Portugal Golden Visa Investment Funds: Ultimate Investor’s Guide For 2024

Disclaimer: The following article is for informational purposes only and should not be considered as financial or legal advice. Always consult with a qualified professional before making any investment decisions.

Introduction

If you are considering investing in the Portugal Golden Visa program in 2024, investing in funds is the best way to secure your visa. However, navigating the investment fund ecosystem can be overwhelming, especially if you are new to fund investments. In this comprehensive guide, we will provide you with all the information you need to navigate the world of investment funds in Portugal and make an informed decision.

Overview of Changes to the Golden Visa Program

The Portugal Golden Visa program, launched in 2012, has been incredibly successful. However, in February 2023, the Portuguese government announced significant changes to the program, aiming to address the country’s housing crisis. One of the key changes was the complete removal of real estate investment routes from the Golden Visa program, including direct real estate investment and investment in real estate rehabilitation funds. However, funds investing in Portuguese companies remain fully eligible for Golden Visa investment.

Qualifying Golden Visa Investment Funds

To qualify for Golden Visa investment, funds must meet certain requirements. They must be approved and regulated by the Portuguese Securities and Markets Commission (CMVM), have at least 60% of their capital invested in Portugal, and have a term of maturity of at least 5 years. All qualifying funds are closely regulated by the CMVM and the Bank of Portugal, and undergo regular independent third-party audits.

List of Qualifying Golden Visa Investment Funds

Here is a list of some of the qualifying Golden Visa investment funds as of November 2023:

Private Equity Funds

1. Pela Terra II: Regenerate

• Investment Overview: Pela Terra acquires and optimizes large farms, focusing on consistent orchard growth.
• Key Info:
  • Type: Private equity
  • Sector: Farmland
  • Min. Investment: €200,000
  • Target Size: €100 million
  • Duration: 8 years
  • Subscription Deadline: Dec 2024

1. VIDA Fund

• Investment Overview: VIDA Fund acquires undervalued Portuguese hospitality businesses and transforms them into premium operating assets.
• Key Info:
  • Type: Private equity
  • Sector: Hospitality
  • Min. Investment: €200,000
  • Target Size: €100 million
  • Duration: 7+ years
  • Subscription Deadline: Oct 2025

Venture Capital Funds

1. Active Cap II Growth

• Investment Overview: ActiveCap II invests in smaller and medium-sized Portuguese companies with high growth potential.
• Key Info:
  • Type: Venture capital
  • Sector: Various
  • Min. Investment: €250,000
  • Target Size: €80 million
  • Duration: 8 years
  • Subscription Deadline: Oct 2025

1. Impact Innovation Fund

• Investment Overview: Women-led fund that invests in impactful companies across Portugal and Spain, targeting positive environmental and societal activities.
• Key Info:
  • Type: Venture capital
  • Sector: Various
  • Min. Investment: €250,000
  • Target Size: €25 million
  • Duration: 8 years
  • Subscription Deadline: Oct 2025

Other Funds

1. Health Innovation Fund

• Investment Overview: Invests in the Portuguese health and life sciences sector, with a focus on Series A companies.
• Key Info:
  • Type: Private equity
  • Sector: Health & life sciences
  • Min. Investment: €250,000
  • Target Size: €50 million
  • Duration: 6+ years
  • Subscription Deadline: Oct 2025

1. AgroBusiness Fund

• Investment Overview: The AgroBusiness Fund invests in hydroponics and permanent crops in Portugal, followed by projects in Africa.
• Key Info:
  • Type: Private equity
  • Sector: Agriculture/farmland
  • Min. Investment: €100,000
  • Target Size: €100 million
  • Duration: 8 years
  • Subscription Deadline: Dec 2025

These are just a few examples of the qualifying Golden Visa investment funds available. It is important to thoroughly research each fund and consult with a financial advisor before making any investment decisions.

How Investment Funds Work

Investment funds allow multiple investors to pool their money together into one professionally managed portfolio. The fund manager is responsible for selecting a variety of investments, such as stocks, bonds, and other assets, to include in the fund’s portfolio. When you invest in a fund, you become a shareholder and receive an ownership stake in the fund’s investments. The fund generates profits by selling its underlying securities at a higher price than initially paid, and as an investor, you benefit from a share of those profits.

The advantage of investing in funds is that it provides access to professional investment management and allows for diversification across different companies, industries, and asset classes. There are different types of funds, including private equity funds and venture capital funds.

Private equity funds focus on acquiring mature, established companies to help them expand, restructure, or go public. They typically target stable companies with predictable cash flows and aim to provide capital for growth and operational improvements.

