden Visa investment funds can vary depending on the specific fund you choose and its management structure. Here are some common types of fees that you may encounter when investing in Golden Visa investment funds in Portugal:
Management Fees
These fees are charge by the fund manager for overseeing the fund’s investments and making strategic decisions. Management fees are typically calculates as a percentage of the total assets under management (AUM) and are typically charged annually. They can range from 0.1% to 2%
Performance Fees
In some cases, investment funds may charge performance fees if the fund achieves certain predefined performance benchmarks. These fees are typically calculate as a percentage of the fund’s returns above a specify hurdle rate. Typically these fees range between 20-30%
Subscription Fees
Some funds may charge fees when you initially invest in the fund. These fees are often a one-time expense and may use to cover administrative costs associate with onboarding new investors. When charged, you may expect 1-3%.
Exit Fees
If you decide to exit the fund or redeem your investment, you may encounter redemption fees. These fees are designed to discourage frequent trading and may be applied if you exit the fund before a specified holding period.
Legal Fees
Legal fees for a Golden Visa application can vary base on several factors, including the law firm you choose and the number of family members includes in the application. For a family of four seeking a Golden Visa in Portugal, legal fees may typically range from €6,000 to €12,000.
Step-by-step Application Process
Please note that while this summary provides a general overview, it is recommend to consult with a professional legal advisor for detail guidance tailored to your specific situation.
- Select the desired Golden Visa investment fund(s) for your investment.
- Engage the services of a reputable law firm experienced in Golden Visa.
- Obtain a Portuguese NIF number and open a bank account in Portugal.
- Sign and complete the necessary subscription documents for the fund(s).
- The fund managers assess your eligibility and approve you as an investor.
- Transfer the invested funds from your bank account to the fund account.
- The fund manager provides you with the fund subscription declaration.
- Your law firm submits your application to AIMA (former SEF).
- Schedule a biometrics appointment with AIMA and attend in person.
- Upon approval, AIMA issues a residence permit valid for initial period of two years.
List of documents required for the Portuguese Golden Visa
To apply for the Portugal Golden Visa you must provide the following supporting documents:
- Golden Visa application
- Valid passport and, if applicable, a valid Schengen visa, for each applicant.
- Criminal record certificate
- Applicant’s permission for AIMA to access his/her Portuguese criminal record.
- Proof of residence, which can be in the form of a recent utility bill, or a recent bank statement
- Proof of having obtained health insurance valid in Portugal.
- Proof of professional occupation, such as a letter issued by the employer, should be submitted.
- Documentary evidence of the eligibility of family member applicants
- Certificate of no debts from the Portuguese tax and insurance offices
- Signed statement affirming their commitment to meet the investment requirements
- Evidence of the minimum investment
- Letter from a local bank confirming the funds’ transfer.
- Document demonstrating your ownership of the participation units in the fund.
- Declaration issues by the investment fund’s management company outlining the business plan, maturity dates (of at least five years), and the deployment of at least 60 percent of the fund portfolio towards investments in Portugal.
Portugal Golden Visa Investment Fund Required documents
To meet the requirement for the Golden Visa investment funds, you must provide the following additional supporting documents:
- Declaration from a registered Portuguese institution confirming the successful transfer of funds that meet the minimum investment requirement.
- Document demonstrating your ownership of the participation units in the fund, free from any encumbrances or liens.
- Declaration issued by the investment fund’s management company outlining the business plan, maturity dates (of at least five years), and the deployment of at least 60 percent of the fund portfolio towards investments in Portugal.
Cycle time of the Portugal Golden Visa
Here you can find a flowchart for a better understanding:
Portugal Golden Visa Renewals
During the five-year duration of the Golden Visa program, the applicant will need to renew their visa twice. The 1st renewal is due at the end of year two, after the issuance of the residency card and the 2nd renewal is due at the end of year four.
Golden Visa Renewals Requirements
- Investors and their family members are require to adhere to a minimum stay of 14 days in Portuguese territory within each residence card’s validity period.
- Renewals necessitate the submission of the same documents and the maintenance of all initial application conditions.
- Every two years, all investment options must undergo an evaluation regarding their contributions to scientific and cultural activities, as well as their role in promoting foreign direct investment and job creation.
