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Portugal Investment Funds Guide

The Portugal Golden Visa has went under significant changes throughout 2023. In October 2023 exactly how the program would proceed became official. The option to invest in real estate has been eliminated. This was the most popular investment pathway of the Portugal Golden Visa. In the face of the radical changes, many investors will turn to Portugal Investment Funds as their means to acquire the Portugal Golden Visa. This pathway still remains in tact, but it’s important to know that real estate related funds (directly or indirectly) will not be accepted.

This guide will walk you through the Portugal Golden Visa Investment Fund pathway entirely. We will even point you in the direction of approved funds to invest in.

Keep reading to determine if Portugal Investment Funds could be the perfect route for you to secure residency in Europe.

Portugal Golden Visa Program Overview

A golden visa is a residency by investment opportunity available to third country nationals. Portugal has had a particularly successful program in recent years due to its optimal Mediterranean location paired with reasonable investment costs and requirements. Since the inception of the Portugal Golden Visa in 2012, the program has brought in over €7 billion to date.

We have now entered a new era of the Portugal golden visa. Real estate investment was undoubtedly the most common golden visa pathway, and only time will tell how successful the program will remain with that option no longer on the table.
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Why Portugal?

Portugal is a pulsating spot on the world map. Over the last decade or so, Portugal has come closer into zoom as a desirable place to live. The Portugal Golden Visa program certainly attributed heavily to the rise of popularity. Portugal went through tremendous reforms to become the country it is today. A country which is incredibly safe, prosperous and welcoming. Inviting from the breathtaking topography to the warm and generous people and obtainable immigration pathways. 

Traditional migrants, expatriates, digital nomads, retirees and international businesspeople can all find a home, or home away from home, in Portugal. As well as a visa corresponding with their circumstances. By following the right measures, some who come to Portugal are eventually granted Portuguese citizenship. A bargaining chip that sweetens the pot that much more. 

You can read extensively about how incredible Portugal is on various blog posts and pages throughout our website. Although, since you’re on this page, it’s likely you’re already convinced about Portugal as a destination and you are sorting the logistics of how to get there. Specifically, how to get there by contributing to Portugal Investment Funds.

What is the Portugal Golden Visa Investment Fund?

A Portuguese investment fund is a financial services provider which offers an option to gather investments from various investors and put them into multiple asset classes like stocks, bonds or real estate projects. If there’s a profit made in the process, it’ll be split between each investor with the company taking its own commission. Most funds that are approved for Golden Visa qualification are termed as ‘fundo de capital de risco’ (FCR), including a venture capital fund and private equity ones. Golden visa qualified funds related to real estate have not been allowed recently following changes of eligibility rules concerning golden visa investment options. To kick off your journey on investing, you need to invest at least €500 000 using funding investment techniques based on Golden Visas regulations.

The Investment Fund option of the Portugal Golden Visa was introduced in 2017 in an amendment made to Portuguese Law no. 102/2017. According to the law:

“The acquisition of units of investment funds or venture capital funds dedicated to the capitalization of companies, a capital transfer of €350,000* or more is required. These funds must be compliance with Portuguese legislation and have a maturity of at least five (5) years. Furthermore, at least 60% of the investments must be made in commercial companies with their main offices located within the national territory of Portugal.”

As of January 2022, the required amount was increased to €500,000. And, as of October 2023, Investment funds must not have a direct or indirect relationship to the real estate market. 