Venture capital funds, on the other hand, invest in early-stage startups and small companies with high growth potential. They provide funding in exchange for equity ownership and typically invest in innovative companies and emerging technologies.

Fund Regulation in Portugal

Investment funds in Portugal are subject to several levels of regulation. At the EU level, funds are regulated under Directive 2009/65, which created uniform rules for investment funds across the European Union. This directive includes standardized investor summaries and stronger supervision of funds and fund managers.

At the national level, the Bank of Portugal establishes rules and guidelines that investment funds must follow when operating in Portugal. These regulations ensure proper conduct by fund managers, specific rules around offerings and strategies, and comprehensive information disclosure to investors.

The CMVM, Portugal’s financial regulatory body, plays a key role in the regulation of investment funds. All investment funds in Portugal must be authorized by the CMVM before they can begin operations. The CMVM ensures that funds comply with regulations, conduct proper governance, and provide comprehensive information to investors. This high level of regulation and supervision aims to ensure proper management and investor protection.

Investment Fund Fees Breakdown

When investing in Golden Visa investment funds, it is important to consider the fees associated with the investment. The three main fees typically involved in fund investments are the subscription fee, management fee, and performance fee.

1. Subscription Fee: This fee is paid at the start of the investment and goes towards administrative costs, such as onboarding investors and compliance procedures. The fee is usually calculated as a percentage of the total capital invested.

2. Management Fee: This fee is paid annually to the fund manager and covers the fund’s overheads, operating expenses, and salaries for the management team. It is usually calculated as a percentage of the total funds committed by investors to the fund.

3. Performance Fee: The performance fee is the main way fund managers are compensated. It is calculated as a percentage of the fund’s overall return above a certain hurdle rate. This fee incentivizes managers to generate profits for the fund and aligns their interests with the investors’.

It is important to consider these fees when choosing a Golden Visa investment fund, as they can impact overall returns. Each fund may have different fee structures, so it is essential to clarify the fee details with fund representatives before making any investment decisions.

Tax Implications of Golden Visa Fund Investments

Investing in Portuguese funds can have tax advantages, especially for non-residents of Portugal. Non-residents are not subject to Portuguese taxation on their investment gains. However, it is important to check the tax regulations in your country of tax residency, as you may be subject to taxation there.

If you become a tax resident of Portugal, the tax rate on fund investments is only 10%, regardless of whether you have Non-Habitual Resident (NHR) tax status or not. Portugal’s NHR tax scheme offers preferential tax treatment on worldwide income for eligible individuals who become tax residents of Portugal.

It is advisable to consult with a tax professional to fully understand the tax implications of your Golden Visa investment and how it may impact your overall tax situation.

Pros and Cons of Golden Visa Fund Investments

Before making a Golden Visa fund investment, it is important to consider the advantages and disadvantages of this investment strategy. Here are some pros and cons to consider:

Pros

1. High Potential Earnings: Golden Visa fund investments offer the potential for significant returns, depending on the fund and its investment strategy.
2. Fast Visa Application Timeline: Investing in funds is the fastest way to obtain the Portugal Golden Visa, allowing for a streamlined and efficient visa application process.
3. Professional Management: Fund investments provide access to professional investment management, allowing for expert selection and management of investments.
4. Diversification: Investing in multiple funds allows for diversification of your investment portfolio, spreading the risk across different companies and sectors.
5. Closely Regulated: Golden Visa investment funds are closely regulated by the Portuguese Securities and Markets Commission (CMVM) and the Bank of Portugal, ensuring investor protection and confidence in the oversight of the funds.
6. No Geographic Restrictions: Once you obtain your residence permit through the Golden Visa, you have the freedom to live and travel wherever you choose within the European Union.

Cons

1. Know Your Customer (KYC) Checks: Investing in funds requires undergoing KYC checks to verify your identity and the source of your capital, which may involve additional paperwork and verification processes.
2. Lack of Control: Fund investors have limited control over the investment decisions, as the fund manager handles all investment activities on behalf of the investors.
3. Lock-in Period: Most funds have a minimum lock-in period before you can exit your investment, typically lasting 6-7 years or longer.
4. Fees: Investment funds charge various fees, including subscription fees, management fees, and performance fees, which can reduce overall returns.
5. Shared Earnings: At the end of the investment period, investors pay a performance fee based on the fund’s profits, along with annual management fees.

Consider these pros and cons carefully to determine if Golden Visa fund investments align with your investment goals and risk tolerance.

Investor Requirements and Document Checklist

To be eligible for the Portugal Golden Visa, you must meet certain requirements. You must be a non-EU/EEA and non-Swiss citizen, over 18 years old, and have no criminal record. Additionally, you can include your spouse or partner, dependent children under 18, dependent children over 18 in full-time education, and parents in your application under certain circumstances.

