Portugal Launches Investigation into Golden Visa Funds with 'Guaranteed Buyback' Agreements

Portugal has initiated an investigation into the market activities of several venture capital funds, following concerns raised by Golden Visa applicants from regions such as North Asia, Southeast Asia, and the Middle East.

This move comes after complaints were filed by local lawyers who are closely connected to the Golden Visa sector.

Some of the venture capital funds under scrutiny have been offering investors what is referred to as a "guaranteed buyback agreement." Under such agreements, visa applicants are promised the full return of their invested capital when the fund reaches maturity, in addition to being granted permanent residency in Portugal.

A "Buyback Agreement" is a contractual arrangement in which the seller commits to repurchasing the property at a predetermined price should a specified event occur within a defined time frame. These agreements are commonly used in real estate transactions, where a homeowner might offer to repurchase the property after a few years at a fixed price.

However, the legality of these agreements when offered by fund managers or third parties is currently unclear. The primary focus of the investigation is whether such agreements align with the laws governing these funds, and whether entities promoting these agreements are in compliance with legal requirements. The legality and regulations surrounding these buyback agreements remain the key issues under debate.

1 Year Since Amendments to the Golden Visa Program

The investigation comes nearly a year after Portugal’s President, Marcelo Rebelo de Sousa, approved the "More Housing" bill in October of last year, which brought significant changes to the country’s Golden Visa Program. The changes were introduced as part of efforts to address the nation’s housing crisis.

One of the most prominent amendments involved the removal of real estate investment options from the Residency by Investment scheme, which is better known as the Golden Visa Program. Previously, foreign investors could qualify for the program by investing €280,000 or more in real estate, making it one of the most popular pathways for obtaining residency. However, other investment options under the program remain available.

Surge in Golden Visa Applications in 2023

Despite ongoing reports linking the EU’s Golden Visa Programs to potential irregularities, foreign interest in the program continues to grow. According to an analysis from the Agency for Integration, Migration, and Asylum (AIMA), there was a notable surge in Golden Visa applications in 2023, largely driven by demand from American investors.

AIMA's data revealed a significant increase in family applications under the Golden Visa scheme, rising from 1,588 family members in 2022 to a total of 2,901 in 2023. Additionally, the number of individual Golden Visa investors saw an increase from 1,281 in 2022 to 1,554 in 2023.

The surge in applications, combined with the ongoing investigation into the legality of guaranteed buyback agreements, underscores the continued complexity and evolution of Portugal’s Golden Visa Program. While the program remains a popular route for foreign investors, the recent developments highlight the need for regulatory clarity and oversight. 

By fLEXI tEAM