Portugal: the advantages of investment funds to obtain the Golden Visa

The new law regulating access to Portugal's Golden Visa (the most popular residency-by-investment program), which could be enacted next September, will bring as its main change the impossibility of investing in real estate to obtain a Portuguese passport. The debate, which began at the start of the year with some strong statements from the Portuguese government, concluded with the law known as "More Housing," allowing access to Golden Visas, albeit through investment funds and capital transfers.

It is still unclear whether President Marcelo Rebelo de Sousa will publish the law in the same form it emerged from the Assembly of the Republic of Portugal, or whether he will take one of these courses of action: he could send it back to Parliament for review, or he could remain silent on the new law and send it to the Constitutional Court for review anyway. Only time will tell what will happen to the current Golden Visa; the only thing that is clear is that these are likely the last opportunities to enter the program as it has existed until now.

But for those who might not have been considering owning another property in Portugal, with all the tax implications that entails, these funds are starting to appear as a very attractive opportunity to obtain a European passport through investment. This is especially true given that they offer certain advantages over the traditional method of obtaining a Golden Visa, making them an even more appealing option for joining the program.

What will be the options for obtaining a Golden Visa in the future?

One of the options for obtaining a Golden Visa is a capital transfer earmarked for a specific activity, such as investing €500.000 in a scientific research institution in Portugal. The new law could eliminate the possibility of purchasing a property for €500.000 to obtain a Golden Visa, but it will open the door to other investment options, including capital transfers and certain funds (only those not related to the real estate market).

The new law, which aims to provide housing opportunities for all Portuguese citizens, has changed the investment options required to obtain a European passport through investment. Specifically, the new investment or capital transfer options that will remain in place for obtaining a Golden Visa, following the enactment of the law, are as follows:

• Capital transfer for scientific research: It requires a minimum investment of €500.000 and is intended for public or private organizations integrated within the Portuguese technological and scientific system.
• Capital transfer for cultural options: This implies allocating €250.000 or more to artistic production, recovery or maintenance of Portuguese cultural heritage, public institutes and other municipal entities.
• Capital transfer for collective investment schemes: €500.000 or more must be invested in certain types of funds incorporated under Portuguese law, which must have been in existence for at least 5 years and 60% of the value of the investments must be made in commercial companies based in Portugal.
• Transfer of capital intended for the formation of a commercial company: for an amount equal to or greater than €500.000, with registered office in the national territory, combined with the creation of five permanent jobs, or the reinforcement of the share capital of a commercial company based in the national territory, already established, with the creation of at least five permanent jobs or maintenance of at least ten jobs, with a minimum of five permanent, and for a minimum period of three years.
• Creation of 10 jobs (8 in “low density” areas).
• Venture Capitals

Any of these options are included in the law that will be enacted in the coming months, as one of the ways to access this program, which to date is the most popular in the world. According to data published by the IMI Daily portal , Portugal's Golden Visa program is among the most popular in the world as a way to obtain a European passport through investment.

What are the advantages of the funds?

Firstly, a major advantage is the time involved, as a Golden Visa application through investment funds is typically faster than one obtained by purchasing property. On the other hand, Portugal is also experiencing a significant housing crisis, which makes it difficult to find the desired property when seeking to invest, often limiting the options available to real estate investors.

Furthermore, investment funds offer a number of tax advantages on real estate, making them even more attractive to those seeking a European passport through investment. For an amount that can reach €500.000, one can quickly and effectively obtain a Golden Visa without having to purchase a property, and above all, without having to pay taxes.

Finally, investment funds typically offer higher returns on investment (ROI) compared to real estate. While a property has a maximum ROI of 2% to 5%, an investment fund can yield between 4% and 8%, with a floor close to the maximum return of a property, but in some cases, this return can reach up to 20%. Furthermore, they require almost no maintenance and are considerably safer than other investments.

Furthermore, our team of experts at AIM Global has extensive experience investing in various investment funds, allowing you to gain an expert perspective before making an investment. We invite you to contact us for more information.