How can the Golden Visa program be a tool to grow and expand Portuguese companies overseas?

One thing that may surprise the reader is to start by remembering that the Portuguese investment residency program (the so-called Golden Visa) has, for several years now, eight different investment options.

Essentially, only options related to real estate and investment in mutual funds have benefited from cross-border promotion to the detriment of most of the other options. Consequently, after 10 years of the program with 10,903 residence permits granted to investors from more than 60 different countries, we found that 10,091 of these permits were granted in the real estate investment field.

Without prejudice to a deeper analysis, from the outset we believe that the reason is related to the Portuguese government's inertia in publicizing the program or even due to the lack of incentive for its promotion abroad, forgetting that it was created by them in 2012 with one main goal – to attract foreign investment, aiming to recover from the profound impact of the 2008 economic and financial crisis, which, it should also be remembered, led to the need for Portugal to resort to external financial aid, thus leading to the third intervention of TROIKA in the country.

In 2022, after two years of pandemic (whose economic effects will extend over time), facing an ongoing war in Eastern Europe (with a direct impact on the world's social and economic dynamics) and an escalation of tensions in relations between Asia and America, it is not time for Europe, or Portugal, to ignore the instruments that have proven to have a positive impact on the economy and, in particular, on the daily lives of the people.

So, can the Golden Visa be used as a tool for companies' growth and internationalization?

Without prejudice to the most popular option, through which the investor makes an investment of €500,000 in a Portuguese investment fund dedicated to the capitalization of companies, acquiring the respective participation units and delegating to a licensed management company the search for investment opportunities, negotiation, and management, there is another option that the Portuguese business sector may resort to: the investment of €500,000 to reinforce the share capital of a commercial company headquartered in Portugal, already established, with the creation or maintenance of jobs, with a minimum of five permanent, and for a minimum period of three years.

This option, legally foreseen in the law that regulates this program, has, to date, 6 processes already successfully concluded, that is, 6 Portuguese companies that have already benefited from the capital and know-how of a foreign investor-partner who 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). On the contrary, micro-enterprises (less than 10 workers) represent 96% of the Portuguese sector, 40% of the jobs, and around 20% of GDP. Incomprehensibly, it is also the business segment with the least access to incentive measures or direct support and with the most difficulties in increasing the business scale due to lack of resources, support, or know-how in terms of management and international market, remembering here that, according to the most recent study from Francisco Manuel dos Santos Foundation, only a third of the managers have higher education.

Another curious fact is that there are around 400 centennial companies in the Portuguese business fabric, 66% of which are also micro-enterprises (Informa D&B data).

With the privileged situation that Portugal offers at the geopolitical level, access to natural resources, political and social stability, high levels of security and quality of life, it is time to put aside the prejudice regarding this program, review what has to be reviewed (namely in terms of processing, transparency and tax impact in general) and create mechanisms for dissemination and cross-business accessible opportunities between international investors and Portuguese entrepreneurs with the view of generating wealth, economic and social development and creating well-remunerated jobs through efficient, immediate and non-bureaucratic investment processes.

Will this work? Well, it is certainly not a coincidence that the financial autonomy of Portuguese companies increased by 40.3% in the fourth quarter of 2021 (according to the calculation made by the Bank of Portugal), and the exponential growth that occurred since 2020 in the acquisition, by foreign investors, of participation units in Portuguese investment funds that were able to gather significant volumes of capital exclusively aimed for companies’ capitalization, under the Golden Visa program.

Sara Sousa Rebolo
Partner at
Caiado Guerreiro

+351 937 855 962