Portugal golden visa: investment in fund units instead of real estate
I always plan investment income and evaluate risks. When I decided to get a residence permit in Portugal, I also made calculations. I was satisfied with EBITDA and the prospect of citizenship.
Joseph, 32 years old
A shareholder of a waste recycling company
Clients’ names and photos have been changed
This case was provided by our expert
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Portugal golden visa: investment in fund units instead of real estate
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Joseph wanted to move to the European Union to live in a country with a high standard of living and a mild climate and travel around Europe without visas. Also, he wanted to obtain citizenship in the future.
Joseph’s friends got residence permits in Portugal under the state program for investors — the Golden Residence Permit Program — and moved to Portugal. Joseph decided to do the same.
In July 2021, Joseph turned to Immigrant Invest on his friends' advice. He tried to get a residence permit under the Portuguese program and, at the same time, acquire a liquid asset, which he would sell profitably in the future.
The program offers seven investment options. The most demanded of them are purchasing real estate and buying investment fund shares. At first, Joseph wanted to invest in real estate, but then he changed his mind and chose an investment fund. We’ll tell you why.
How Joseph chose 1 of 7 investment options
At first, the investor planned to buy a modern apartment in the business centre of Lisbon or near the city’s historical area. He wanted to rent it out with the help of a management company and receive a rental income.
Since January 1, 2022, the program’s rules allow investors to buy property only in the Azores, Madeira and the country’s interior regions. The inland areas do not include Lisbon, Porto, coastal and resort regions.
Benefits and disadvantages of buying property. Under the terms of the program, you need to buy a property for €500,000, and after five years, it can be sold. The cost of apartments in Lisbon grows by 7% per year. In five years, the asset may rise in price to €700,000. At the same time, rental income brings up 10% per annum in the high season.
Examples of properties in Portugal
Portugal, Albufeira
€1,400,000 — €4,500,000
Apartments and villas in a luxury resort managed by Marriott International
194 m² — 386 m²
3 
3 
Portugal, Lisbon
€1,900,000 — €3,400,000
Apartments in a luxury residential complex137 m² — 245 m²3—4 3—4 Buying a property takes time and additional charges. The investor wanted to come to Portugal to see the object personally. Then it takes 1.5—2 months to conclude a sale and purchase deal and negotiate with the management company. Also, there are maintenance costs and taxes.
A residential real estate investor in Portugal pays a tax on the transfer of ownership — up to 8% of the value of the contract of sale and the stamp duty — 0,8%. The owner pays the property tax — 0,4% of its value every year.
The manager of Immigrant Invest calculated the minimum amount of expenses when buying a property for Joseph — €546,000. Property tax would be €2,000 per year.
As a result, Joseph asked to tell how the purchase of fund shares takes place and what are the associated costs.
Pros and cons of investing in a fund. €350,000 was the minimum amount of participation in the Portugal golden visa investment fund until December 31, 2021. This is €150,000 less than when buying a property. Since January 1, 2022, for the option of purchasing investment fund units, the minimum contribution amount is €500,000.
The choice of a fund and the transfer of investments occur remotely, and there are no taxes on the transaction. The investor pays a commission to the fund — up to 7,5% of the contract amount. They pay the management company from 0.5 to 3% per year.
The contract with the fund is drawn up in 1‑2 weeks. Therefore, an investor applies to participate in the program faster than buying real estate.
The income from investments in the investment fund is from 3 to 10% per annum, considering the annual fee for asset management. Depending on the fund’s strategy, the investor receives the money within 6—10 years.
Lyle Julien,
Investment programs expert
Participation in a Portugal golden visa investment fund is always a risk. We select funds in Portugal that meet the conditions of the residence permit program. For example, at least 60% of the capital must be directed to local projects. We also check the experience of the fund managers closely.
Most investors participate in funds that invest in new real estate projects. The return on investment in such a fund is comparable to the return on selling your real estate.
Joseph was attracted by saving time and money, so he participated in the fund.
Lisbon, the capital of Portugal, has a mild Mediterranean climate with short winters and hot and dry summers. Joseph wanted to live in a place like that, so he thought about moving to the city
Stages that Joseph went through to get Portugal golden visa
1. Preliminary Due Diligence. The lawyers of Immigrant Invest assessed the risk of denial for Joseph under the Portugal golden visa program.
