Golden Visa – Investment Funds

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This article summarizes the key aspects of investing in a Portuguese investment fund, for Golden Visa purposes.

There is currently an increased influx of investors aiming to secure an eligible investment for Golden Visa purposes. Investment funds are one of the types of Golden Visa suitable investments.

Covid related travel restrictions also increased this alternative’s attractiveness. While an investor usually wants to personally inspect a real estate property and its surroundings, investing in a Portuguese fund can be achieved remotely (with the assistance of a lawyer).

It makes it an increasingly popular option. Selecting a fund may look like a daunting affair.

Research and due diligence will allow this choice to take place according to your objectives and risk profile.


Investment funds

An investment fund is a type of investment product where the capital of several investors is pooled into an investment product. Not all investment funds meet the requirements of a Golden Visa application.

The fund will follow an investment policy for the acquisition, holding, and disposal of assets, and the fund’s management will carry out pivotal decisions.

According to Portuguese law, a fund is domiciled at its registered office and where its management is. Therefore, a Portuguese fund cannot be managed by a foreign firm. Instead, it must be managed by a Portuguese licensed fund management firm.

Both the fund and the management firm are regulated by the Portuguese Capital Markets Board – CMVM. The CMVM is part of the European System of Financial Supervisors (ESFS) and the National Council of Financial Supervisors. In addition, some funds may be subsidized by the Government or other institutions, such as IFD (Instituição Financeira de Desenvolvimento).

Investment funds must be managed by regulated professionals, and they present a tax-efficient investment. Nonresident individuals are not liable to withholding tax on income paid by the fund. Furthermore, there are no transfer taxes associated with investing in a fund.

Negative aspects of investing in funds include no guaranteed returns or capital and payment of fees.


Eligibility for Golden Visa

Not all funds are eligible for investment under the Golden Visa regime.

The eligibility requirements are:

  1. a) Investment of at least EUR 350,000;
  2. b) Acquisition of participation units in Portuguese investment fund;
  3. c) Minimum maturity of five years at the time of investment;
  4. d) The fund must invest at least 60% of its funds in Portuguese companies.

The investment fund must be a Capital Risk Fund / Venture Capital Fund. The investment portfolio must be diversified, and no single asset, company, or equity can account for more than one-third of the portfolio. The investor must be qualified under Portuguese rules, and the fund may not guarantee any return or capital.

Real Estate Funds, i.e., funds investing directly into real estate assets, are not eligible for Golden Visa applications.

The Portuguese Government introduced several changes to Golden Visa. The new changes will enter into force on January 1st, 2022, and will only apply to Golden Visa applications submitted after that date.

In January of 222, this investment option will require a higher investment. The current threshold of EUR 350.000 will be increased to EUR 500.000.

The GV applicant may perform the investment directly or through a single quotaholder company incorporated in Portugal.


Fee structures

A traditional fee structure encompasses a 2% management fee and a 20% performance fee. The management fee is charged on the fund’s total assets under management. The performance fee is charged on the fund’s profits to incentivize the management team’s performance and align its interests with the interest of investors. This arrangement is known as the 2/20 fee structure.

This industry-standard is present in Golden Visa-friendly funds. Some funds may have different fee structures to avoid double-dipping and protect investor returns. It is not uncommon for funds to charge an upfront fee of up to 5%.


Conducting due diligence on funds

The evaluation of a fund requires understanding critical legal and regulatory variables and the investor’s risk profile.

Any prospective investor must consider personal risk tolerance. There are no legal impediments to invest in an aggressive fund from a risk perspective. Nevertheless, the risk profiles of Golden Visa applicants tend to be moderate to conservative.

Evaluating a fund requires knowledge of keys metrics and investment concepts such as target returns, maturity, management fees, etc.

Proper due diligence must include checking the fund’s registration with the CMVM, the investment policy, and the placement memorandum. In addition, Golden Visa funds tend to be highly illiquid. Therefore, keeping the investment for more than six or seven years is expected until the fund completes its investment cycle and achieves the necessary liquidity for the investor’s exits.


The underlying assets

A fund will follow an investment policy for the acquisition, holding, and disposal of assets. A Golden Visa eligible fund may invest in several types of assets, including real estate companies, stocks, bonds, or commodities. Some of these assets may be in jurisdictions or in industries that are perceived to generate higher yields. There is room, therefore, for personal preferences.

A good starting point is to review the fund’s strategy and investment policy and analyze if the fund’s plan is in line with current market conditions, which vary between asset classes.

Many Golden Visa funds, marketed as such, invest in real estate companies. It is not uncommon for real estate developers to start their own fund and sell it to Golden Visa applications. This practice may lead to an under-diversified investment portfolio and borderline self-dealing.

Therefore, it is crucial to understand if a fund was created with the sole purpose of capitalizing on the Golden Visa investment options or it is an excellent financial product regardless of its Golden Visa eligibility.


The management team

One of the essential factors for a fund’s success is its management team.

Managers perform extensive research on assets, industries, company fundamentals, economic trends, and macroeconomic factors. Therefore, it is vital to review their credentials and track record.

Golden Visa funds are recent, and the metrics required to properly evaluate performance are not yet available. Therefore, your analysis should focus on the management team, even though “past performance does not guarantee future results”.


The Portuguese Golden Visa

Golden Visa holders may reside in Portugal as long as they wish and move within the Schengen area (and other territories with open borders within Europe).

Flexibility is part of the appeal of this residency scheme. Golden Visa holders must stay in Portugal for as few as seven days per year during the first year and as few as 14 days in the following two-year periods – 35 days in five years.

In addition to the right to reside in Portugal for the applicant and freedom of movement within the Schengen area, the Golden Visa grants the right to family regrouping, the possibility to request a permanent residence permit in Portugal after five years and does not constitute an obstacle to applying for Portuguese citizenship (further requirements must be met) after five years.


Our advice

Industry knowledge is a must when conducting comprehensive due diligence. GFDL has assisted numerous investors in implementing and structuring their investments in Portugal.

Our Capital Markets and Private Client teams can assist in vetting a fund of your choice and assisting with the Golden Visa application.

Feel free to contact us should you required any assistance in relation to this or other matters.



This publication or document contains general information and is not intended to be comprehensive nor to provide legal or tax advice or services. It should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Professional legal advice should be requested for specific cases. We do not undertake any continuing obligation to advise on future legal amendments, or of the impact on the conclusions herein. Prior results do not guarantee a similar outcome. The contents of this publication or document may not be reproduced, in whole or in part, without the express consent of GFDL.

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