When applying for the Golden Visa through investment funds, you will need to provide various documents, including:

1. Application form
2. Receipt for payment of the application fee
3. Passport copies for all applicants
4. Declaration from a Portuguese bank confirming the transfer of funds from outside Portugal
5. Proof of minimum investment amount
6. Health insurance policy covering Portugal
7. Criminal record check from your country of origin or legal residency
8. Proof of no outstanding debts with Portuguese tax and customs authorities
9. Signed declaration stating your intent to follow the investment requirements

Ensure that all documents are prepared accurately and in compliance with the Golden Visa requirements to avoid any delays in your application process.

The Investment Process: Step-by-Step Guide

Investing in Golden Visa investment funds involves several steps. Here is a step-by-step guide to the investment process:

1. Apply for a Portuguese taxpayer number (NIF).
2. Open a bank account with a Portuguese bank.
3. Transfer the required capital for the investment into the Portuguese bank account.
4. Make the investment in the qualifying Golden Visa investment fund(s).
5. Undergo KYC and anti-money laundering checks.
6. Prepare and submit your Golden Visa application through your appointed lawyer on the SEF online portal.
7. Attend the appointment to submit biometric data once your application has been processed.
8. Receive your Portuguese residence permit card.

Following these steps will ensure a smooth and efficient investment process towards obtaining your Golden Visa.

Choosing the Right Fund for Your Golden Visa Investment

When selecting a Golden Visa investment fund, it is crucial to consider several factors:

1. Regulation and Eligibility: Ensure that the fund is regulated and eligible for Golden Visa investment. All funds listed in this guide meet the eligibility criteria.
2. Fund Manager Experience: Research the experience and credentials of the fund managers. Look for managers with expertise and a track record in managing funds successfully.
3. Investment Strategy: Consider the fund’s investment focus and strategy. Does it align with your investment goals? Assess the risk profile and potential returns of the fund.
4. Lock-in Period and Exit Strategy: Review the lock-in period of the fund and its exit strategy. Determine if the duration aligns with your investment timeline and whether the exit strategy suits your needs.
5. Alignment with National Goals: Consider if the fund’s investment focus aligns with Portugal’s national goals, such as supporting startups, generating jobs, and promoting sustainability.
6. Seek Professional Advice: Consult with an independent financial advisor to gain further insights and guidance on choosing the right fund for your Golden Visa investment.

By thoroughly evaluating these factors and conducting proper due diligence, you can make an informed decision and select a fund that aligns with your investment objectives.

Alternative Golden Visa Investment Routes

While investing in funds is the primary route for Golden Visa investment in 2024, it is worth noting that alternative investment routes are still available. These routes include:

1. Creation of at least 10 new permanent jobs: This option allows you to obtain the Golden Visa by creating employment opportunities in Portugal.
2. Investment in artistic production and national heritage preservation: By investing in artistic projects and preserving national heritage, you can qualify for the Golden Visa.
3. Investment in scientific research activities: Investing in scientific research projects and activities can also make you eligible for the Golden Visa.
4. Investment in Portuguese venture capital funds: Investing in venture capital funds focused on Portuguese companies is another alternative route for the Golden Visa.
5. Investment to incorporate a commercial company and job creation: By investing in a commercial company and creating jobs, you can obtain the Golden Visa.

Consider these alternative routes and their specific requirements to determine if they are suitable for your investment goals and circumstances.

Is the Golden Visa Worth It?

The Portugal Golden Visa offers numerous benefits for investors and their families. By obtaining the Golden Visa, you can enjoy the following advantages:

1. Residency in a safe and stable EU member state.
2. Fast track to EU citizenship within five years.
3. Freedom to live, work, study, and retire in any of the 30 countries in the EU and EEA.
4. Dual citizenship, allowing you to retain your original citizenship while gaining Portuguese citizenship.
5. Visa-free travel to 186 countries with a Portuguese passport.
6. Access to the well-respected Portuguese healthcare system.
7. Preferential tax treatment, including the Non-Habitual Resident (NHR) tax scheme for tax residents of Portugal.

If you are a British citizen, the Portugal Golden Visa offers an excellent opportunity to regain your EU rights and benefits after Brexit.

Conclusion

Investing in Golden Visa investment funds in Portugal is a highly regulated and professionally managed way to obtain the Golden Visa. By carefully researching and selecting the right fund(s) for your investment, you can navigate the investment fund ecosystem and secure your visa efficiently. Remember to consult with a qualified financial advisor and conduct thorough due diligence before making any investment decisions. The Portugal Golden Visa offers numerous benefits, and by following the investment process outlined in this guide, you can embark on your journey towards residency and potential EU citizenship.