Vladlena Baranova,
Head of Legal & AML Compliance Department, CAMS, IMCM
Immigrant Invest has a Compliance Department. A certified Anti Money Laundering Compliance Officer studies the investor’s situation in detail. Acting so, we reduce the risk of failures to almost zero
Joseph had a high level of reliability. He received income only from his company. The investor had no debts and criminal records, and he paid taxes on time. This meant that the investor would obtain a residence permit in Portugal with a probability of 99,9%.
2. Fund selection. Immigrant Invest lawyers helped Joseph choose a Portugal golden visa fund. An applicant can invest in funds that meet all the requirements of the residence permit program in Portugal:
registration with the Portuguese Securities Market Commission;
at least 60% of the fund’s capital is invested in Portuguese companies and real estate;
maturity of shares is from 5 years.
It was important to Joseph that the fund invested in real estate; this is a conservative market with minimal risks. The lawyers of Immigrant Invest offered the investor four funds.
Joseph considered other indicators of funds:
management experience;
term of withdrawal from the fund;
return on investment;
management fees.
Joseph chose EQTY Global Growth Fund. 70% of the fund’s asset portfolio is real estate in Portugal’s central and coastal parts and 30% in real estate and private equity funds from the EU and the USA.
The expected size of the fund’s capital is 40 million euros. The annual profit of the fund is 3%. The fund has been operating for eight years. After this period, the investor will receive 20% of the invested amount as profit.
€361,523 — Joseph’s expenses for getting Portugal golden visa via an investment fund
€350,000 — purchase of fund units
€5,250 — fund commission
€533 — application fee
€400 — medical insurance
€5,340 — residence permit card fee
3. Obtaining a tax number in Portugal. The tax number Número de Identificação Fiscal (NIF) is needed to make payments in Portugal.
You can get a tax number remotely — through a tax representative in Portugal. Immigrant Invest lawyers got a NIF for Joseph within a week.
Documents required for getting a NIF:
a completed application for registration of a taxpayer number;
a copy of an applicant’s passport;
a tax number from another country;
bank statement to confirm the legality of the investor’s income.
A week later, Joseph’s application was approved. The investor got a personal account on the website of the tax service of Portugal.
4. Opening a bank account in Portugal. The program requires all payments to be made from a Portuguese bank account. Immigrant Invest lawyers helped Joseph choose a bank where he could open an account remotely by proxy through a lawyer in Portugal.
We submitted the investor’s passport data, NIF and documents that confirm the legality of the investor’s income to the bank.
When the bank approved the opening of the account, Joseph transferred the amount necessary for participation in the program — €361,523.
5. Purchase of fund units. Before agreeing with an investor, the fund checks them for reliability. So the Portugal golden visa fund management wants to make sure that the money for the investment has been obtained legally.
Joseph’s documents provided to the EQTY Global Growth Fund
tax return;
statement from the investor’s account in a bank in the country of living for the last three months;
certified copy of passport;
NIF;
bank details of a Portuguese bank account.
Five days later, Joseph received a written confirmation from the fund to approve the transfer of the investment. The entrepreneur transferred €355,250 to the account of the EQTY Global Growth Fund using the bank details.
6. Sending documents. The lawyers of Immigrant Invest collected all the required documents and uploaded them to the Migration Service of Portugal platform.
The service checked the investor for two months. The Department sent the approval for Joseph’s participation in the program to Immigrant Invest by email.
7. Capturing biometric data. A month after receiving approval, the investor had a rest in Italy on a valid Schengen visa. After a vacation, Joseph flew to Portugal to give biometrics.
Immigrant Invest lawyers accompanied Joseph from the airport to the migration service office.
8. Obtaining residence permit cards. Approval from the migration service came in four and a half months. As soon as the approval came, Joseph paid a fee for the residence permit card — €5,340.
Joseph received a residence permit card in Portugal six and a half months after applying to Immigrant Invest.
Joseph's step-by-step process of getting a Portugal golden visa
Joseph contacted Immigrant Invest
Preliminary Due Diligence check
Choosing the fund for investment
Opening a bank account and getting a NIF
Registration of an agreement with the fund and making the investment
Applying to the SEF
Applying for a residence permit and submitting fingerprints
Application approval
Receiving the residence permit card
Joseph’s life with a residence permit in Portugal
Joseph has already used the residence permit card. The entrepreneur spent the winter of 2021—2022 at the ski resorts of Europe.
He travels freely within the Schengen Area and plans to move to Portugal to live closer to his friends. In five years, he will apply for Portugal citizenship, and he is learning the language for now. At the same time, the risk of losing investments is almost zero, and the planned profit is comparable to rental income.
Immigrant Invest is a licensed agent for government programs in the European Union and the Caribbean.
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