Alternative Investment Funds for Portugal Golden Visa

Alternative Investment Funds (AIFs) are private investment funds that invest in non-traditional asset classes like real estate, commodities, cryptocurrencies, and hedge funds. AIF does not fall into conventional investment categories, which are stocks, bonds, or cash etc. Private equity or venture capital, hedge funds, real property, commodities, and tangible assets are all examples of alternative investments.

• Private equity funds pool money from investors and institutions invest in mature companies with proven track record. They carry high risk but rewards are substantial.
• Venture capital funds invest in early startups and young companies but carry very high risk of losing capital.

Portugal Alternative Investment Funds

Portugal’s alternative investment funds approved for Golden Visa tend to focus on agriculture, technology,hospitality, tourism, media/events, healthcare, and renewable energy..

• Minimum subscription 100,000 to 500,000 per unit
• Typically require a 5-8 year commitment,
• Internal rate of return (IRRs) of 10-20%
• Minimum exit strategy 2 years.

Golden Visa Conditions

Portugal requires a Capital transfer of the amount of 500,000 Euros, or higher, for the acquisition of units of Private equity (PE) funds which invest in companies not listed in stock market or venture capital (VC) fund of funds dedicated to the capitalisation of startups 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 invested in companies headquartered in Portugal.
• Head office in national territory

Investment funds (AIF, VC fund) sold for the purpose of GV program must meet the following conditions:

• Regulated by Portuguese Securities Market Commission (CMVM),
• Must not invest directly or indirectly in real estate market.
• Fund manager is a depository financial institution or Bank of Portugal regulated by central bank.
• Fund adviser is external Fund Management company.
• Audited by Portuguese Tax Authorities complying with tax laws.
• Comply and eligible for Golden Visa regulation.
• Disclose invested sectors, strategy risk and exit strategy.

Why Investment Funds

Investment funds carry advantage and disadvantages depending on your convenience. You put capital at risk. At the same time the more risk you take, it get rewarded handsomely (high stakes game)

• Pros – Diversification, Invest in different Industries/sectors, Low setup costs, Low taxes, High returns than real estate, Easy exit, No management.
• Cons – High investment threshold, Risks, Profit sharing, Holding period, Complicated fee structure.

Real Estate Alternative

The Portugal AIF funds deliver a super returns over real estate with more liquidity little or no management experience required. The whole capital can be redeemed after 6 years at the time you get citizenship.

The Prime Portugal Fund

We offer clients a handpicked private equity fund – Portugal Prime Fund, delivering 10% returns, that invests in tourism hospitality projects with no exposure to real estate thus complying with GV regulations.

• Fund: Closed-End Private Equity Fund
• CMVM Approval: Authorized
• Fund size: €100 million
• Minimum subscription: €100,000 (€500,000 for Golden Visa)
• Custodian: Bison Bank
• Auditor: BDO
• Fund Term: 8 years
• Subscription period: 2 years
• Subscription fee: 0%
• Management fee: 0.20%
• Target Return: 10%
• Risk: Low (3/7)

Portugal Prime Fund invests in operating companies with no real assets on their balance sheets. These companies provide secured loans to property owners in exchange for operating leases and equip the properties with the equipment, fixtures, and furnitures to operate. The secured loans are backed by the properties, which serve as collateral and offer protection to investors — while complying with GV regulations.

Important Tips

• Subscription – The minimum subscription required is €500,000 or in units
• Investment Periods: Typically, funds require a 5–8-year commitment, reflecting long-term growth strategies.
• Regulatory approval – Fund must be approved CMVM securities commission, the apex authority in Portugal.
• Golden Visa Eligibility – The AIF fund must be eligible for GV. It is advisable to seek a legal opinion from a portuguese lawyer or lawfirm.
• EU/Citizenship: Portugal Golden Visa holders eligible to obtain European citizenship and an EU passport after five years of residency with minimal residence conditions, Only seven days required in Portugal per year with a choice of where you wish to have tax status.
• Tax obligations – Non-resident investors in fund are exempted from taxes in Portugal. A good CPA or auditor based in Portugal will give you a personalized advice before investing, can help to take advantage of Non Habitual tax regime.
• Targeted IRRs: Returns are forecasted to range between 10–20%, varying by fund strategy. Take into account profit share and dividends also paid by fund depending performance.
• Track Record: Many funds boast credible histories, being on their second or third cycle, which often indicates maturity and reliability. Likewise the Fund manager and Custodian must be well known with track record and experience.
• Capital Raised: Some Golden Visa alternative investment funds in Portugal have raised upwards of €50 to 200 million, showcasing robust investor interest.
• Invested sectors: From agriculture to high-tech, media, and tourism, funds tap into industries where Portugal shows global competitiveness.
• Diversification – Some funds spread investment across thriving industries, offering balanced risk and reward.
• Exit strategy – The fund must permit to redeem their investment after exit period usually ranges from 2-5 years. The put option is signed upfront, granting investors the right (but not the obligation) to sell their fund participation units whenever they choose, providing flexibility and security for early exits or in case of unforeseen circumstances
• Low Risk – The key to investing in a fund safely is to pick a fund with low risk. The risk indicator is a standardized metric used in European markets to convey the level of risk associated with investing in a particular fund, rated on a scale from 1 (low risk) to 7 (high risk). The level of risk shows predictable growth in the invested sector and provide predictable cash flows.
• Risk Protection: Investors should assess measures like capital preservation and operational risk mitigation.
• Fees and Annual Costs: Typically investors must consider subscription fee, management fee, profit share, performance fee, hurdle rate, exit fee etc..
• US investors – US citizens applying for Portugal GV must be aware of FATCA and PFIC. Investment funds and banks need to consider FATCA regulations.

How to Apply

Applying for Portuguese golden visa through fund subscription is a straightforward process. The first steps needed to apply for NIF tax number and opening bank account in Portugal to transfer funds.

1. Obtain NIF Portuguese Tax number
2. Open bank account in Portugal bank
3. Transfer the investment from abroad to Portugal.
4. Subscribe to the Investment fund
5. File your golden visa application.

To obtain citizenship in Portugal, investors need to:

1. Pay the Golden Visa fees
2. Spend avg. 2 weeks/year in Portugal
3. Maintain the investment until citizenship.
4. Pass a A2 language test or enroll in school.