Case Studies

Portugal golden visa by purchasing shares in an investment fund

My business was falling apart, and I needed to visit the suppliers in Italy asap. But it was hard to go anywhere during the pandemic. I got sick and tired of depending on visas and constantly changing entry rules. That's why I decided to get a residence permit in the EU

portugal-golden-visa-for-family-image
Banele, 34 years old
furniture factory owner
The name and photo of the client have been changed
Portugal residence permit by investment for a South African family

Our client Banele is an investor from Soweto, South Africa. Banele is engaged in the production of custom-made furniture. In 2020, supplies of fittings from the European Union began to be delayed. The business was losing money, but Banele could not travel abroad to find new suppliers or renegotiate the conditions with the old ones due to the pandemic.

A residence permit in Portugal solved the problem of going abroad without the need to obtain a Schengen visa. To participate in the program, Banele chose to invest €350,000 in purchasing shares of an investment fund. From 2022, the minimum investment for this option is €500,000.

We will tell you how Banele chose a fund for investment and remotely opened an account in a Portuguese bank.

Why does the investor's family need a residence permit in the European Union

To travel to the European Union without a visa. Banele owns a custom-made furniture factory. He buys accessories from partners in Germany and Italy.

In 2020, the supply of fittings was delayed due to the pandemic, and the lead time increased. Some customers did not want to wait and left. Production was idle, and Banele was losing money.

Banele could not go to the European Union and meet with suppliers to revise the terms of cooperation or find new partners as Italy and Germany closed their borders. Banele had a valid Schengen visa, but a good reason was required for the trip even with that. For example, family reunification, childbirth, or emergency treatment.

To obtain citizenship in the European Union. Banele wanted his son to grow up cosmopolitan: educated in Europe, speaking several languages and living in different countries. It was easier to carry out this plan if the child had EU citizenship.

Banele heard about European citizenship programs for investors from an Immigrant Invest article. Banele learned that some EU countries also issue residence permits by investment.

For quality furniture, fittings are everything. If I replace Europe with China, I will lose regular customers on which the business is supported. Therefore, I need the opportunity to go to the suppliers at any time.

Furthermore, my living experience in South Africa has forced me always to think ahead. My son is growing up, and I want to give him the best, which includes choosing where to study, where to work and where to live.

portugal-golden-visa-for-family-image
Banele, 34 years old
furniture factory owner

Benefits of a Portugal golden visa for a family

On November 11th, 2020, Banele turned to Immigrant Invest to choose an investment program.

Banele's family could not immediately receive EU citizenship by investment. When contacting Immigrant Invest, the Cypriot citizenship program was closed; the country finished accepting applications from investors on November 1st, 2020. The Government of Malta has reviewed the conditions for granting citizenship to investors and has suspended applications pending the adoption of new rules.

Visa-free travel to the Schengen countries is possible with a residence permit in Portugal, Malta, Greece and Spain. The holder of a residence permit or permanent residence card has the right to travel to the country of residence.

The prospect of citizenship without residing in the country. Banele planned to become a citizen of a country where he would receive a residence permit by investment. However, he did not want to move from South Africa yet.

Only the Portuguese program provided the prospect of citizenship without residing. To maintain a Portuguese residence permit and apply for citizenship, an investor needs to spend seven days a year in the country for five consecutive years.

The rest of the EU does not allow investors to apply for citizenship without continuous residing. The investor cannot spend more than 10 months outside the state in the last five years before applying for citizenship.

Portugal golden visa

Portugal golden visa allows its holders to get tax benefits, travel in the Schengen visa-free, and claim EU citizenship. Investors are not required to live in Portugal to maintain the status: as long as they spend seven days a year in the country, their residence permit remains valid

Portugal golden visa

Portugal is one of the cheapest countries for living in the European Union. The Portuguese cost of living is lower than in Italy, France and Germany. Nevertheless, Portugal has high living standards, and it is one of the top European countries to live in

Portugal golden visa

Investors can apply for Portuguese citizenship after five years as a resident. Portuguese citizens can choose to live in any EU country for life and travel visa-free to 187 countries around the world, including the United States, Canada, the UK and Australia

Choosing an investment option: why investment funds, not real estate

Portugal offers investors eight investment options, from buying real estate to creating new jobs for Portuguese citizens. 91% of investors chose to buy real estate under the residence permit program in Portugal in 2020.

Banele did not want to buy real estate: he understood that buying and maintaining real estate would require time and additional costs.

First, you need to go to Portugal to select an object. This can be done remotely, but most buyers prefer to see the property in person before buying.

