Investment fund options for Portugal Golden Visa applicants

Overview of Portugal Golden Visa investment funds

An investment fund is a financial company that aims to attract investments and raise capital. It has the following algorithm of work:

The Portugal residency by investment

1. Collecting investors’ money.
2. Putting a required sum into the chosen asset such as residential or commercial properties, capital of companies, stock market or industrial facilities. 
3. Receiving profit and distributing it among investors deducting the commission.

The average time for money to operate in the fund is 6—10 years.

Each investment fund has its investment strategy written in the contract, and it is forbidden to deviate from it. For example, if the fund was created for investment into real estate, it can’t be used for investment into stocks or companies.

The Portuguese Securities Market Commission surveils the investment process and regulates all Portuguese funds’ activities.

Requirements for Portuguese Golden Visa investment funds. There are many investment funds in Portugal; however, not all are suitable for Golden Visa applicants. There are certain requirements:

• the fund must be registered with the Portuguese Securities Commission;
• at least 60% of investment must be made into Portuguese real estate or companies;
• the maturity of shares must be at least 5 years.

Most funds invest in assets of one type. But about 10% of funds are mixed: they invest in various assets. For example, Monarque invests 60% of its money in commercial real estate and private companies and 40% in the European stock market.

Investment funds also differ in terms of commissions and fees, the frequency of dividend payments, and the degree of diversification.

Expenses. The minimum fund investment under the Portugal Golden Visa Program is €500,000. Above it, investors bear additional expenses:

1. The subscription fee that is paid upon entering the fund. Its rate is 1—7.5% of the investment amount.
2. Management expenses, which are paid each year at the rate of 1—2.5% of the investment.
3. Performance fee that is paid upon closing of the fund. The minimum rate is 10%. 

Portugal tax residents also must pay a 14% tax on their investment income; non‑residents are not subject to this tax.

Discover the benefits of the Portugal Golden Visa and a unique way to EU citizenship

Who can apply for a Portugal Golden Visa through fund investment

To be able to apply for a Portugal Golden Visa, an investor must meet several requirements:

• be over 18 years old;
• have no criminal records or prosecutions;
• have no debts in Portugal;
• earn money for investment outside Portugal;
• be able to confirm the legality of the income;
• have medical insurance.

Investors can add their close family members to the application. That includes minor and adult children, a spouse, parents and siblings.

A spouse may be of the same or opposite sex. If the spouse is of the opposite sex, they can be both in a registered marriage or unregistered union with the investor. Same-sex couples are required to be officially married, which can be registered in Portugal if needed. 

Adult children under 26 years old must be financially dependent and live with the investor or study at a university. They also can’t be married.

Parents must be dependent on the investor as well.

Siblings who participate in the application must be under 18 years old and be in the investor’s custody.

Advantages of investment in Portuguese funds

Safety. All funds are registered with the Securities Market Commission and are monitored by the Portuguese Central bank and the management company. The Portuguese tax authorities also audit issues concerned with taxes. These ensure that the fund and the investment process comply with the Portuguese legislation.

Diversification. Investment funds value diversification, so they invest in several assets at once. Some of them have quotas that indicate the percentage of a particular investment in the fund. Diversification allows investors to decrease risks.

Delegation of managing. When investing in the fund units, the investor is not required to manage the whole process. The fund managers do this, so the applicant only needs to choose a fund and transfer the money.

Less overall cost. The investment fund option is not the most expensive. For example, a capital transfer option requires an investment of €1,500,000, while with funds, you need to invest three times less — €500,000.

It can also be less costly than investing in real estate as almost no additional fees and taxes must be paid. For example, you decide to purchase a new residential property that costs €500,000+. 

When you purchase real estate, you need to pay a 6—8% transfer tax, a 0.8% stamp duty, and an 0.8% annual property tax, as well as for lawyer’s services and potential renovation of the property. When you invest in the fund in Portugal, you need only to pay management expenses of 1—2.5% and a subscription fee that can be as little as 1.25%.

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Disadvantages of investment in Portuguese funds

Lack of control. As we mentioned before, with the investment fund option, the investor doesn’t control the investment process. They need to trust the fund’s management company and managers with that.

Longer period of investment return. Under the Portugal Golden Visa program, applicants must keep investments in fund units for at least 5 years. However, funds usually operate for 6—10 years.

The investor can exit the fund before the scheduled date; however, they would need to fulfil a certain requirement. For example, find someone who could buy their share.

Let us present other options if the investment in the fund units option doesn't seem to suit you. 

Investment in fund units vs. other investment options

The process of obtaining the Portugal Golden Visa through fund investment

Obtaining the Portugal Golden Visa by investing in fund units takes from 8 months. The process consists of several steps, and Immigrant Invest lawyers accompany the investor through the whole procedure.

Benefits of the Portugal Golden Visa

1. Registration of a taxpayer number in Portugal, as it is impossible to open a bank account without it. The investor doesn’t need to go to Portugal to do so: everything can be done by the tax representative on their behalf.

To get a taxpayer number, the applicant must provide an application for registration of a taxpayer number, an ID, a document with a taxpayer number in their country of origin, and a confirmation of the income.

2. Opening a bank account in the Portuguese bank as all the payments must be made from the local bank account. Among the most trustworthy banks in Portugal are Banco de Portugal, Novobanco, Caixa Geral de Depositos, and Millennium.

3. Selection of an investment fund. Immigrant Invest agents help to choose one or several that meet the investor’s requirements and wishes. The fund is also required to be opened in Portugal and invest at least 60% of the money in Portuguese assets.

4. Purchase of fund units. The investment fund conducts its own Due Diligence. To pass it, investors must provide documents confirming they legally earned money for investment. 

The process takes several days, and when the application is approved, the investor receives a document with bank details for the investment. Using it, the applicant must transfer the money from their Portuguese account to the fund account.

5. Submission of documents and biometrics. The agents provide the applicant with a list of required documents. Then they translate and notarise them, fill in the application forms and file an application.

To submit biometrics, the investor and their family members must come to Portugal on the pre-arranged day.

6. Receipt of resident permits. After the application is approved, the investor can obtain resident cards. They don’t need to come to Portugal again as the documents can be sent by mail. The investor also needs to pay a fee for issuing cards — €5,336.40.

In short: what to keep in mind when investing in a Portugal Golden Visa fund

1. The minimum investment amount to be eligible for the Portugal Golden Visa is €500,000. 
2. Year yield is 3—10% on average.
3. The subscription fee of 1—7.5% of the investment is paid upon entering the fund.
4. Management expenses of 1—2.5% of the investment are charged annually.
5. The performance fee of up to 20% of the profit is paid upon the fund closure.
6. The income tax of 14% is paid by tax residents of Portugal.

The Portugal Golden Visa program requires the investor to keep the investment in the fund for at least 5 years. However, funds usually work for 6—10 years, and it is better not to exit before that to earn a maximum profit.

Frequently Asked Questions