Hottest Investment Option for Portugal Golden Visa: Investment Funds
The first Golden Visa program was launched in Portugal on October 8, 2012. As Portugal’s real estate market lost its value, Portugal Golden Visa had been introduced to bring new funds. Portugal’s Golden Visa is offered in accordance with the Ministry of Foreign Affairs through AICEP (Department of Consular Affairs and the Portuguese Trade and Investment Agency).
What are Investment Funds?
In November 2018, the government of Portugal introduced venture capital funds (or FCR – Fundo de Capital de Risco) to the Golden Visa program of the country. These funds have already existed as separate investment options in Portugal, but the parliament with its recent move made the funds an eligible option for investors who want to apply to Portugal Golden Visa. The minimum investment requirement of this option has been declared as 350,000 Euros.
Venture capital funds of Portugal are basically funds that are used by experts to find out and invest in start-ups and projects with strong growth potential. These funds may focus on different sectors like industry, technology, real estate or energy. Each protected under a specific mandate, venture capital funds are regulated by Portugal’s regulator, the CMVM.
What are the Perks of The Portuguese Venture Capital Funds?
To start with, the minimum investment requirement for the venture capital funds is 350,000 Euros. It means that through these funds, it is possible for investors to obtain Portuguese residency for a fee that is quite advantageous when compared to other big European Union countries.
The way that these funds are managed by professionals is the second perk of this option. Funds in each sector are managed by appointed experts. These experts are also inspected by the CMVM (Portuguese Securities Market Commission) which means that the funds are exempt to regulations of the CMVM and they must comply with the rules. As a result, the investment made becomes more safely guarded. Moreover, some of the funds come with a hurdle rate which changes the rules of compensation of the experts that manage the funds. If the funds do not perform better than the suggested percentage in this case, the managers are not compensated.
Some venture capital funds are financed by the IFD (Instituição Financeira de Desenvolvimento) and as a side note, profit emerging from these funds may be tax exempt.
2020 UPDATE: EUR 350,000 private equity and venture capital funds investment has been introduced through in November 2018. Portugal’s Borders and Immigration Service(SEF), recently announced the 2019 statistics of the investments done since 2012. So this fund investment option has got into the statistics with the newly published SEF’s data. The statistics demonstrated that 7 investors got their golden visa through this investment . It is known that many investors who made investments in 2019 are in the phase of Golden Visa application. The number of the investors getting Golden Visa with fund investment are expected to increase dramatically due to the growing demand of qualified investors who are acquaintant with the financial instruments.
Two Important Factors to Keep in Mind
While realizing the investment for the Golden Visa program of Portugal, it is crucial to check for the fund or funds’ eligibility for the program. Working with professionals eliminates this risk and provides the investor with an easier and smoother process. Second important key point is the fund or funds’ credentials including its legal credentials, its strategy and its management pedigree.
Eligibility of the Funds for the Golden Visa Program of Portugal
As mentioned above, there are many types of governmental funds in Portugal that can be invested into, but it does not mean that all of them are eligible for the Golden Visa program of Portugal. Portuguese border service, SEF for short (Serviço de Estrangeiros e Fronteiras), provides the public with necessary information about the requirements of the funds. It is crucial to double-check the funds that are to be invested in are eligible for the program and they are regulated by the Portuguese CMVM.
Risk Management of the Venture Capital Funds
Investment in the venture capital funds, of course, comes with certain risks attached. The evaluation of these risks is mostly up to the expectations of the investor. The level of the risk of investment in these funds differs according to the managers’ qualifications, investment’s mandate, liquidity, leverage, and legal credentials. Characteristically, the potential for high capital gains means higher risk, and lower potential and fluctuation means safer investments. This decision, naturally, depends on the investor’s priorities. If the aim is to expand the profit margin, investors may choose riskier investments. On the other hand, if the sole aim is Portuguese residency with minimal loss of capital, then the low-risk enterprises might be more reasonable to pursue.
Is it necessary to seek advice from an investment advisor?
As most other legal and economic activities, this process of investing in venture capital funds in order to be able to apply for Portugal Golden Visa is a tiring and risky one. In order to go through this transition with minimum risk and highest efficiency, it is smart to consult professionals.
Professionals of the Portugal Golden Visa program application process in this option do not only inform and help the investors go through with their application, but also may aid them in finding the most profitable and logical option of investment, too. Therefore, getting advice from an investment advisor for this process is definitely a good idea.
Eligibility Criteria for the Portugal Golden Visa
Any non-EU/EEA nationals who are older than 18 years old can apply for the Portugal Golden Visa provided that they make a substantial investment into the country. The country requires the investment to be maintained for five years.
One of the biggest advantages of Portugal’s Golden Visa programme is that its investment requirement is 350,000 Euros. Also, it is defined as residency by investment, but it does not require a significant physical residence. As mentioned before, the applicants’ continued presence in the country is not necessary for naturalization as long as a certain limit had been met. This limit is 7 days for the first year, and 14 days for the two subsequent years.
Investment Options of Portugal Golden Visa
- Money Transfer
- Real Estate
- Real Estate and Rehabilitation
- Scientific Research
- Cultural Contribution
- Portuguese Fund
So far, the most popular option of investment for the Portuguese Golden Visa also known as the “ARI” (Autorização de Residência para Actividade de Investimento) has been the real estate investment option. However, Portuguese government introduced a new method that might change that in the future. As seeking a proper real estate from abroad and investing a substantial amount for it is not for everyone, this new method can be very handy for investors.