Portugal’s residency-by-investment scheme ― the Golden Visa Program ― has helped thousands of international families acquire residency in exchange for a qualifying investment. Investors can choose from a range of investment routes — including but not limited to — buying property, renovating a building, or investing in funds. While most choose to invest in real estate to get Portuguese residency, a rising number of investors are selecting the fund investment option for the Golden Visa.
This article provides a comprehensive overview of the Portugal investment fund option for the Golden Visa.
Key topics include:
- What the Portugal investment fund for the Golden Visa is
- Portugal investment funds benefits
- Important facts about the qualified investment funds for the Golden Visa
- How the Rock Capital investment fund for the Golden Visa works
The Portugal Golden Visa
Established in 2012 by the Portuguese government, Portugal’s Golden Visa — also known as the Golden Residence Permit Program (ARI) — awards non-EU/EEA citizens with Portuguese residency in exchange for a qualifying five-year investment in the nation.
To date, over 9,014 investors have successfully received Golden Visas and many have chosen Portugal as their second home or base. What makes the program so popular is that the investor only needs to spend a minimum of seven days per year in Portugal to maintain the residency, while enjoying all the advantages that come with being an EU resident.
By far, the leading share of applicants hold Chinese nationality, followed by Brazilian, Turkish, South African, and Russian citizens.
Key Golden Visa highlights
The Portugal Golden Visa Program holds numerous benefits.
Some of the top advantages the golden visa affords investors include:
- The right to live, work and study in Portugal
- Visa-free travel to 183 countries and access to 26 nations in the EU
- Opportunity to capitalize on the investment
- Five years until you qualify for PR status or a Portuguese passport
- Option to become a non-habitual resident and pay almost no tax for ten years
- Short stay requirement
- Your dependent children and dependent parents qualify for the same benefits
- Second residence in a safe and stable country
Golden Visa investment routes
There are a number of investment routes applicants can take for the Portugal Golden Visa.
You have the option to:
- Contribute €350K in investment funds across a range of sectors—including but not limited to— technology, energy, and real estate
- Invest €500K+ in a property of your choosing across the country
- Invest €350K+ in renovations projects. Certain conditions apply
- Invest €280K+in renovations projects in low-density areas
Golden Visa Portugal: The investment fund option
A relatively cheap and easy route to Portuguese residency is through the Portugal investment fund/venture capital option. Introduced in 2018 by the Portuguese government, for a €350K investment in this fund, applicants are granted Portuguese residency in a few short months.
What exactly is venture capital? It’s a pool of investment funds that are managed by corporate experts in the field. For example, if you want to invest in a start-up or a medium-sized project with strong growth potential, then the fund investment for the Golden Visa is a viable option. Each fund is regulated and offers options to invest in sectors like energy, industry, technology, or real estate. The funds are regulated by Portugal’s regulator, the CMVM.
Important points to consider about the Portugal investment fund for the Golden Visa:
- The venture capital investment fund is categorized as a primary index fund, which is beneficial if you’re interested in growing your wealth over time
- The venture capital option is steadily growing in popularity
- Investment starts from €350K, and it must be held for a minimum period of five years
Investment fund benefits
- The fund is handled by experts qualified in the sector you invest in
- For a €350K investment, you can obtain Portuguese residency
- Venture capital funds are tax-friendly. Dividends and capital gains returned to investors may be tax-exempt.
- Some funds offer a minimum return hurdle-rate
- Some funds are backed by the Portuguese government through subsidies or financed by the IFD (Instituição Financeira de Desenvolvimento).
- The funds are regulated and they comply with the Portuguese Securities Market Commission rules.
- Maintain your Portugal Golden Visa qualified investment fund for a minimum of five years to get permanent residency and Portuguese citizenship.
Investment fund vs. buying real estate for investment
- An investment fund is a more diversified investment than buying property
- You save time from having to source and acquire properties
- You save time on paperwork, as well as getting the real estate purchase approved for the Golden Visa
- You don’t need to submit Portuguese tax returns and there is no withholding tax
- A five-year golden visa investment in real estate at the €350K price point (which is difficult to find in prime locations nowadays) realistically would cost approximately €460K if you factor in taxes, fees, transfer costs, furniture investments, lawyer fees, etc.
- With an investment fund, you can get exposure to a range of different industries, or a less saturated part of the real estate market (e.g. retail/commercial sector rather than investing in short-term holiday homes).
Important factors to consider for the Portugal investment fund
For the Portugal Golden Visa qualified investment fund, you should consider the following:
- The investment mandate and the fund manager’s credentials
- Leverage and liquidity
- Legal paperwork needed for the investment
- Risk-return profile
- Whether you prefer your investment fund to have limited potential for capital appreciation but a safer investment profile or vice versa
- Funds can offer an early exit but generally, the investor should expect to realize all gains after five to ten years
Top three questions to ask yourself when choosing an investment fund:
- Is the fund regulated by the Portuguese authorities?
