The Golden Visa is back and very much alive
Since February 2023, when the previous Portuguese government announced the termination of its hugely successful Golden Visa scheme to attract overseas investors, there had been a period of confusion and disappointment that Portugal was closed to residency and citizenship by investment.
However, the Golden Visa is back and very much alive.
Rui Passos ©Chris Graeme, Open Media Group
Rui Passos, founder and senior partner at Lisbon-based law and investments advisory ERG Legal says that although the €500,000 property option is no longer available, the scheme has been reworked to include investments in venture capital (VC) funds which are invested in promising new companies that benefit the Portuguese economy in projects in sectors such as renewable energy, the blue economy, hospitality, sustainable agriculture, innovative technology startups, and healthcare.
“There are multiple VC funds on the market, such as the ActiveCap and TEPPE funds, with investments that qualify for the Golden Visa with minimum investments from as low as €100,000 or €200,000. This enables investors to have the option of spreading their risk by investing in a combination of different funds to make up the total €500,000 required,” explains Rui, who founded his advisory firm back in the 2000s.
It is a win-win situation since an investment of €500,000 in VC funds, where at least 60% of the capital is invested in Portuguese companies, means that investors can now apply for the Golden Visa and get returns on their investments whilst the national economy stands to gain.
Algarve
There is also an option whereby investors can invest in Research and Development (R&D) Investment and company incorporation, or invest in a participation in existing ones. Additionally, the new law allows for eligibility through donations for cultural heritage projects.
Fund investments have become an increasingly popular route to qualify for the Portuguese Golden Visa.
Starting in late 2023, it is now by far the most popular investment option as the existing real estate option is being phased out.
“The new law brought transparency to the market because the funds are regulated, whereas the property option had not been, and the entities that manage the funds are under the supervision of the Portuguese securities and funds market regulator, the CMVM,” explains Rui Passos.
“It also requires external auditors, plus there is a specific requirement in the law stating that investments can be made in a collective investments entity which meets the requirements under Portuguese law, providing it is managed by a Portuguese entity, whereby at least 60% of the total assets are held in Portuguese commercial companies incorporated under Portuguese law,” he adds.
And there are tax incentives too since the fund is tax exempt in terms of the distributed income, whilst the capital gains tax is not 28% as had been the case, but now 10% once the fund is liquidated.
Of course, there has been an impact on the housing market, with a 10% drop in purchases from non-EU buyers in 2023 and 2024 since the changes in the Golden Visa programme were announced, according to Portugal’s National Statistics Institute (INE). On the other hand, investment and VC funds that invest in Portuguese companies saw an avalanche of money from investors, with this route to residency by investment representing 30% of the total in 2023.
Porto
According to data from the Portuguese border service SEF, between January and September, 2023, over €125 million was channelled into investment and VC funds earmarked to capitalise Portuguese companies from Golden Visa investment.
This was a 45.4% increase on 2022 and six times the amount invested in companies in 2019, 2020 and 2021 put together.
Since the new AD government won the elections in March this year, Portugal’s investment programmes have been largely reworked and a new investment law has been constructed, with no small input from Rui Passos who helped architect the new largely investment-fund focused legal framework.
Earlier this year, he held top-level meetings with parliamentary deputies at the Portuguese parliament charged with advising the committee on how to restructure Portugal’s investment programmes which, since initially introduced in 2012, has seen nearly €7 billion of overseas investment flood into the country.
And despite last year’s storm, which ended up being in a teacup, Portugal is anything but closed for investment.
“Now, when you buy something, you really know what you’re buying”, says Rui Passos, emphasising that the Golden Visa programme was not responsible for the housing crisis and the increase in their value in Portugal since the Golden Visa only represented between 0.7% and 1.6% of the total housing market in terms of total sales and cash transactions via the programme.
Portugal’s Golden visa is clearly very much alive. The €500,000 investment in one or more funds means not only investing in innovative companies and projects that support the Portuguese economy to grow, but also to generate healthy levels of investment return. Rui Passos concludes by saying: “The VC fund route opens up new areas for the programme to evolve whilst enabling investments to be channelled into the real economy, helping the country to overcome some of its difficulties.”
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