On my decision to abandon the Portugal GV search

There are lawyers who do charge per-hour, though not many. This might not be the best plan, though.

GV is definitely not for everyone. And it may well be that this has done you a favor, in that
 you’re frustrated by dealing with bureaucracy, customer-is-not-right, get-it-done-someday-maybe. This will be just a taste of your future life because all of these things are not unique to the GV process alone but probably for all your dealings with Portugal, because that’s just the culture or so I understand it, and being a US person offshore. Don’t think for a second that your real estate in Portugal is going to be so much less hassle either unless you don’t intend to rent it.

Plus yes you are a cash cow. That’s just baked into the process too. After all, you are supposed to be helping the economy of the country


From what I read, I’m surprised you even considered Portugal if you had access to the EU via your wife’s Irish ancestry. I know I wouldn’t have bothered if I had that option.

How do I PM someone on this board?

I haven’t tried but I think you message someone by clicking on their name → Message

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Good point! The Portugal process went on for such a long time that my wife was able to gather and submit her Ireland documentation in the meantime. That said, we are still waiting to hear back from Ireland as to her status but she had excellent documentation of two of her grandparents being Irish citizens. So
 fingers crossed!

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I did not know that. I am going to check out Ireland.

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Thanks for your posting this to the group, it is always good to hear real life experiences.

As someone who works for one of the VC funds (I won’t say which as I don’t think it appropriate to advertise on this group) I do have a different perspective.

Firstly, it makes perfect sense for you to abandon your attempt to get a Portuguese Golden Visa. If your wife is already entitled to Irish citizenship then you don’t need any other Schengen residency or visa and you can live in Portugal at any time.

Secondly, in our experience applicant dissatisfaction arises from two things: a poor lawyer, or; unrealistic expectations.

To deal with the last item first, application for residency/citizenship of any country is time consuming and at times frustrating. I imagine Ireland and Canada are no better. Portugal is probably one of the easier countries in this regard, but “easier” is not the same as “easy”.

The other cause of dissatisfaction is the advisor or lawyer in the process. As in any country, there are good service providers and there are bad service providers. Some people find the process easy and moves smoothly, and is relatively cheap. Others have your experience. We have a database of lawyers who seem to always have satisfied clients, which we share with investors. And we have a database that we do not share of advisors who often seem to have dissatisfied clients.

A last source of dissatisfaction is the banks. Portuguese banks are a problem. They have no service ethic and they have insane (and often nonsensical) compliance requirements. Especially if you are a US person as there are very few Portuguese banks prepared to take US persons, and those are expensive. But once your account is open, it is open and you never have to deal with them again (although you still have to pay fees).
And finally, your comments on funds. I am of course biased in this regard, so please take this from where it comes. But I think there are several misunderstandings in your post.

  1. Regarding the property focused funds. The fees are undoubtedly high when compared to REITS (or even the pure VC funds in Portugal). There is also some regulatory uncertainty around property funds. Property funds as such are not eligible investments for the Golden Visa. VC or private equity funds are eligible investments. Property funds are taxed differently. These “property funds” are structured as VC or private equity funds that invest in companies that invest in property. They then charge fees as VC funds, but operate as REITS (which normally would charge lower fees). This subverts the spirit of the legislation and is also a tax avoidance mechanism (property funds pay higher tax than VC funds). And it also results in the funds being treated differently by the regulator. There is some unhappiness around this in government circles and this may result in the funds having their license category changed by the regulator. It is uncertain what impact this would have on the investors golden visa applications.

  2. With regard to the pure VC funds, these cannot be compared to mutual funds that invest in listed equity. These invest in Venture Capital and their fees are generally very comparable with any VC fund anywhere in the world, including the US. Dealroom is the biggest global database of VC funds and some of these Portuguese funds are regarded as good performers by global standards (the top ranked Portuguese fund manager is ranked as 35th in Europe and the UK )– see https://startupportugal.dealroom.co/investors/f/all_locations/allof_Portugal?prominence=multistage_emea_prominence_2021_unique&sort=multistage_emea_prominence_2021_unique.

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I get what you are saying here, though I would also say that real estate funds were probably a necessary first step, in that people were going to be more willing to go into the funds if they were in real estate - as we all know, there is that “comforting feeling” associated with owning some tangible property, and when you’re talking about a whole new class of asset (VC funds), having them invested in something tangible makes them more palatable.

I would also suggest that they aren’t really so bad in that they’re all dealing in commercial real estate, which is at least reducing pressure on residential real estate, which is the true pain point. (I don’t think Rock counts here - they’re developing property not merely sitting on it and collecting rent; not the same thing at all.)

I can get where .pt.gov would not want to sanction any more real estate based funds. They bloody better not do anything that would affect the status of anyone who’s already invested for GV- that would be akin to breaking promises - sort of to that point you had made in an email about .pt.gov giving with one hand and taking with another. If you’re going to pull the plug on investment, what’s then to say you won’t pull the plug on one later? Besides, it’s not as if the MR of the funds didn’t state exactly what it was they were going to do from the beginning - at least every one I’ve read so far has made it clear they were effectively REITs.

I would tend to think that the correct answer is to let any existing funds run to completion - maybe stop letting them raise capital? - but sanction/accept no new ones. You accept the mistake you made, change course, move forward. That said, I think the market is already starting to correct this for them - there are so many more viable non-REIT alternatives now than there were even 6 months ago, and it seems like not so many new REIT-like ones are being developed.

