Portugal: the Golden Visa refocused on investment funds

Portugal granted a residence authorisation to foreigners making an investment above a threshold, and the most widely used route was the purchase of real estate.

This route was abolished amid intense public debate over housing in Lisbon and Porto, where foreign demand was blamed.

The investment threshold giving access to the residence authorisation for investors is about €500,000¹ for the remaining routes, including subscription to units in approved investment funds.

We do not publish the list of remaining routes, the conditions specific to eligible funds or the presence requirements attached to the permit: they have been amended several times and we have not been able to verify the version in force in an official Portuguese source.

This caveat matters. The Portuguese scheme has undergone more reforms than any other in Europe, and documentation only a few months old may be out of date.

Holders of a permit obtained under the former real estate route keep their authorisation and its renewal, as the reform only targets new applications. This is the general rule for such schemes, and it creates a premium for early entrants that successive reforms reinforce.

Moving from real estate to a fund changes the nature of the asset. A property is a tangible asset that can be occupied and whose value can be observed; a fund unit is a financial asset whose value depends on management and whose liquidity depends on the fund's rules.

Exit conditions are therefore the central point: lock-up period, redemption frequency, management and performance fees. These factors determine the real cost of the residence permit obtained.

An investor must also distinguish the quality of a fund from its eligibility for the scheme. An approved fund is not necessarily a good fund, and regulatory eligibility says nothing about performance.

This is the same distinction as the one that applies to threshold-driven real estate: part of the offering is designed to meet an administrative requirement, not to perform.

The residence permit does not confer Portuguese tax residency, which requires, among other things, presence of more than more than 183 days² in the year.

Nor does it give access to the preferential tax regime, which has its own conditions: a special rate of 20%³ on eligible employment and business income for 10 years⁴, subject to from 5 years⁵ of prior non-residence.

These two schemes are independent: one grants a right of residence in exchange for an investment, the other a reduced rate in exchange for a qualifying activity. Confusing them leads to poorly constructed plans.

For a French national, residency by investment is in any case pointless: freedom of movement allows them to live in Portugal without conditions. The scheme is aimed at third-country nationals.

Finally, the ordinary Portuguese scale ranges from from 12.5%⁶ to 48%⁷, and dividends are subject to a final withholding rate of 28%⁸.

• The real estate route was abolished amid a debate on housing.
• A fund's exit conditions determine the real cost of the permit obtained.
• A fund's regulatory eligibility says nothing about its performance.
• The permit confers neither tax residency nor access to the preferential regime.
• A French national does not need it: freedom of movement already opens the country to them.

The broader lesson goes beyond Portugal. When a residency by investment scheme is reformed under public pressure over housing, it is not the threshold that moves but the nature of the eligible asset. Investors already committed keep their permit; those who follow buy something else, with an entirely different risk.