The Portugal Golden Visa is one of the fastest and easiest ways to European Union Citizenship! All you need to do is invest € 350,000 to 500,000 in property or other eligible investment options.
Investment in property has been the most preferred route for Indians and many investors have been contemplating visiting Portugal to check out properties and complete their investment for the Portugal Golden Visa. However, due to covid related travel restrictions, they have not been able to do the same.
On the other hand, the new Portugal Golden Visa Rules which come into force in less than 5 months, (1st January 22), will restrict the investment options, particularly for properties, and increase the investment amount in other cases. Hence it’s important for one to make a decision quickly as the process for filing the application is lengthy and takes 4 to 6 months.
Given the situation, more and more people are now opting for an Investment Fund (Venture Fund) which does not require travel to Portugal.
An investment of € 350,000 in an investment fund is one of the eligible investment options available for the Portugal Golden Visa. An investment fund is a type of investment vehicle in which multiple investors pool their investment to form a larger fund, the proceeds of which are invested in multiple assets thereby spreading the investment risk.
The purpose of these investments is the capitalization, establishment and development of Portugal and the investment is established under Portuguese law. Thus investments need to mature over an investment period of at least five years and at least 60% of the total investment must be made to commercial companies with headquarters in Portugal. Investment funds are controlled by companies called investment fund managers and are regulated by the Portuguese Capital Markets Board – CMVM. These funds are controlled, audited, and evaluated by private and licensed companies that provide additional security and transparency to the investor.
Let’s look at the Advantages & Disadvantages of Investments in Funds :
Advantages
- The biggest advantage of investing in a fund is you can complete your investment remotely from anywhere. You don’t need to visit Portugal for this process. You can study the fund documents, do the meeting with the fund manager and file your application remotely
- Another, major advantage of the fund route is that the investment is pooled together to create a large corpus which is then invested in multiple assets (properties or companies). Hence your risk is reduced as the investment is spread across different properties/companies.
- Investment in funds also offers significant tax advantages. The dividend income is tax-exempt (and no withholding tax) and also capital gains from the redemption of units or fund liquidation are income tax exempt in Portugal.
- The funds are regulated by the Portuguese Capital Markets Board – CMVM. These funds are controlled, audited, and evaluated by private and licensed companies that provide additional security and transparency to the investor.
Disadvantages
- There is no underlying physical asset like property
- You have to stay with the funds for a minimum time regardless of the Golden Visa application. Often these minimum terms are around 7-10 years.
- The minimum investment is €350k while investing in properties the minimum amount starts from €280k.
- You do not pay taxes but pay fees like, management fee, upfront fee, performance fee, etc.
- Performance of the fund, return on investment, and return of your capital depend on the performance of the fund manager.
Thus it can be seen that while there are many advantages to investing in funds for Portugal Golden Visa, you still carry investment risk. You need to select the right fund and the fund manager based on past performance, track record, reputation, investment strategy, investment criteria, reporting methodology, and transparency, etc.
To know how we can help you in selecting the right investment fund and remotely apply for Portugal Golden Visa, kindly get in touch with us