What is an Investment Fund
Investment Funds are financial products that bring together a group of investors with the aim of jointly investing their money in the financial and capital markets to benefit from the advantages inherent in collective investment. Returns are distributed among the Fund participants in proportion to the amount deposited by each.
Management Company
It is the responsibility of the Management Company to control the investment and allocation of the capital invested in the Fund, attempting to ensure the fulfillment of objectives and interests of the investors. The Management Company will analyze capital market trends and make investments based on the sector, theme, geographical area, etc., in which the Fund intends to operate.
Management Costs
Because there is an entity actively managing the Fund, there is a need to pay for this service. Most charge between 0.5% and 2.0% per year. It is important to check this before investing, as ongoing charges can affect the return on investment.
Advantages of Investing in an Investment Fund
· Ease of investment realization;
· By investing in an Investment Fund, you benefit from the technical knowledge and experience of the managers;
· It is a financially diversified product, thus spreading the risk;
· By investing collectively, investors have greater financial capacity to invest in certain asset classes that would be more difficult to access in the case of individualized investment, while some markets and sectors do not allow individual investment;
· Tax is withheld at the source at the time of redemption. When applicable, investor gains are taxed at 28%, and tax is immediately withheld. Redemption operations and their respective capital gains do not need to be declared in the IRS.
Disadvantages of Investing in an Investment Fund
- Like any type of investment, there are associated risks, including market risk, liquidity risk, etc.
- The fact that it does not invest in an individualizable or fungible asset.
Obligations of Management Companies
Investment Funds are managed by fund management companies and are supervised by the Securities Market Commission (CMVM). Management companies are obliged to comply with reporting obligations about their activity regularly, and in case of bankruptcy, the money invested by investors is secure, and there will be a replacement of the management company by the regulatory entity, thus ensuring the continuity of investment operations.
Investment Funds Eligible for obtaining the Golden Visa in 2024
One of the investment modalities that allows obtaining a residence permit for investment activity (Golden Visa) is the transfer of capital in the amount of €500,000 or more, intended for the acquisition of parts of non-real estate collective investment entities, constituted under Portuguese legislation, whose maturity, at the time of investment, is at least five years, and at least 60% of the value of the investments is realized in commercial companies based in national territory.
Investment Requirements
For the investment to be eligible for the purpose of obtaining a residence permit, it must meet the following requirements cumulatively:
– Minimum investment of €500,000.00;
– The investment cannot be made in real estate funds;
– The fund must have a maturity of at least 5 years at the time of investment; and
– At least 60% of the investment must be realized in companies based in Portugal.
Choosing the Fund for obtaining the Golden Visa
The choice of the Fund can be made following various criteria, including:
1st) Check if it is eligible for obtaining the Golden Visa. For this purpose, the Fund must comply with the legal requirements identified above;
2nd) Understand the type of assets, sector, geographical areas in which the Fund intends to invest;
3rd) Know the people responsible for the Fund and its management and assess their capacity and experience;
4th) Have complete knowledge of all costs associated with subscribing to the Fund;
5th) Inquire about the expected profitability;
6th) Fund characteristics – open, closed, maturity, etc.
In addition to these, it is also advisable to understand that depending on the characteristics of the Fund itself, there may be greater or lesser flexibility for the investor to withdraw the invested capital. Most Funds impose a penalty when the investor wants to withdraw the money invested before the initially designated term, but others do not impose any, leaving the investor the possibility of receiving interest (if any) until that date.
What happens to the Golden Visa in case of partial or total loss
In cases where, instead of a capital gain, the investor has a capital loss, there will be no impact on the process or on the maintenance of the residence card itself.
It is understood that the investor, having made the initial investment, has already fulfilled the requirements for obtaining the Golden Visa, and therefore, any changes or fluctuations in the market will not subtract from their right.
However, the Golden Visa requires that the investment be maintained for at least five years, with the replacement of the Fund in which the initial investment was made only in certain circumstances.
Golden Visa Process in 2024
- 1st Step – Submission of the application on the ARI Portal
The request for the allocation of a residence permit for investors must be made online on the ARI Portal.
At the time of submitting the application on the ARI Portal, a profile of the applicant must be created to which all documents substantiating the requirement for the residence permit are attached, namely:
- Criminal record certificate, valid, certified by the Portuguese diplomatic or consular representation;
- Declaration from a financial institution, certifying the international and effective transfer of capital;
- Documents related to the investment, depending on the investment in question.
Once the application for the allocation of a residence permit is submitted, it is subject to pre-approval analysis. This analysis period can last between one and a half and two years until the application is pre-approved.
Simultaneously with the submission of the Golden Visa application by the main applicant (the investor), the processes of family members can also be submitted, namely:
a) Spouse;
b) Dependent minor or incapacitated children of the applicant;
c) Adopted minors;
d) Adult children dependent on the applicant;
e) Ascendants in the direct line in the 1st degree of the applicant;
f) Younger siblings who are under the guardianship of the applicant.
Fee: €580.31
- 2nd Step – Request for Residence Permit
As soon as the main Applicant is notified of the pre-approval of their residence permit application and as soon as vacancies are made available, the Applicant must schedule their visit to AIMA to submit all the original documentation initially submitted on the ARI Portal and collect biometric data.
- 3rd Step – Approval of the Residence Permit Application
After the submission of all original documents and the collection of biometric data – photograph, fingerprints, and signature – AIMA reanalyzes all the information collected to approve the card issuance.
This reanalysis phase may take between six months and a year. On the day of the appointment at AIMA, in addition to the main applicant, family members can also be present.
After this period and if the process is approved, the applicant will be notified to proceed with the payment of the fees.
Fee: €5798.58
- 4th Step – Residence Permit Issuance
After paying the fee, the residence card will be issued within approximately 90 business days.
Once the Residence Card is assigned, the main applicant and respective family members are subject to compliance with quantitative and temporal requirements. This means that the residence cardholder is obliged to maintain the investment for a minimum period of five years, and is also subject to compliance with minimum periods of stay in national territory:
- In the first year – the residence cardholder must be in Portugal for at least 7 days (consecutive or interpolated).
- Following two-year periods – the residence cardholder must be in Portugal for at least 14 days (consecutive or interpolated).
Thus, on average, the residence cardholder must be in Portugal 7 days per year for a period of 5 years from the date of issuance of their residence card.
Note that family members grouped are subject to compliance with the same minimum periods of stay in Portugal that are established for the main applicant.
Renewals
The residence card is issued for an initial validity of 2 years and is renewable for two more periods of 2 years.
Depending on the situation, the renewal of the residence card may take place automatically or it may be necessary for its holder to travel to Portugal.
Fee: €2899.34
Advantages of the Golden Visa
– Allows circulation in the Schengen Area as a tourist for a period of 90 days without the need for a Schengen visa;
– Access to the National Health Service;
– Allows access to Courts, Education, and the Business Universe;
– Eligibility to obtain Portuguese nationality after 5 years of legal residence in Portugal from the date of submission of the application on the ARI Portal;
– Eligibility to obtain a permanent residence permit after 5 years of legal residence in Portugal.