Upon purchase, a tax of up to 7% of the object’s value is paid, and then annually as a real estate tax in the amount of 0.3 to 0.8%. Property owners also spend money on the maintenance of the property, for example, paying for utilities. Plus, the income from renting out real estate does not always cover the costs.

8 investment options
provided within a Portuguese residence by the investment program

Banele did not plan to live in Portugal, so he saw no reason to spend time and money on purchasing and maintaining the overseas real estate. He chose a simpler option — buying shares of an investment fund.

When Banele decided on the program and investment option, he agreed with Immigrant Invest to participate in the residence permit program in Portugal.

The procedure for purchasing units of an investment fund is entirely remote. The program participant does not need to go to Portugal up to the submission of biometrics for the production of residence permit cards.

Unlike buying real estate, investing in funds allows you to save on taxes and maintenance. An investor can transfer money to the fund and receive passive income in interest on the deposit for the next 5 to 10 years.

The fund option has been gaining popularity among investors since the end of 2020. Closed borders make it difficult to invest in real estate, but they don’t make it difficult to buy shares or take part in venture capital in Portugal.

Victor Esik - Immigrant invest
Victor Esik
Head of the Portuguese office

Portugal golden visa for the purchase of investment fund shares: a step-by-step procedure

1. Obtaining a taxpayer number in Portugal. Número de Identificação Fiscal (NIF) is an analogue of TIN. It is required for anyone who wants to open an account in a Portuguese bank and make payments.

An investor does not need to go to Portugal to obtain a Portugal tax number. A tax representative can act on his behalf: he receives a power of attorney in his name and visits the Portuguese tax office for the investor.

Immigrant Invest cooperates with a Portuguese company, whose lawyers become tax representatives for investors. To obtain the NIF, the lawyers handed it over to the Banele’s tax representative:

  • a completed application for registration of a taxpayer number;
  • a copy of the South African passport and international passport;
  • a copy of a document with an individual taxpayer number in South Africa;
  • confirmation of the investor's professional activity and income.

The Portuguese tax service approved Banele's application and entered the investor into the register of taxpayers. Banele also has a personal account on the website of the Portuguese tax service.

2. Opening a Portuguese bank account. All program payments must be made from a local bank account. On lawyers' advice, Immigrant Invest Banele chose Novo Banco, which provides services for remote account opening.

All new clients of the bank undergo a Due Diligence check. Banele provided passport details, Portuguese taxpayer number, and contact details of his tax representative in Portugal to go through it. Also, lawyers sent the bank confirmation of the legality of the investor's sources of income.

Banele had no problems with the law and always paid taxes on time, so the bank approved his application within an hour.

After a bank check, the investor issued a card with a sample signature. He did this in the presence of a notary, who assured the signature's authenticity. The lawyers also sent the card to the Portuguese bank.

Selection of an investment fund

An investor who participates in the residence permit program in Portugal cannot invest in just any fund. The fund must be registered in Portugal and invest at least 50% of the capital in Portuguese assets.

Immigrant Invest lawyers offered Banele 15 investment funds to choose from. These funds qualify for the program, have undergone Due Diligence and provide an optimal balance of risk and return.

Banele chose the Blue Crow investment fund for three reasons:

  1. The fund is engaged in investments in commercial real estate: industrial facilities, agricultural land and retail space. Banele himself is the owner of an industrial facility and a former tenant of the production facility. He knows that investments in such real estate can bring up to 10% per annum.
  2. The return on investment in the fund is 5% per annum. Payments are made annually. Additionally, the fund will pay 10% of profits after closing in 2028.
  3. The fund provides investors with an early exit option. At the same time, the investor does not have to look for a buyer himself for his share in the fund. The fund will offer other investors to purchase shares or reduce its authorized capital by the value of the shares returned to the investor.

The participant of the residence permit program owns the shares of the investment fund for at least five years – this is a prerequisite for maintaining the status of a resident. However, we recommend not leaving the fund at least until you receive citizenship. Therefore, investors rarely take the opportunity to exit the fund early. This is insurance in case of an unforeseen situation.

Victor Esik - Immigrant invest
Victor Esik
Head of the Portuguese office

Fulfilment of the investment condition: purchase of fund units

The fund also conducts its own Due Diligence. The investor confirms that the money for the investment was received legally. To do this, he needs to provide:

  1. A tax return confirming the amount of the investment.
  2. Bank statement from the investor's account for the last three months. The account balance must not be less than the investment amount.
  3. Certificate from the place of work.
  4. A certified copy of your passport.
  5. Portuguese taxpayer number.
  6. Bank details of the account in the Portuguese bank from which the payment for the purchase of the fund units will be transferred.

The fund’s Due Diligence took four days. After that, the fund sent a document called “capital call”. This is a written confirmation that the fund accepts to receive the investment from the applicant. The document also contains the bank details for the payment.

