Shariah Compliant Investments Within the Portuguese Golden Visa
Understanding Shariah-Compliant Investments
Shariah-compliant investments adhere to Islamic religious laws, known as Sharia, which govern various aspects of life for Muslims, including financial practices. As explained by Clay Halton in Investopedia, Sharia provides Muslims with principles and guidelines to navigate important life decisions, encompassing both finance and investments.
When engaging in Shariah-compliant investing, the focus extends beyond financial returns to include ethics and morality. Often referred to as socially responsible investing, it requires compliance with Islamic principles, as emphasized by Good Finance.
Shariah-Compliant Investing Through Portuguese Residency
One favored option among our clients is the Portuguese Residency by Investment, particularly the €500,000 investment in a private equity fund. This has been tailored to align with Shariah principles through consultation with scholars, making use of Class A1 shares based on Sukuk al-Ijarah principles. Here, fixed returns are offered for limited investment, aligning with ethical standards.
Thomson Reuters’ Practical Law Glossary explains a sukuk al-ijara transaction as follows:
The entity seeking capital sells assets to a special purpose vehicle (SPV).
The SPV finances the asset purchase through sukuk issuance proceeds.
The SPV holds assets in trust, granting sukuk holders proportional ownership.
Assets are leased back to the originator, with lease payments used to remunerate sukuk holders.
Simultaneously, Class A2 shares operate under the Musharakah principle. This involves shared profits and losses after five years, a common practice in Islamic banking. As defined by the Institute of Islamic Banking and Insurance, Musharakah entails an agreement where funds from an Islamic bank and the enterprise are pooled, allowing all capital providers managerial participation, although not mandated, and distributing profits as per predetermined ratios, while losses align with each partner’s investment.
Making the Portuguese Golden Visa Your Next Shariah-Compliant Investment
The Portuguese Golden Visa is emerging as a prime Shariah-compliant investment opportunity, offering benefits such as unrestricted travel within the Schengen area and eligibility for a Portuguese passport after five years of residency. Contact us today to explore how you can secure a Portuguese Golden Visa as part of your investment strategy.