January 1st, 2022 Update: The minimum investment requirement for Portugal Golden Visa’s investment fund option was raised to €500,000.
For extensive information on this method, check out our article on the investment fund option of Portugal’s Golden Visa.
Portugal’s Golden Residence Permit Program (GRPP), otherwise known as the Golden Visa, is a residency-by-investment program that secures EU residency. Being one of Europe’s most popular Golden Visa programs, it was launched by the Portuguese government in 2012 in order to increase foreign direct investment into the country’s economy. The program initially had a minimum threshold of €500,000 investment in real estate. However, Portuguese lawmakers have recently introduced a new law that makes it more affordable to obtain a Golden Visa in exchange for a €350,000 investment in a Private Equity Fund, which comes with many tax advantages in the bargain. Then, on January 1st, 2022, the amount was raised to €500,000 again.
What is Portugal Golden Visa and Why is it so Popular?
It’s a program that allows you (the main applicant), your spouse, and your dependent children to go and live in Portugal for at least five years through an investment. In other words, it provides you with property and residency in Portugal. Golden Visa is especially popular in South Africa because it also ensures a visa-free travel throughout the Schengen Area and it only requires you to spend on average seven days in Portugal each year for five years. The minimal residence requirement is surely one of the strengths of the program. This way, you don’t need to leave South Africa to meet the residence requirement. After five years, you can be eligible for permanent residence and in one year after that, you will be able to apply for Portuguese citizenship.
When the program was first introduced, there were three options for you to become a GRPP participant, the most popular of which being the €500,000 real estate investment. Since then, there’s been a huge demand for the €350,000 property option. As of November 2017, a new criterion has also been offered: it allows for participation units in Portuguese Private Equity Fund (PEF) to be eligible for the Golden Visa.
Portugal Golden Visa Tax Benefits
The PEF is financially more appealing for the investors because it is fully exempt from many taxes that apply for direct property investments such as Corporate Income Tax (CIT) and Real Estate Tax (IMI). Therefore, it is more profitable than the previous real estate investment in terms of the annual net income. Moreover, it is easier to manage for the overseas investor as the investment is professionally conducted and therefore more favorable than the property investments.
On the whole, Private Equity Funds offer a more profitable and advantageous investment than the other investment options. Applicants who decide to invest in Private Equity Funds earn the right to apply for the Golden Residence Permit Program. From then on, applicants can benefit from all the advantages of being a Portuguese resident as explained above.