Portugal's Golden Visa: Understanding The Investment Fund Route

Understanding the Investment Fund Route

To qualify for the Golden Visa via an investment fund, applicants must make a capital transfer of at least €500,000 into units of investment funds or venture capital funds. These funds must adhere to specific regulations:

• Non-Real Estate Focus: Critically, the funds cannot directly or indirectly invest in real estate for residential purposes. Funds focusing on other sectors like technology, renewable energy, healthcare, agriculture, and various growth-oriented businesses are eligible.
• Portuguese Registration: The fund must be registered and regulated under Portuguese law by the Comissão do Mercado de Valores Mobiliários (CMVM), Portugal's securities market commission. This regulatory oversight ensures transparency and investor protection.
• Maturity Period: The fund's shares or units must have a minimum maturity of at least five years at the time of investment.
• Portuguese Investment Focus: A crucial requirement is that at least 60% of the fund's investment portfolio must be in commercial companies with their headquarters in Portuguese territory. This ensures the investment directly benefits the Portuguese economy.

Key Benefits of the Fund Investment Route

Choosing the investment fund option for your Portugal Golden Visa offers several compelling advantages:

• Family Inclusion: The Golden Visa programme extends to immediate family members, including spouses, dependent children, and dependent parents, ensuring a collective path to European residency.
• Professional Management and Diversification: Funds are managed by experienced professionals who actively seek out promising investment opportunities across various sectors. This professional oversight can reduce the individual investor's burden of managing direct assets and offers diversification, potentially mitigating risk compared to a single direct investment.
• Simplified Process: Compared to direct business creation or individual property management, investing in a fund often involves a more straightforward application process, with less administrative burden once the initial investment is made.
• No Active Management Required: Investors do not need to actively manage the underlying investments or directly participate in business operations. This "hands-off" approach is ideal for those who prefer passive investment while pursuing residency.
• Flexibility and Minimal Stay Requirements: Like other Golden Visa routes, the fund investment option retains the appealing requirement of an average 7 day physical presence in Portugal per year. This allows investors to maintain their current lifestyle and tax residency while still progressing towards Portuguese citizenship.
• Potential for Returns: While the primary goal is residency, many qualifying funds aim to generate returns, offering the potential for capital appreciation over the investment period. Some funds may even offer early distribution of returns, though it is essential to understand the fund's specific terms and exit strategies.
• Tax Benefits: Distributions made by the qualifying funds to respective non-tax resident Portuguese unit holders are not subject to taxation thereon (unless to a Portuguese tax haven). It is important to understand that the Golden Visa is a residency programme, and does not necessarily trigger tax residency in Portugal (see here for more details on tax residency).
• Pathway to EU Residency and Citizenship: The fund investment leads to a Portuguese residence permit, granting visa-free travel within the Schengen Area. After five years of maintaining the investment and meeting the minimal stay requirements, applicants and their eligible family members can apply for permanent residency or Portuguese citizenship, securing an EU passport.
  • Note that the Portuguese Parliament has begun discussing significant changes to the country's nationality and immigration laws, including extending the required residence period for citizenship and altering how that period is calculated. These proposed amendments, which also cover stricter requirements for family reunification, are still in early stages and may be subject to revisions.
• Family Inclusion: The Golden Visa programme extends to immediate family members, including spouses, dependent children, and dependent parents, ensuring a collective path to European residency.

Important Considerations and Risks

While attractive, the fund investment route also carries considerations and potential risks:

• Regulatory Changes: As mentioned already, the Portuguese government are actively looking at changing their immigration and nationality laws. Although Golden Visas may not be the main target, proposals suggest there may be changes coming in future to the current programme.
• Market Risk: As with any investment, the value of fund units can fluctuate based on market conditions and the performance of the underlying assets. Investors should be aware that returns are not guaranteed, and the principal investment is at risk.
• Liquidity: Most Golden Visa-eligible funds are closed-ended with a fixed maturity period (typically 6-10 years). This means your capital will be locked in for the duration, and early withdrawal options may be limited or non-existent.
• Fund Selection: Choosing the right fund is crucial. Investors should conduct thorough due diligence, examining the fund manager's track record, the fund's investment strategy, fees (management, performance, subscription), and the fund's specific compliance with Golden Visa regulations.
• Tax Implications: While non-tax residents may enjoy tax benefits on investment profits from qualifying funds, tax implications can vary depending on individual circumstances and tax residency. Consulting with tax advisors in both Portugal and your home country is essential. See here for more information on tax consequences on golden visa investments.

The Application Process

The general process for applying for the Golden Visa via fund investment involves:

• Renewals and Path to Citizenship: The permit is renewable at least every two years, leading to eligibility for permanent residency or citizenship after five years.
• Legal and Financial Consultation: Engage with specialised legal and financial advisors to understand the requirements, identify suitable funds, and plan your investment.
• Obtain NIF and Open a Portuguese Bank Account: A Portuguese Tax Identification Number (NIF) is essential, and the investment must be made from a Portuguese bank account.
• Select and Invest in one or more Qualified Fund/s: Choose a CMVM-regulated fund that meets all Golden Visa requirements and align with your investment objectives.
• Gather Documentation: Compile all necessary personal documents, proof of investment, clear criminal records, and other supporting evidence.
• Submit Application: The application is submitted to the Portuguese immigration authority (AIMA).
• Biometrics Appointment: Attend an in-person appointment in Portugal to provide biometric data and verify original documents.
• Receive Residence Permit: Upon approval, the initial residence permit is issued, valid for two years.