4 days
took Due Diligence in the investment fund

Banele transferred €350,000 using bank details to the fund's account at Millennium BCP bank. Transfers between Novo Banco and Millennium BCP are free of charge.

Fees for money transfers between accounts at different Portuguese banks depend on the terms of cooperation between the banks. For example, Novo Banco sets a standard fee for payments within the eurozone — €3.75 for payments up to €50,000. The fee for other outgoing payments is 0.25% of the amount, but no more than €110. Novo Banco transfers money to some banks without a commission.

Two weeks later, the lawyers received confirmation that the payment was credited to the fund's account - the so-called signature declaration. It is submitted to the Portuguese Migration Service and the investor's application for a residence permit.

€377,569 — Banele’s expenses on obtaining a Portuguese residence permit

€350,000
purchase of investment fund units
€9,000
apartment rental for a yearly
€16,020
fee for the production of residence permit cards
€1,800
medical insurance
€749
application fee

Residence permit in Portugal in 7 months

Renting a residence for residence registration in Portugal: The residence address is indicated on the residence permit card. To register, it is sufficient to rent the accommodation for a long period, e.g. one year.

Immigrant Invest, real estate specialists found an apartment for Banele in Porto. The lawyers checked the legal clarity of the property and the terms of the contract with the landlord — the one-bedroom flat cost Banele €9,000 for one year.

Apartments with a view to the historical center of Porto, Portugal

Apartment overlooking the historic centre of Porto, Portugal. The rental cost is €9,000 per year, the purchase price is €309,000

Apartments with a view to the historical center of Porto, Portugal

Flat located in a restored 18th-century building. It overlooks the Douro River and the historic centre of Porto

Apartments with a view to the historical center of Porto, Portugal

The one-bedroom apartment is rented furnished. Air conditioning and high-speed internet connection

Preparation of documents for applying. The list of documents included:

  1. Copies of passports of Banele and his wife.
  2. Police clearance certificates.
  3. Marriage certificate.
  4. Birth certificate of a son.
  5. Medical insurance for the whole family.
  6. Signature declaration from the investment fund.
  7. Rental contract and certificate of registration in Portugal.
  8. Government questionnaires and forms.

Submission of an application and biometrics. On December 14th, 2020, lawyers submitted an investor application to the Portuguese Migration Service. They also signed up Banele's family for fingerprints, which are needed to make biometric residence permit cards.

On the appointed day, Banele and his wife flew to Lisbon. Immigrant Invest lawyers escorted the couple to the office of the migration service. Banele and his wife passed the biometrics and returned home to await the decision on the application.

Obtaining residence permit cards. The approval from the Portuguese Migration Service came five and a half months later. After that, Banele paid a fee for producing residence permit cards — €5,340 per person.

The family did not need to come to Portugal to get their residency cards ready. Banele received the completed residence permit cards by mail on June 18th, 2021, seven months after contacting Immigrant Invest.

In 7 months, Banele’s family obtained a residence permit in Portugal

1
November 11th, 2020
Banele applied to Immigrant Invest
2
+ 1 week
Registration of taxpayer number and opening a bank account in Portugal
3
+ 3 weeks
Purchase of shares in an investment fund and renting a housing
4
+ 1 week
Applying and submitting biometrics at the Portuguese Migration Service
5
+ 5.5 months
Portuguese Migration Service approval
6
+ 3 weeks
Production of residence permit cards
7
June 18th, 2021
Banele's family received residence permit cards

The family’s future with Portugal residence permit cards

Firstly, Banele went to Milan to meet with suppliers. To travel, he did not need a visa; the investor used a Portuguese residence permit card to cross the Italian border.

In the winter of 2021, the family will go on holiday to Portugal. They will spend a week in a rented apartment in Porto: stroll through the city's old streets, visit traditional wine cellars, and ride the funicular with their son. After Porto, the family will travel to Setubal to sunbathe on the Atlantic coast.

During this time, the couple wants to look at the local schools for their son. For example, in Porto, a child will be able to go to a public school at the place of registration.

Banele wants his son to learn Portuguese and receive citizenship in the future. With a Portuguese passport, he will be able to enter a university and live and work in any EU country. Travel visa-free to 188 countries, including the Schengen area, Australia, UK, USA and Japan, is also accessible.

Banele does not plan to leave the fund ahead of schedule. His shares will be sold in 2030 - after the fund's closure. So the investor will fully return the money invested, which he can spend on paying for his son's education at a university or buying a house in the European Union.

Immigrant Invest is a licensed agent for government programs in the European Union and the Caribbean.

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Evgeniya Morozova
Head of the Legal Department
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