Also Read:- Portugal Golden Visa Investment Funds 2024

Benefits of the Portuguese Investment Fund Golden Visa

Investing in Portuguese Funds via the Golden Visa not only secures a Portugal Golden Visa and all of its benefits, but likewise gives you special benefits when choosing this investment pathway.
Management Delegation
Owning a participation unit in an investment fund is a hassle-free investment as the responsibility of management is delegated to the fund managers, which contrasts with the burdens of being a real estate landlord.
Potential Earnings
Depending on the fund's focus, annual yields, and eventual capital appreciation, earnings may be significantly higher compared to other investment options related to the Golden Visa program.
Diversification
Portuguese legislation mandates a certain level of diversification in funds, setting quotas for the percentage of a particular asset or investment in the fund. Thus, reducing risk for participating investors.
Tax-Efficiency
An investment in a fund may yield significant tax efficiencies depending on the fund and investor's tax structure. Some cases allow for exemption of withholding tax on income generated by the fund, especially if the investors are not tax residents in Portugal. Conversely, all real estate rental income is subject to a fixed 28% taxation in Portugal.
Secure Investment
A registered Portugal fund is regulated by various authorities, including the Portuguese Securities Market Commission (CMVM), the Bank of Portugal, the external Fund Management company, and the Portuguese Tax Authorities. This ensures compliance with local legislation, tax laws, and the proposed investment plan approved by the Portugal investor fund.
Low Fees and Taxes
Unlike real estate acquisition, investing in investment funds doesn't incur hefty fees and taxes such as IMI transfer tax (avg. 6%), stamp duty (0.8%), and annual municipal taxes (between 0.3-0.5% annually).
Reasonable Investment
Compared to other investment routes for the Portuguese Golden Visa program, such as the capital transfer (€1.5 million), the investment fund option requires a lower investment amount of €500,000.

Cost and Associated Fees

The Portugal Golden Visa program requires a minimum investment amount of €500,000 through designated investment funds. The lock-up period for this type of golden visa is six years and the capital must be invested in Portuguese companies as per Portuguese law to qualify for it.

Fund Selection Criteria

When considering an investment fund to meet the requirements of Portugal’s Golden Visa program, it is essential to look at its portfolio as well as evaluate the fund's management company, team and company experience. It should also be noted that subscription/setup fees vary from 1% up to 5%, or a fixed amount may apply. Not all Funds in ‘Fundo do Capital de Risco’ would qualify for a Portuguese Golden Visa application due to real estate involvement (either direct or indirect). Only Growth/Buy-out funds and Venture Capitals are accepted by this particular visa program.

Investment Funds Eligibility

Under the Portugal Golden Visa program, non-EU-EEA and non-Swiss citizens with a clean criminal record are eligible to apply.

When considering investment in Portugal funds, the fund management company may impose additional prerequisites such as:

  • Prove as a savvy investor with experience in financial instruments like company stock, government bond, company bond, or fund.
  • Demonstrate access to ample funds.
  • Providing the source of the funds.

American Citizens investing in Portuguese funds

American citizens are eligible to invest in Portuguese investment Funds to acquire the Golden Visa. However, it is worth noting that the IRS mandates foreign financial institutions and entities to disclose the foreign assets of their U.S. account holders. This implies that any Portuguese bank, fund, or fund manager with American clients must comply with stringent U.S. government regulations.

This compliance requirement may deter some banks and Portugal investment funds from partnering with U.S. citizens. Nevertheless, there are still banks and Portugal funds that welcome American investors. If you wish to learn more about these funds or require a list of Portugal Golden Visa investment funds, please don’t hesitate to contact us.

Type of Investment Funds

Investment funds, private equity and venture capital are all available as part of the Portugal Golden Visa program. Portuguese investment funds can provide investors with a wide range of opportunities, from real estate to industrial ESG-focused businesses or even early stage tech startups in the healthcare sector. It is important for fund investments to consider diversification in their investment strategy, by choosing suitable industries that present potential growth for golden visa participants while weighing both safety and potential gain over time – usually within 5-10 years. Private Equity Funds offer different levels of risk depending on whether they focus more on established enterprises or high leverage investments like those offered through Venture Capital Funds – both offering unique ways forward towards achieving returns for Golden Visa Investors looking into this route option.

Regulation and Oversight

The Portuguese Securities Market Commission (CMVM) is the equivalent of the US SEC, and has authority over investment funds in Portugal. Fund units belonging to Americans must comply with FATCA rules when held by remote account openers Bison, BiG or Atlantico Europa as part of a mandatory obligation. April marks yearly audit deadlines for all active Portuguese Funds by third-party organizations set out according to regulation requirements from The Foreign Account Tax Compliance Act (FATCA). Every year investors have their portion calculated through Form 8621, which records taxable income accrued from passive foreign investments like fund units.

Eligible Fund Investments from €500,000.

Portugal Investment Funds Categories

There are several key growing industries in Portugal with attractive investment opportunities. Take a look at the categories of investment funds in Portugal.

