The fund investment option for Golden Visa application was introduced in 2017, meaning it is relatively recent when compared to the property investment route, launched in 2012, but the popularity of investing through private equity funds is fast becoming one of the most popular routes for people looking to get their Portugal Golden Visa.
And this trend will continue as the more traditional and most popular route, through property acquisition, has become more restricted with new regulations terminating residential property investments in Lisbon, Porto, and other coastal areas as of 1 January this year.
Related article: Golden Visa changes in 2022
Advantages of Real Estate Fund investments
1. Higher potential yield
Depending on your investor profile and the chosen fund’s policy and targeted risk/return, capital gains yield can be significantly higher when compared to other investment options that qualify under the Golden Visa program
2. Lower risk through diversification of your investment
Real Estate funds diversify their investments into different assets according to the fund policy and targeted risk/return, thus providing greater security by not placing all its eggs in one basket, as would be the case with a direct property acquisition. It also entails less risk than would be the case with a venture capital fund.
3. Lower tax liability
If you maintain your fiscal residency outside of Portugal, you are not taxed on dividends or income from capital gains. For Portuguese fiscal residents, the tax is set at 10%, residents of tax havens might also be subjected to a 10% tax.
4. Lower transaction cost than the property acquisition route
Purchases of real estate assets implies paying around 7% tax on the transaction value.
5. Lower maintenance cost than the property acquisition route
No need to hire a property management company to manage your rental property.
6. Lower minimum investment requirement than through the simple transfer of capital
From Jan 1, 2022, the minimum investment amount required for the investment fund route is €500,000 while the minimum for a capital transfer is €1,500,000.
7. Funds are highly regulated and supervised
Funds eligible for the Golden Visa scheme must be registered in Portugal, which means they are regulated and supervised by the Portuguese Securities Market Commission (CMVM).
8. Expert management of your investment
All fund management companies are well respected companies in this area. Each fund has a unique profile adapted to different clients with different objectives and risk profiles. Fund managers are experts and their full-time job is to make sure the funds perform. Also, many funds have a performance fee which gives fund managers extra motivation to achieve better results, meaning both investors and fund managers share the same objective.
Related article: Golden Visa Portugal: Rules for investment in Private Equity Fund
People less familiar with investment funds may be hesitant to choose this route when compared to obtaining a legal residence permit in Portugal by simply buying a property in the country and while there is no 100% guarantee that your money invested in a Portuguese real estate fund will be perfectly safe, as with any other option, when you consider that these funds are managed by professionals, and the funds are strictly regulated and supervised by the competent national body, and these financial institutions are regularly audited by external audit companies, this option should become more attractive for Golden Visa applicants.
Any investment entails risk and an investment in a Portuguese real estate fund is no exception. It would be wise, therefore to choose a professional expert to assist you in assessing the risks involved in investing in any particular fund in Portugal.
You can assess the risk by yourself but assistance from qualified professionals in the matter is always recommended, especially if you are not fluent in Portuguese or familiar with Portuguese bureaucracy.
One such company is Lince Capital which has 40 years of experience in the Portuguese market, helping applicants not only with obtaining the respective documentation but in choosing the best options for your situation, for example to invest in the right qualified investment funds to secure all the benefits associated with the program.
As regards the Investment Fund option and according to your investor profile, Lince Capital has an outstanding real estate fund that qualifies for Golden Visa application and which is still open for subscription.
Navigator II focuses exclusively on real estate development projects in the central Lisbon area. The minimum investment for this fund is €100,000 and the term is 7 years.
If you would like more information about Golden Visas or would like to discover how to best invest in Portugal, please feel free to contact us.