Portugal Golden Visa Investment Funds

Portugal offers Golden visa for investing in investment and venture capital funds. Some 5% of the residence permits issued are for capital transfers investments in Portugal.

For Golden visa program, Portugal requires a Capital transfer of the amount of 350,000 Euros, or higher, for the acquisition of units of investment funds or venture capital fund of funds dedicated to the capitalisation of companies. The conditions for capital injected under the Portuguese legislation, whose maturity, at the moment of the investment, is,

Investment must be held for at least, of five years and, at least,
60% of the investments is realized in commercial companies
Head office in national territory

It is important to remember that if you have dual EU status, you will be ineligible for GV program. (you will only qualify for Non habitual residency)

Portugal offers a number investment funds for foreign investors for the purpose of GV program. The investment funds may be interesting as it has less overhead compared to real estate investment. For some applicants who have investing background may find it useful as these funds are controlled by dedicated investment managers freeing you from oversight.

You can expect yields about 3-5% which will cover all the fund expenses and it will be profitable for you after the first year on the top of 350k investment.

Please note from Jan 1, 2022 onwards, amended Portugal Golden Visa legislation will increase the minimum required to purchase investment funds by to 500,000 euros (from 350k)

Please note the minimum investments for the funds may range from 50,000 euros to 500,000 euros per unit and the holding period ranges from 5-10 years.

We have compiled full list of investment funds and venture capital funds from CMVM (see below)

Advantages

Investment funds have several advantages compared to real estate.

Tax efficient investment , not required to submit Portuguese tax returns, no any withholding tax
Diversified investments invested in real estate, tech companies, fixed income securities.
Yields are higher than investment options.
Low fees
Save time, money and lots of paperwork

Fund Costs

Here are the brief overview of costs you should expect from subscribing to an Portugal investment fund

Subscription fee – 1%-5%
Annual Fund management fee – 0.75% to 2.75% of the funds value
Additional Legal costs
Success fee (paid to fund managers) when dissolving the fund
GV fees paid to SEF

US Persons

US persons are allowed to invest in portuguese investment funds.

US Persons (citizens and tax residents) are subject to FATCA regulations. This means that “US Person” investing in the eligible investment funds for the Portuguese Golden Visa they need to open the Portuguese bank account at a FACTA compliant bank (eg. Bison Bank, Banco Atlântico, Banco Carregosa) to hold the shares of the investment fund.

The Passive Foreign Investment Company (PFIC) is a pooled investment registered and regulated outside the US, including many types of funds, investment trusts, ETFs, and some foreign corporations and pension schemes too.

The Passive Foreign Investment Company (PFIC) rules are designed to prevent U.S. persons from deferring tax on passive income earned through non- U.S. corporations, or from converting this income into capital gains that are taxed at preferential rates. A foreign investment fund or corporation is considered a PFIC if either at least 75% of its gross income is passive income (i.e. from investments), or if at least 50% of its assets are held to produce passive income.

PFICs covers a wide variety of non-U.S. investment products besides mutual funds and are commonly owned by Americans abroad, are taxed punitively by the U.S. Each PFIC must be reported annually on U.S. tax form 8621 often time consuming and quite complex. Expats who invest in a foreign mutual fund will also have to report it under FBAR and FATCA rules, depending on the size of their investments, seeking a professional advice.

Note: US citizens and permanent residents may be restricted to apply for some investment funds

Fund Returns

You should expect returns of 3-5% a year, for example when the fund ends in 5-10 years.

Fund Risks

All investment funds are exposed to risks which could lead to capital loss. due to global events (eg. Covid pandemic) . Do your risk analysis by closely evaluating track record of company, all balance sheets, performance of funds and background of company and fund managers. Invest wisely.

Full List

Below are full list of investment funds approved and monitored by Portugal Securities commission (CMVM) Please note some of the funds are not available for Golden visa applications and US citizens.

1. Real Estate Investment Funds

2. Venture Capital Funds

Venture capital funds are pooled investment funds that manage the money of investors who seek private equity stakes in startups

3. Securities Investment Funds

A security is a fungible, negotiable financial instrument that represents some type of financial value, usually in the form of a stock, bond, or option. There are five main categories of securities investment funds: treasury funds, bond funds, equity funds, mixed funds and funds of funds.

Source: CMVM Portugal

Disclaimer: The above information is for general information and must not be considered as professional advice. As an online platform, we do not provide investment or tax advice to clients. Please consult a tax expert to seek professional advice.

Categories: Citizenship