Renewable Energy Investment Funds

Invest in Sustainability in Europe's leading nations for renewable energy

Hospitality Investment Funds

Invest in Portugal's thriving hospitality sector

SME Investment Funds

Invest in small and medium size enterprises in Portugal

Biotech Investment Funds

Invest in the Portuguese Biotech Industry

Entertainment Investment Funds

Invest in Entertainment sector in Portugal

Alternative Investment Funds

Consider investing in to niche investment funds in Portugal
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Interested in a free consultation with one of our specialist residency & citizenship by investment advisors?

Steps to Invest in Golden Visa eligible funds

For the Golden Visa program, investing in Portuguese investment funds requires making an informed decision and going through a process involving choosing an appropriate fund to invest in, opening a bank account based in Portugal, and completing the necessary steps for your investment. This guide will explain each step thoroughly so you can safely make this venture into Portugal’s funding fund investing landscape.
investment-funds

Choosing an Investment Fund

When deciding on an investment fund for the Portugal Golden Visa program, certain factors must be taken into consideration. These may include conditions of investment, yield rate, return rate and fees associated with the fund portfolio itself. As well as experience from both management teams and advisers. It is advisable to ask pertinent questions during these assessments (such as investing tactics used by said managers or projected end results of investments made) to ensure a properly informed choice has been made.

For Assistance selecting appropriate funds through this scheme, one could consider enlisting additional expertise from experts specialized in Portuguese Investment Funds that are involved within the visa framework itself. It’s important that any advisors’ interests coincide directly with yours so that each party remains aligned throughout dealings conducted under the golden visa program.

Opening a Bank Account in Portugal

For those wishing to invest in a Portugal investment fund as part of the Golden Visa program, it is necessary to open a bank account with an institution based in the country. Most Portuguese banks require this to be done physically. Yet certain organizations offer online applications too. To qualify for opening such an account, you must provide accepted photographic identification (e.g., passport) and proof of address information, consult your chosen banking facility directly regarding exact requirements and procedures prior to making an application.

US citizens are advised to opt for FATCA-compliant facilities like Bison, BiG or Atlantico Europa – these will enable remote account openings while also providing compliant custody services when holding your investment fund units under guidelines outlined by FATCA regulations.

Completing the Investment Process

Once you have chosen an investment fund and set up a bank account in Portugal, it is time to invest. You will need to make the obligatory transfer of €500,000 or more into your Portuguese banking account while signing a contract with the same fund that specifies how much money has been invested as well as its method/model.

When applying for the Portugal Golden Visa program, documents such biometric data needs presenting along with proof of capital deposit together with evidence regarding agreement between yourself and financial firm handling investments. All these must be submitted at the Immigration Office from Portugal to complete the application successfully.

Also Read:- Portugal Digital Nomad Visa Guide (D8 Visa)

Tax Implications and Reporting Requirements

For non-residents and US citizens investing in Portugal investment funds, potential tax exemptions as well as relevant treaties must be considered. Likewise, certain reporting requirements such as FATCA and PFIC should also be considered when allocating investments towards these sorts of funds due to the taxation on associated income earned from them.

Monitoring and Managing Your Investment

When investing in Portugal investment funds, it is essential to keep an eye on the performance and adjust according to market conditions. This section will provide advice for evaluating qualified investment fund' performance as well as strategies to plan your exit from such investments. Monitoring closely can help recognize potential risks or take advantage of any opportunities that may arise over time.

Assessing Fund Performance

To ascertain the effectiveness of an investment fund, investors can use benchmarking to gauge its performance against a particular index or standard. This will let you assess how well it is doing compared to other funds in the same category and even to the market as a whole. Popular methods used for analyzing such performances include Return on Investment (ROI) that checks if there has been any return over initial capital, Sharpe ratio evaluating risk-adjusted returns, Alpha looking at differences between predicted results and actual ones concerning the sector/market activities. Beta assessing sensitivity to changing trends.

By utilizing these measures investors can gain an understanding into whether their choice was optimal or whether they should search elsewhere when making decisions regarding continued investments with this fund — being aware of opportunities as well as potential risks through regular tracking of progress made within designated time frames.