Very much seconded on the VC fund issue. I have spent time in VC world myself, and while the fees seem usurious to the average US investor, they’re mostly bog-stock normal. A few are charging stupid fees but most are about your expected “2 and 20” or so. VC investing requires a lot of time and effort if you expect to take your money home with you, it’s not liquid, and you are assuming a fair amount of risk.

I’ve noted a lot of folks who sort of want their GV for “free” - “I want the GV, I don’t want to pay any fees, and I don’t want to take any risks” - IMO that’s just a huge ask. Just like wanting there to not be anyone around with their hands out - how come there are all these legal fees and bank fees and gov fees? Because there are. Like anything else you have to step carefully. But (mostly) nothing worth anything is easy.

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Yes, it is sort of a “better be careful what you wish for” situation .

I think the government is very cautious about being perceived as being unreliable wrt the Golden Visa and they will tread very carefully. However, if funds are avoiding the spirit of the law and are not meeting their licensing requirements and mandates (i.e. are acting as property funds and not as VC funds), and are avoiding tax, the government is entitled to say that these funds are no longer qualifying investments, and the buyers failed to perform a basic due diligence.

I imagine the government will probably act by giving the funds notice that they have a certain time period in which to adjust their strategy to meet their license and mandate.

This will mean investors don’t lose their GV, but the funds have to change their strategy and investments from the property type funds which they have marketed themselves as being to the VC/private equity funds that they have applied for licenses as being. Given that many of these fund managers only have property experience, and their investments are illiquid, this will result in losses to investors, but the government cannot be held responsible for the investors not doing their DD and therefore choosing funds without the relevant experience.

I’ll concede your point Gavin, and yeah, you can say some of the funds have exceeded or violated their mandate. However, the optics of such an action as you describe on the government’s part would be horrible. The whole thing around VC funds is brand new. And let’s face it, most GV investors are just not that sophisticated, and worse, they’re foreigners attempting to understand what is going on in a foreign country. Their ability to do DD is at least somewhat limited.

I get that what has happened was not necessarily the government’s intent, but let’s face it, that’s just what happens sometimes. Doing something that will cause a bunch of investors to get shot in the foot does not seem like a really good move. Claiming “investors didn’t do their DD” and doing something that causes a bunch of losses, when most of the funds on the market are doing real estate, is simply NOT going to look good, and IMO going to have a significant impact on the GV programme going forward because again it looks like a broken bargain.

You could make the argument here that CMVM did not do its job in oversight of the funds too. Isn’t that part of due diligence, seeing that they are being regulated by a government regulator in an ostensibly first world country? Not that SEC or FINRA are perfect but speaking as a senior manager of a hedge fund, I know they’re up in our ass all the time on so many different levels. Where was CMVM?

I’d further note that, on the whole, it’s not clear that the flow going into real estate as it is IS causing a ton of damage. It’s mostly been impacting the commercial space, and as MM notes, it is getting a lot of renovation of older spaces done. Whereas the political pressure would I imagine be coming from inflated pricing in the residential market.

So maybe it’s worth curtailing future investment somehow, but forcing existing funds to sell existing investments is just going to hurt everyone. (You could say “ok you can run out these investments but you can’t make any more” and then the funds have to sit on cash because they don’t know what else to do. To say “sell everything and start over” 
ugh.)

Better yet, just classify 'em as REITs and tax them accordingly. That’ll impact returns but not the basic operation of the fund, and avoids screwing the pooch.

I am not sure how you can concede that point.

Per the law allowed investments for GV include " vii. Capital transfer of the amount of 350 thousand Euros, or higher, for the acquisition of units of investment funds or venture capital fund of funds dedicated to the capitalisation of companies, capital injected under the Portuguese legislation, whose maturity, at the moment of the investment, is, at least, of five years and, at least, 60% of the investments is realized in commercial companies with head office in national territory. "

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I think once these properties are on the market, the price will be higher and the locals won’t be able to afford. Therefore, most of these properties will be purchased by foreigners and probably turn into short-term rentals because it usually makes more money than long-term rentals. So, in my opinion, they are not really adding housing to the market.

Well that is pure speculation. I don’t know that legally it is even possible.

Hi,
May I have the contact for your attorney? :slight_smile:

Definitely a speculation from what I’ve seen in other big cities. And, the government shares the blame in this for sure. I don’t know this for certain, but I don’t think there are real limits in Lisbon in terms of how many days a property can operate as a short-term rental. I think the owners just have to register with a government so that they can tax the owners appropriately. But my point was that the new refurbished housing is probably not marketed for the locals and it probably will drive up the average price in the city. Even if the buyers don’t turn the properties into short-term rentals like in Vancouver and L.A. where houses and condos owned by foreigners are sitting empty, still makes owning properties impossible for the average Joe.

thank you for the post
it is very explanatory

@a449fc49c92f562c3cf8 I don’t know Irish citizenship is that good! do they have golden visa in Ireland?

Sorry to hear this ! But glad you share your experience with us.

Hats off on putting this out there for others to see it’s not easy. I’m really surprised you even went through the effort given your wife’s Irish heritage. My wife is a genealogist and we pursued every effort to go the “by descent” route first to save the brain damage of applying for a regular visa. We could have gotten UK visas and passports, but given brexit, we didn’t go this route. Unfortunately the appropriate paperwork wasn’t filed to allow us an Irish visa and passport so UK was the only other option.

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Would you be willing to share the fund that you finally decided on? I have been doing my research and not impressed with many of them. Thanks

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