15th August 2022
Investing directly into Portuguese companies under Portugal’s Golden Visa/ARI programme.

Christina Hippisley from the Portuguese Chamber of Commerce in the UK explains how foreign investors can also use the programme to make direct investments into fast-growing Portuguese companies.


Many investors are still unaware that Portugal’s  residency by investment programme (the so-called Golden Visa or ARI) has, for several years now, offered eight different investment options.


To date, investing in Portuguese real estate and Portuguese-based mutual funds have been the best publicised,  to the detriment of most of the other options.


Consequently, after 10 years of the programme and  with 10,903 residence permits granted to investors from more than 60 different countries until the end of 2021, an analysis of the permits shows that the vast majority, or 10,091 permits,  were linked to the direct purchase of real estate in Portugal.


The explanation may lie in the Portuguese government’s relative inertia in terms of widely publicizing the programme’s different investment options at home and abroad.


Indeed the Golden Visa/ARI programme was created by the government in 2012 with one main goal – to attract foreign investment, in order to help Portugal recover from the profound impact of the 2008 economic and financial crisis – which affected the country so badly that Portugal had to resort to EU financial aid, thus leading to the third intervention of  the EU ‘TROIKA’ in Portugal’s government.


In 2022, after two years of pandemic (whose economic effects are yet to be wholly felt), facing an ongoing war in Eastern Europe (which is profoundly affecting the supply chains and energy security of the West) and with an escalation of tension  in relations between Asia and America, now is not the time for Portugal to ignore the instruments that are proven to have had a positive impact on the economy and, in particular, on the daily lives of the people.


So, how can the Golden Visa be used as a tool to help Portuguese companies’ growth and internationalization?


The most popular option is one in which the investor puts up to €500,000 into a regulated Portuguese investment fund which then injects funds into fast growing companies.  The funds in turn delegate to a licensed management company the search for investment opportunities, the negotiation, and the management.


However, another option under the Golden Visa programme is that the investor can directly invest €500,000 into the share capital of a commercial company headquartered in Portugal, – one which is already established, with at least five permanent staff already in place, for a minimum of three years.


To date, only six of these direct investments have been concluded under the Golden Visa programme.


That is, six Portuguese companies have already benefited from the capital and know-how of a foreign investor-partner who has contributed to the reinforcement of its commercial capabilities in an increasingly globalized and competitive market.


According to the latest available statistics (PORDATA) there are around 1,317,000 companies in Portugal, of which only around 1,300 are considered “big companies” (companies with more than 250 active workers and a turnover of more than 50 million euros per year).


At the other end of the scale,  micro-enterprises (less than 10 workers) represent 96% of the Portuguese sector, 40% of the jobs, and around 20% of GDP. Bizarrely, this is also the business segment with the least access to incentive measures or direct support and the sector with the most difficulties in scaling up, due to a lack of resources or know-how in terms of management and internationalisation.  Remember too that, according to the most recent study from the Francisco Manuel dos Santos Foundation, only a third of micro-company managers have a higher education.


Another curious fact is that there are around 400 one-hundred-year old  companies in Portugal, 66% of which are also micro-enterprises (Informa D&B data).


Given the attractiveness of Portugal at the geopolitical level, its access to natural resources, its political and social stability, and its high levels of security and quality of life, is it not time to put aside any pre-existing bias regarding this programme, and review how to make this process more appealing for investors, especially in terms of processing, transparency and tax impact in general?


Surely we should create mechanisms to promote cross-border connections between international investors and Portuguese entrepreneurs in order to generate wealth and economic and social development, while creating well-paid jobs through efficient, direct and non-bureaucratic investment processes.


Will this work?


Well, it’s no coincidence that the financial autonomy of Portuguese companies increased by 40.3% in the fourth quarter of 2021 (according to the calculations made by the Bank of Portugal).  It is notable too that since 2020 there has been exponential growth in the acquisition, by foreign investors, of participation units in Portuguese investment funds – so much so that many funds have already raised significant volumes of capital.


For more information on the Golden Visa programme and Portugal’s investment funds please email  info@portuguese-chamber.org.uk or see www.movingtoportugal.org.uk for our next live events in the UK


(With thanks to Sara Sousa Rebolo, Partner at Caiado Guerreiro for much of the information in this article)