- Throughout the Golden Visa period, investors are obligates to maintain their investments free from encumbrances and financial burdens.
Still curious? Explore our video!
Useful glossary for the Portugal Golden Visa investment fund
Venture Capital Fund: A venture capital (VC) fund is a type of investment fund that provides capital to early-stage, high-growth companies with significant growth potential. Venture capital funds typically invest in startups or small businesses that are deemed to have strong prospects for rapid expansion and substantial returns on investment.
General Partner (GP): The General Partner is the fund management company responsible for identifying, evaluating, and managing investments. The GP invests its own capital in the fund and oversees its operations.
Exit Strategy: An exit strategy is the plan to divest from a company in which the private equity fund has invested. Common exit strategies include IPO (Initial Public Offering), selling to another company or investor, or a management buyback of the company.
CMVM: CMVM stands for “Comissão do Mercado de Valores Mobiliários,” which translates to the Portuguese Securities Market Commission. CMVM is the regulatory authority responsible for supervising and regulating the securities market in Portugal.
PFIC: PFIC stands for “Passive Foreign Investment Company.” It is a term used in the United States tax code to refer to certain foreign corporations that meet specific criteria related to their income and assets.
Form 8621: Form 8621 is a tax form used by U.S. taxpayers who have an interest in a Passive Foreign Investment Company (PFIC). The PFIC reporting requirements are intended to prevent U.S. taxpayers from deferring tax on passive income earned through foreign investments.
If you are interested in discovering a wider range of acronyms associated with Portugal Golden Visa investment funds, we invite you to read our comprehensive article available here.
Why choose us for your Investment Fund Golden Visa Application?
Local Expertise
We know Portugal. Due to our extensive local knowledge, we believe that concentrating our services in a single country destination is the best way to give you the most thorough and useful information.
Holistic Approach
One single channel of communication for the entire process. We provide you with a comprehensive service that covers all aspects of your move, from identifying the ideal residency visa to finding your new home or helping you to settle.
Transparent Service
We recommend what’s best for you based on an extensive process experience that saves time and money to clients. Our pricing is clear and competitive, and we don’t sell services that make us more money.
Simple Process
Technology plays a very important role in our company. We minimize our clients’ involvement in paperwork. We are customers ourselves and we know how to serve you.
Frequently asked questions about the Portugal Golden Visa Investment funds
What is the Golden Visa investment fund option?
The Golden Visa investment fund option allows investors to obtain Portuguese residency by making a qualifying investment in an eligible investment fund.
What is the minimum investment amount required for the Golden Visa investment funds?
The minimum investment amount is €500,000.
Can I choose any investment fund for the Golden Visa program?
No, you must select an investment fund that is pre-approved and meets the requirements specified by the Portuguese authorities for the Golden Visa program.
How long do I need to maintain the investment in the fund?
The investment must typically be maintained for a minimum period, usually five years, to retain the Golden Visa residency status.
Can I receive returns or dividends from the investment fund?
Yes, depending on the specific investment fund, you may receive returns or dividends based on the fund’s performance and investment strategy.
Can I include my family members in the Golden Visa application?
Yes, you can include your spouse or partner, dependent children, and dependent parents in your Golden Visa application.
What are the benefits of the Golden Visa investment funds?
The benefits include residency in Portugal, visa-free travel within the Schengen Area, access to Portuguese healthcare and education systems, and the opportunity for potential capital appreciation.
Can I apply for Portuguese citizenship through the Golden Visa investment funds?
Yes, after holding the Golden Visa for a certain period and meeting additional requirements, you may be eligible to apply for Portuguese citizenship.
Do I need to reside in Portugal to maintain the Golden Visa?
No, the Golden Visa allows for flexible residency requirements, and you are not required to reside in Portugal for a specific period.
Can I invest in multiples funds for the Golden Visa application?
Yes, it is generally possible to invest in more than one fund for the Golden Visa application
You could find interest in reading
- Portugal Golden Visa – A comprehensive guide
- Useful Glossary for the Portugal Golden Visa Investment Fund
- Golden Visa Spain vs Portugal Golden Visa: Comparison Guide
- The Tax System in Portugal – A comprehensive guide for expats
- Moving from the US to Portugal – All you need to know
- Portugal’s Cultural Golden Visa
