Legal Residence in Portugal: Investment Fund or Real Estate?

What is the most affordable and the simplest way of acquiring a golden visa to Portugal? Below we compare two popular routes to legal residency in the country: putting money in an investment fund and purchasing real estate in Portugal.

As the required investment amounts are going to grow beginning January 1, 2022, investors from all over the world haste to file applications for Portuguese golden visas.

While some foreign investors prefer to purchase real estate in Portugal, others choose investment funds. Both investment options have their advantages and disadvantages. Below we discuss the pluses and minuses of each option hoping to help you make an informed decision.


The investment fund option allows bringing less money and making a smaller profit

If you choose to put money in an investment fund, you will be able to avoid certain costs involved in purchasing real estate in Portugal such as the property right transfer fee, the stamp duty, and so on.

Besides, you will not have to buy furniture and other household items that you do have to buy when purchasing a house or an apartment in Portugal. You have to make an investment of 350,000 euros, pay the immigration agent’s fee, and cover some negligible administrative costs.

The minimum required amount of investment in an investment fund is going to increase to 500,000 euros on January 1, 2022. You have to hurry if you would like to use this immigration route!

If you do not become a tax resident of Portugal, you will not have to pay the profit/ capital gains tax when receiving dividends from the investment fund. However, a fiscal resident will have to pay a 28% / 25% withholding tax on the profits obtained from long-term lease. If you let your property on a short-term lease, the tax rates are going to be even higher.

Regardless of the country of your tax residence, you will have to pay the real estate tax and the capital gains tax if the Portuguese property that belongs to you is sold. The tax rate is 28% for natural persons. In case you reinvest the capital gains in another piece of Portuguese property, the tax rate can be reduced.


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The rates of the real estate tax are between 0.3% and 0.45% in Portugal. These rates are applicable to real property located in the cities while the rate for property in the rural areas is 0.8%.

The table below shows the average amounts of investments that you will have to make if you apply for a golden visa to the country.

 Real estate purchase *Investment fund
Minimum required investment amount€ 350,000 (property in a city more than 30 years old requiring repairs)€ 500,000 (livable property)€ 350,000
Fees and taxes   
Property right transfer tax **0% — 10%0% — 10%0%
  Stamp duty0.8%0.8%0%
  Registration fee0.20% — 1.20%0.20% — 1.20%0%
Property management costs   
  Realtor’s commission3% — 5% (+23% VAT)3% — 5% (+23% VAT)0%
  Efficient management fee0%0%35% of the profit ***
  Management fee0%0%1.5% per year ****
The cost of legal services required by applicants for legal residence in Portugal *****Amounts varyAmounts varyAmounts vary
Total (approximately) € 364,110 — € 409,919€ 520,158 – € 585,598€ 350,000

* If you purchase property in a sparsely populated/ underdeveloped region of Portugal, you will be eligible for a 20% discount (the required investment amounts are € 280,000 and € 400,000, correspondingly)

** The rate of the property right transfer tax is fixed at 6.5% for property located in cities and at 5% for property in the countryside. The tax rate is between 0% and 6% if the property is going to be lived in. However, if the buyer is a fiscal resident of a low-tax jurisdiction (one that is on the OECD black list), the tax rate is 10%.

*** The efficient management fee varies from one investment fund to another and it is normally between 20% and 50% of the profit that the fund management makes.

**** The management fee varies from one investment fund to another and it is normally between 1% and 2% of the invested amount (paid annually, deducted from the profit).

***** The cost of legal services depends on the law firm that you hire, the number of family members applying for legal residence in Portugal, and some other factors. The financial route to Portuguese residence will not have a bearing on the cost of legal services.

The state duties involved in acquiring legal residence in Portugal are not included in the table above. The duty amounts are the same whichever investment option you choose.

Putting money in an investment fund leaves you carefree 

You have to make the investment in the required amount, pay the administrative fee, and go through other formalities and there you go: you have a legal residence permit in Portugal. If you put money in an investment fund, your investment capital will be under the management of the fund management and you will have nothing to worry about. It is true that an annual management fee is due but its amount is usually much lower than the maintenance costs of the property that you own.

If you would like to earn money by letting your property in Portugal on a lease, you will have to hire a management company that will take care of your house or apartment and find renters for you. The services of such a company will come at a price. Would you make more money if you invest in a fund? It depends.    

Real property in Portugal or an investment fund?

The choice will depend on your personal goals and preferences, of course. If you buy an apartment, for instance, in a large city and let it on a long-term lease, you will thus obtain a stable monthly income of a certain amount. If you invest in a fund, you might be able to earn a lot when the fund sells the property that it owns at a higher price. Real estate prices are growing in Portugal so there is a good chance that you will be able to return your investments pretty soon.

On the other hand, investment funds can be managed more or less efficiently. In some cases, you may find that the flow of dividends is quite unstable. What you have to do is weigh all pros and cons that each investment option has and make an optimal choice.

Expert support to those seeking legal residence in Portugal

The International Wealth team helps investors from different countries acquire foreign citizenship and legal residence. We have helped hundreds of people to obtain Portuguese golden visas. Some of our clients choose to buy property in Portugal while others prefer investing in a fund.

Our specialists in economic immigration, international banking, and foreign investments will be happy to assist you in finding the best route to foreign citizenship/ legal residence. We will provide support to you throughout the application process: from filing the application to obtaining the passport or residence card.  

Please contact us today to learn more about foreign citizenship/ legal residence opportunities!

Below please find the answers to some FAQs related to the Portuguese golden visa program.

What are the financial routes to the Portuguese golden visa?

Foreign nationals wishing to acquire legal residence permits in Portugal have multiple investment options. You can qualify for a golden visa to Portugal if you purchase real estate in the country, join an investment fund, make a bank deposit, create new jobs, invest in a Portuguese-based business venture or scientific research, or make a donation to the cultural heritage fund.

What are the most popular routes to legal residence in Portugal by investment?

The most popular option is purchase of real estate in Portugal. This is not surprising as you can find an affordable piece of property on the coast or in a fascinating ancient town. Foreign investors use their Portuguese property for different purposes: some will live there permanently, others will stay there during their holidays in the country, while others will rent it out, thus obtaining a passive income.

Can I use a bank loan to invest in a Portuguese golden visa?

Of course, you can but only on the condition that the loan comes from a bank outside Portugal. The key requirement of the Portuguese residence-by-investment program is that the investment shall come from abroad. At the same time, if the price of the property that you are buying in Portugal exceeds the required investment amount, you can take out a loan from a Portuguese bank. For instance, if the villa that appeals to you costs 550,000 euros, you can pay 500,000 out of your own pocket and apply for a 50,000-euro mortgage to a local bank.

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