Part 2: How to get paid to acquire a European Passport

Of all the Citizenship by Investment programs, one of the most user friendly and accessible is the Portuguese Golden Visa program. The program provides an instant residency upon fulfillment of the investment or donation requirements and that residency card grants you the ability to live, work and retire in Portugal as well as unlimited freedom of movement in the Schengen zone comprising 26 countries throughout Europe.

For most people, the Portuguese Golden Visa is all they need to enjoy as little or as much time that they want to spend in Europe because the minimum residency requirement to maintain your Golden Visa status is only one week per year. After five years on the Golden Visa status an individual can then apply for permanent residence (the equivalent of the US green card) and simultaneously apply for Portuguese citizenship, thereby obtaining one of the top rated passports in the world.

The best part of the Portuguese Golden Visa is that it does provide international investors with a real opportunity to make money from the investment process, meaning you can actually get PAID to become a European Citizen.

And while most newsletters and magazine articles focus only on the €500,000 real estate option (which can be reduced to €400,000, €350,000 and even as low as €280,000 and is by far the method most people choose for the Golden Visa process), the incentive law lays out a number of other qualifying options, beyond real estate, that foreign investors are only now starting to explore.

For those with sufficient resources and a low appetite for risk, the law allows a foreign investor to simply open a Portuguese bank or brokerage account and deposit €1 million euros. That’s not very glamours and with rates at historic lows, you won’t earn much on a CD but it is a fast and easy way to obtain residency and citizenship. 

The highest CD rate available as if this writing, for example, was 1.4 percent. While very low as an investment return, an €80,000 gain (less applicable tax) over five years certainly beats the zero interest rate bonds issued by countries like St. Lucia and Bulgaria for similar periods. 

The law doesn’t require you to place your money in a CD, however, it simply allows for it. That means you could also place your Portuguese domiciled investment portfolio in a variety of stocks, bonds and mutual funds anywhere in the world and your portfolio qualifies you for Golden Visa status.

That means if you had invested €1 million into a brokerage account based in Lisbon and then had that account purchase nothing but US equities such as Amazon or Walmart your portfolio would still qualify you for the Golden Visa.

Furthermore, the Euro is currently trading at the lower end of its trading range vis-à-vis the dollar which means there is also an opportunity for capital appreciation of the €1 million investment portfolio in dollar terms.

Next, for those looking for Portuguese investment returns, the option for mutual funds or venture capital funds based in and focusing on Portuguese investment exists. The minimum investment amount for this type of investment is much lower at €350,000. 

It’s important with this option to have your lawyer do extensive due diligence in the fund itself, not only as to the track record, but also to make sure that the fund’s investment allocation (minimum 60 percent in Portuguese companies) meets the requirements of the Golden Visa law. 

The least applied for option under the Golden Visa Program has been to start a business in Portugal and hire Portuguese employees. There are actually two sub options for business creation. The first requires a capital investment of €350,000 and a minimum of five jobs. 

I’m seeing a number of folks interested in this option who also want to start some kind of franchise business in Portugal. The combination of a popular US franchise acquisition together with €350,000 in capital and five employees (one of which could be yourself) has a high probability of financial success. Personally, I think most US franchise restaurants like a Pizza Hut or Dunkin Doughnuts would do very well in Portugal.

For individuals without €350,000 in investment capital, a second option exists which does not specify any minimum capital requirement. This option, however requires the employment of ten Portuguese workers. For those interested,for example, in any type of company from IT startups to cleaning services, this option could be both profitable as well as help you obtain European Citizenship as long as you manage to stay in business throughout the five year Golden Visa Process.

I’m seeing more entrepreneurs look closely at this option and for those who aren’t entrepreneurs but are willing to bankroll others, the capital structure can be organized in such a way that everyone gets what they want. 

A recent entrepreneurial client, for example, offered to handle all the aspects of this type of investment for another US investor who had neither the time nor inclination to run a business in Portugal. The business plan required €185,000 in capital (far lower than the other Golden Vsa options) to meet the requirements as required by law. 

The best part was the investor didn’t need to have all the money up front but rather could pay it into the company as its start up needs dictated.

The investor put in the funds, took 100% of the share capital and the entrepreneur took day to day management of the business. The entrepreneur also had a profit sharing deal on the business and an option to acquire equity in the business in the future based on profitability metrics. 

This was truly a win win for everyone involved, including the Government of Portugal which achieved job creation and future tax revenues in exchange for a residency card. I personally like this type of win/win arrangement because everyone involved benefits and it meets both the spirit as well as the letter of the law.

Finally, I need to mention there are straight up “donation” options for foreign investors willing to give money into the artistic or scientific arenas. The donation amounts start at €200,000. This might be a viable option for people in high tax rates as these types of donations are generally tax deductible if structured properly. The net after tax cost of these types of donations might be cheaper for some wealthy investors, for example, than the lost opportunity costs of putting €1 million into a low interest rate bank CD.

All of these options make Portugal one of the most interesting and viable country options for obtaining a second residency and citizenship. Having a European residency will allow you in turbulent and uncertain times like the present to continue traveling, living, working, retiring or just spending time in Europe while traditional tourists can not.  

It’s a wonderful plan B or even plan A for those who want Europe to be part of their lifestyle mix and it is one of the best places to actually make money from the residency and citizenship by investment option.