- Is it 100% eligible for the Portuguese Golden Visa according to SEF?
- Does the fund have the right attributes to safeguard the investor’s Golden Visa status?
It’s important to note that not every private equity fund in Portugal qualifies for the Golden Visa program. You need to make sure the chosen fund complies with the Portuguese border service (SEF) and that the investment fund is regulated by the Portuguese CMVM.
What are my investment fund options?
Funds for Golden Visa investors
These funds are exclusively designed for Golden Visa investors. They usually offer the option of having a matching length or option of earlier withdrawal and accept €350K investments, often assisting with the Golden Visa process itself. The funds are usually geared toward the real estate market and carry low to medium risk, with low to medium expected returns. These funds are often focused on preserving the investors’ capital and paying some type of yearly dividends.
Traditional venture capital (VC) funds
Traditional venture capital funds are normally invested in early to mid-stage tech companies with forecasted global growth. Sometimes there are higher minimum investments than the €350K threshold, with a fixed fund length of 10+ years. There is a higher risk but also higher potential rewards. The goal is to maximize the capital gains at the exit, with no yearly dividend payments.
Traditional private equity (PE) funds
Traditional private equity funds are typically invested in more traditional markets or financial entities, sometimes with a focus on yearly dividends. There can be a higher minimum investment than the €350K threshold, with the fund length going up to 10+ years, with often a medium to high risk, with expected rewards accordingly.
Rock Capital Fund
Rock Capital is a Portuguese independent fund registered with the Portuguese authority (CMVM). The investment strategy is exclusively focused on residential real estate companies in Lisbon aiming for attractive returns with the solidity of real estate assets.
Rock Capital’s advisors are committed toward full Golden Visa eligibility of each fund throughout its life term. As such, the advisors co-invest in the fund. This feature aligns the interest of advisors with the interests of outside investors. The underlying objective is capital preservation.
Overview of Rock Capital Fund:
- Minimum investment: €350K
- Fund term: 7 years
- Investment profile: Residential real estate development in Lisbon, focused on local middle-class demand.
- Open to US persons and complies with FATCA rules
Why Rock Capital?
The Rock Capital Fund has a transparent fee structure. Advisors are rewarded with a 30% performance bonus if the fund delivers at least 30% profit to shareholders at the end of the fund period. The underlying objective is to maximize shareholder value.
The fund has a maximum life term of seven years with a target IRR of 10-12% per annum.
It’s approved and regulated by the CMVM and audited by KPMG. Ongoing reporting comprises of quarterly updates and semi-annual reporting and annual general assembly.
The fund was launched in the second quarter of 2020. Investors will acquire the Participation Units at the opening price and investment phase to begin in the second half of 2020 when we forecast a window of opportunity to acquire assets at a favorable price.
Golden Visa investors and Rock Capital
Frequently Asked Questions about the Portugal Golden Visa qualified investment fund
1. How does the Portugal Golden Visa qualified investment fund work?
The Portugal Golden Visa qualified investment fund welcomes investors to invest in funds that ultimately are considered qualified under the Portugal Golden Visa scheme. For example, you can invest in venture capital funds at the minimum value of €350K. The funds are allocated to an experienced Funds Manager with credentials, who will invest the amount in a sector of your choosing, like real estate development companies. In return, you are granted a Golden Visa or residence permit, and can legally reside in Portugal for the duration of your investment.
2. Why invest in Portugal investment funds for the Golden Visa? As one of the cheapest and easiest ways to get Portuguese residency, the Portugal yield fund option for the Golden Visa is an excellent option. Depending on the fund you choose in which sector, you can enjoy a minimum return hurdle-rate, acquire tax advantages like getting dividends and capital gains back, as well as the fact that many of the funds are regulated by the Portuguese government, and thus offer security.
3. How long do I need to maintain my investment fund to get permanent residency? You need to maintain your investment fund for at least five years to be eligible for permanent residency and Portuguese citizenship.
4. Do all Portuguese investment funds qualify for the Portuguese Golden Visa? You must be careful when choosing your Portugal yield option for the Golden Visa because not all funds qualify. It’s advisable to consult with an expert first on your options.
Past performance is not necessarily indicative of future results. All investments carry significant risk and all investment decisions of an individual remain the specific responsibility of that individual.
Please note, this article on offer should not be perceived as a proposal or invitation to invest. This article in question is exclusively available to qualifying investors abroad or within Portugal who are permitted to make such an investment in accordance with local law. Like with any investment, investors may not receive the full amount invested and may be subject to some liquidity risk.
This article is offered by us on a confidential and case-by-case basis. It must not be circulated, distributed, reproduced, or disclosed to any other person without the prior written consent of Lince Capital.