Investing in closed-end funds is one of the 8 ways to obtain a residence permit in Portugal. After a few months, the investor will become the owner of the "Golden Visa". It will allow the applicant's entire family to live and work in the EU and apply for citizenship after 5 years. So, what do Portuguese fund immigrants need to pay attention to, is there a scam, and how to do it not fall into the pit?
1. The problem of the closed period of the Portuguese fund
Residence permits in Portugal can be obtained through investment funds. This is the best way to get a residence permit card for applicants who do not intend to live in Portugal permanently or do not want to invest in real estate. The minimum investment amount of the fund is €500,000. A person needs to invest at least five years, but more often than not, the money is returned after 6 to 10 years.
Obtaining a Portuguese residence permit through an investment fund takes three months. The applicant receives the taxpayer number, opens a bank account and purchases shares in the fund. Residence permit documents are then collected, applications submitted and biometrics are submitted. The investor's application is processed within 1-2 months. At each stage, the investor is accompanied by an immigrant investment lawyer. They accompany the applicant in Portugal, help select the fund, make a list of documents, fill out forms and attest to a copy.
2. How to ensure the safety of the fund
Most active funds collect investors' funds and invest them in selected assets, such as residential or commercial real estate, Portuguese companies, industrial facilities or European stock markets. After making a profit, the fund distributes it to investors, minus its commission. The investment model of the Fund is specified in both the contract and the constituent documents. The fund can only invest within the framework of the chosen strategy. For example, if the fund is set up to invest in residential real estate, the managing company cannot invest part of the investor's funds in commercial real estate or commerce.
The Portuguese Securities market commission (CMVM, Comiss?o do Mercado de Valores Mobil) monitors compliance with investment strategies, which regulates the activities of all funds in the country.
3. Which funds are more suitable for applicants
Only about 50 funds are suitable for Golden Visa applicants, although the total number of funds registered with the Securities market commission is more than 200. Funds participating in the Portuguese residence permit scheme are subject to additional requirements for capital allocation and expiry of shares. Investment funding requirements under the Portuguese Residency Permit Program:
1. Registered with the Portuguese Securities Commission;
2. Invest at least 60% of your capital in a Portuguese company or real estate;
3. The maturity date of the stock is 5 years.
Many funds are set up specifically for Portuguese Golden Visa applicants. Investment amounts start from €500,000, after 5-7 years or early withdrawals. The strategy of such funds is to minimize risk while saving capital. Therefore, in most cases, a minimum annual dividend is paid when investing in real estate. This kind of fund is likely to be suitable for applicants on a Golden Visa.
4. What are the differences between different funds
Investment funds suitable for Portuguese residence permit applicants vary in terms of the type of assets in their portfolios, the size of commissions and fees, the frequency of dividend payments (each year or the end of the period), profitability and investment model. Depending on the type of assets in the portfolio (investment strategy), the fund can be divided into investments in:
1. Residential real estate: residential buildings in Lisbon and resort towns;
2. Commercial real estate: hotels, shopping centers and office centers;
3. Commercial enterprises in Portugal: manufacturers, IT start-ups or wineries;
4. Have multiple assets at the same time: the fund can invest 50% of industrial facilities, 25% of agricultural land, and 25% of commercial land.
Hybrid funds are rare, with about 10% of them in the market. The remaining delegates were broadly the same. Depending on the degree of diversification, funds can be divided into funds that invest in one object, multiple or different sectors of the economy. A fund can only invest in one property or one company or several companies at a time, all in Portuguese property or in part in European or American properties.
All funds offer different risk and return portfolios, each of them has different advantages and risks, when choosing a fund, investors must consider their own situation and choose carefully. As long as you choose the right fund, immigration to Portugal will certainly be smooth sailing and will not fall into the pit.