More and more investors are interested in finding out about investment funds in Portugal, as not only do they represent a strategic way of accessing the Portuguese financial market, but they are also a way of creating opportunities for growth, portfolio diversification and citizenship by investment.
The advantages of investment funds in Portugal, such as the potential returns, the robust regulatory framework and the possibility of obtaining additional benefits, such as the Golden Visa, are why this way of doing business has attracted global attention.
If you are interested in investment funds in Portugal, in this article we will cover what these funds are, the advantages of investing, the main rules, laws and regulations involved, as well as explaining how they can be a route to obtaining residency in the country.
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What are investment funds in Portugal?
Investment funds are financial arrangements that pool resources from different investors to invest in different assets, and are managed by qualified professionals.
In Portugal, there are a variety of funds available, including real estate, venture capital, stock and bond funds. These funds aim to provide diversified and professional asset management, with the aim of maximizing returns and mitigating risks.
The basic operation of funds involves raising funds from investors, which are invested in different assets according to the fund’s strategy, and gains or losses are distributed proportionally among investors.
In this article we will focus on the characteristics of venture capital funds, especially those that make it possible to apply for the Golden Visa Portugal.
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Advantages of investing in investment funds in Portugal
First of all, we can mention the advantage of portfolio diversification, as this reduces risks since you invest in a wide range of assets. Professional asset management is another advantage, as the funds are managed by experienced specialists who make informed and strategic decisions to maximize returns.
Investment funds in Portugal also offer tax benefits. For example, dividends distributed by funds are exempt from Corporate Income Tax (IRC) for non-residents, except in tax havens. For residents, the withholding tax rate is 10%.
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Regulatory entities
The Portuguese Securities Market Commission (CMVM) is the main regulator of investment funds in Portugal. It guarantees the transparency and security of the market, protecting investors’ interests through rigorous supervision of funds and their activities.
The Bank of Portugal acts to regulate the financial system. The regulation of these entities ensures that funds operate in a fair and efficient manner, offering an additional layer of security for investors.
How can venture capital funds be used to obtain the Golden Visa?
To obtain the Golden Visa through venture capital funds, the investor must meet certain requirements, such as a minimum investment of €500,000 in an approved fund. The selection process involves choosing duly regulated funds that are eligible for the program.
By choosing venture capital funds for the Golden Visa, the investor and their family can obtain legal residency in Portugal, with the possibility of applying for Portuguese citizenship after five years of the residency granted, as long as the investor maintains the investment in the selected fund.
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Additional benefits of investing through the Golden Visa
With the Golden Visa in hand, you can travel freely throughout the Schengen countries without the need for additional visas. This is one of the main benefits that investors wish to gain, but there are others:
Freedom of movement in more than 26 countries
As mentioned above, Golden Visa holders have freedom of movement in the Schengen area, and this means being able to travel to more than 26 European countries without the need for additional visas. For those who love seeing new places or even traveling for business, this is a very practical solution.
Possibility of Portuguese citizenship
After five years of residence and investment, it is possible to apply for Portuguese citizenship, obtaining a passport that allows you to travel to 186 countries without a visa, including the United States, through ESTA (Electronic System for Travel Authorization).
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Access to health and education services
Golden Visa holders and their families have access to Portugal’s public health system, which charges very low prices for its use. In addition, they can enroll their children in Portuguese public schools and universities.
Tax benefits
Another advantage of the Golden Visa is the tax exemption on income earned outside Portugal during the first ten years of residence. Dividends received from investment funds are exempt from Corporate Income Tax (IRC) for non-residents.
Family reunification
When applying for the Golden Visa, the investor can include family members in the application, such as spouse, dependent children, and dependent parents and parents-in-law. In other words, all your dependents can move to Portugal legally, providing security and stability for your family.
Style and quality of life
Much is said about the quality of life in Portugal, as the country has a relatively low cost of living compared to other European countries, a pleasant climate and a rich cultural heritage to pass on to future generations.
Now, the most important point for most investors who want to bring their family to Portugal is safety, which is much greater than in many USA cities. The peace of mind of living in a safe country is priceless.
Procedures for the Golden Visa with investment funds
Now that you have the benefits in mind and are thinking more about the idea, here’s the short sequence of events for obtaining the Golden Visa by investing in venture capital funds.
First, the investor must select an approved investment fund and invest at least €500,000.
After making the investment, the investor must submit an initial online application, which includes submitting financial and personal documentation, such as passports and proof of investment.
After preliminary approval, the investor and their family must attend a face-to-face session to collect biometric data.
Once the Golden Visa has been granted, it must be renewed every two years, presenting updated criminal records and proof of minimum residence in Portugal.
After five years of renewing your Golden Visa and maintaining your investment, you can choose to apply for permanent residency or Portuguese citizenship and go through the relevant process, which also involves submitting documents and meeting certain requirements.
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Risk and return analysis
Investing in venture capital funds, as the name suggests, involves certain risks, such as market volatility and the performance of the underlying assets. However, these funds also offer potentially high returns.
That’s why risk and return analysis should be carried out considering factors such as the fund’s strategy, performance history and asset management.
Get to know the VIDA Investment Fund in Portugal
The VIDA Fund is a venture capital fund focused on hospitality, more specifically on the acquisition and revitalization of undervalued hospitality companies, transforming these assets into high-quality, high-return operations.
The fund’s management uses an integrated owner/operator approach, ensuring a comprehensive strategy from acquisition to operation. As a result, it is a fund that stands out in the Portuguese market and is eligible for the Golden Visa program.
Investment strategy and focus sectors
As mentioned above, the VIDA Fund’s strategy focuses on acquiring hotel assets that are undervalued or in financial difficulty. After acquisition, these assets are repositioned and transformed into hotels, apart-hotels and apartments with high-quality services. The fund’s focus is to maximize returns by optimizing operations and repositioning assets to increase their market value.
Performance and management history
The VIDA Fund’s performance track record is proven, with a projected internal rate of return (IRR) of 10% to 12% per year. The fund’s management is made up of experienced professionals in the hospitality and investment sectors, ensuring efficient and strategic asset management. The fund aims for a cash multiple of 2x over seven years.
Why is the VIDA Fund an attractive option for Golden Visa?
The answer lies precisely in its focused strategy and return potential. In addition to the financial benefits, the fund offers the possibility of investing in tangible, high-quality assets in the hospitality sector in Portugal, which is a growing market.
And as if making an investment through a trusted company wasn’t enough, eligibility for the Golden Visa adds significant value, allowing investors and their families to take advantage of the benefits of residency and citizenship in Portugal, which you’ve already seen.
Examples of assets in the VIDA Fund portfolio
The VIDA Fund portfolio includes assets such as “Villas d’Agua”, a seaside resort in the Algarve, and “Riviera”, a luxury resort in the historic area of Gaia, in Porto. Both projects involve transforming poorly managed properties into high-performance operations with luxury amenities such as restaurants, bars, spas and wellness areas.
One of the assets of the VIDA Fund Portugal – Villas d’Agua Algarve
If you’d like to find out more about investment funds in Portugal and the VIDA Fund to start planning your next investment in Europe, we’re on hand to guide you along the right path.