Drawbacks

In the journey to secure a Portugal Golden Visa through an an investment fund route, there are potential pitfalls one should be aware of. To be transparent we’ve listed below:
  • Sharing the Earnings: While there are potential yields and capital appreciation, these are shared with the fund managers, who charge a management fee and a performance fee that can vary between funds.
  • KYC Burden: Engaging with an investment fund means the participant must disclose a range of documents and critical information, such as proof of income and source of income, to the fund managers, unlike in real estate acquisitions.
  • Exit: Funds often contractually bind participants for a minimum number of years to allow them to qualify for permanent residency or citizenship in Portugal. However, challenges include difficulty in reselling participation units before fund dissolution, potential extension periods initiated by the fund management without participant input, and market uncertainties when the fund opts to sell its portfolio.
  • Lack of Control: Investors must place their trust in external fund managers to make investment decisions and guide the strategy, unlike holding real estate property or capital within a bank, where they may have more control over their assets.

Exiting Your Portuguese Investment Fund

As mentioned above, a potential downside can be Diving deeper into the exit strategy of Portugal Golden Visa investment funds reveals several key aspects that require careful consideration.

Resale or Transfer of Participation Units

Finding a buyer for participation units in a Portugal Golden Visa investment fund can be challenging, especially given the specific timelines associated with Golden Visa requirements. To mitigate this, some funds offer a buy-back option for participation units at a discounted rate, albeit this can vary between funds.

Exit Market

The primary goal of most Portugal Golden Visa funds is to sell their portfolio at a profit, which benefits fund managers as they often receive a percentage of the value appreciation as a performance fee. While this alignment of incentives is advantageous, it’s important to note that while fund managers share in the profits, they do not share in any potential losses, which are borne solely by the investor.

Extension Periods

Portugal Golden Visa funds typically have a set exit target, often ranging from six to ten years, with optional extension periods that can be initiated by the fund managers at maturity. This means that investors might find themselves locked in for longer than initially planned, underscoring the importance of thoroughly checking with the fund regarding potential extensions.

Minimum Lock-up Period

A notable advantage of Portugal Golden Visa investment funds is the contractual obligation most have to remain active for at least six years, aligning with the required investment duration for applying for Portuguese citizenship. This collaborative approach is a critical aspect to look for when selecting an investment fund for the Golden Visa pathway.

Portugal Digital Nomad

Frequently Asked Questions


What are the best investments in Portugal?

Investment opportunities in Portugal are abundant in the Pulp and Paper industry and services, tourism, transport telecommunications, financial services company and banking sectors. There is also the prospect of investing in natural resources such as lithium, titanium, or Uranium. Making an investment decision could yield substantial results for those willing to take advantage of these attractive options.

What is the Golden Visa fund option in Portugal?

The Portugal Golden Visa Program is an expansive permit providing a five-year residence for non-EU nationals, enabling them to live, work and study in the country. The scheme also offers eligible applicants access to their very own golden visa fund through making a capital transfer of €500,000 or more towards venture capital funds and investment funds designed to invest in corporations. This residency program not only unlocks entry onto Portuguese soil, but provides its citizens with diverse financial prospects as well.

Is Portugal a good country to invest in?

Investing in Portugal has the bonus of permitting eligibility for its Golden Visa program, which offers holders access to all the advantages associated with EU residency. The attractive conditions offered by this Portuguese visa make it an ideal choice!

What is the minimum investment for Portugal Golden Visa?

In order to gain a Portugal Golden Visa, you must make an initial investment of €500,000. To pay the government application fees, legal fees and processing charges. This one-time payment allows investors to acquire residency in Portugal (EU residency).

Is there a requirement to live in Portugal under the Portugal Golden Visa Program?

The Portugal golden visa program requires visa holders to spend seven days each year in this country.

What types of investment funds are available in Portugal for the Golden Visa program?

Investors seeking a Golden Visa in Portugal can take advantage of venture capital and private equity funds. These two types of investments offer great potential for those looking to gain the benefits associated with investing.

passive income visa portugal

Apply for the Portugal Golden Visa with Lincoln Global Partners

Lincoln Global Partners is a specialist international investment migration firm with offices in the UK, UAE and Brazil. Our professionals are experts in the field of citizenship by investment and we are ready to assist you every step of the way with your Greece Golden Visa application.

Contact Us to start the process and Become a Global Citizen in 2023

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