Visa & Finance
June 4, 2025
Portugal’s Golden Visa programme continues to be the most attractive residency-by-investment option internationally. It offers access to a high quality of life, freedom to travel throughout the EU Schengen Area, and a pathway to apply for permanent dual citizenship and an EU passport after five years.
The Portugal Golden Visa programme is highly appealing to U.S.-connected individuals—that is, U.S. citizens, green card holders, or tax residents.
However, the path to obtaining the Golden Visa through investment in Portuguese alternative investment funds involves a set of U.S.-specific considerations that are especially important for U.S. taxpayers to understand.
The Fund-Based Route to Portugal’s Golden Visa Residency by Investment
As of recent legislative changes, Portugal no longer allows Golden Visa investments through direct or indirect real estate purchases.
One of the most accessible and popular options is to invest in one of over 50 qualified Portuguese alternative investment funds, typically private equity or open funds that invest in Portugal’s publicly listed companies and/or bonds.
These funds are regulated by the Portuguese Securities Market Commission (CMVM), and the minimum investment required is €500,000. Investors must hold the investment for at least five years and are only required to spend seven days per year in Portugal to maintain their residency status.
Most U.S. investors typically invest for seven years, as they need to hold the Golden Visa residency for over five years while they apply for permanent citizenship and secure the EU passport for the relevant family members on the application.
Tax Considerations for Portugal Golden Visa for U.S.-connected Families
U.S.-connected investors must be aware of specific tax and compliance challenges.
Chief among these challenges is the treatment of these foreign funds under U.S. tax law, often referred to as Passive Foreign Investment Companies (PFICs) by the Internal Revenue Service (IRS).
PFICs can create tax consequences, especially if the investor is unable to make specific tax elections. This can be managed by ensuring the Portuguese alternative investment fund has QEF (Qualified Electing Fund) compliant language in its annual reporting to U.S. investors.
It is not a tax requirement for the Portuguese authorities, and therefore, it is important to check with Portugal Pathways and cross-border tax experts who can check that the relevant funds use QEF compliant language with the reporting for the annual tax returns on these Portuguese-held assets for the Golden Visa.
If you do not have this QEF-compliant reporting, any gain or distribution from an alternative investment fund in Portugal could be taxed at progressive rates on the U.S. tax side, and an additional interest charge is applied.
This is crucial to check and verify before making any shortlist or direct investment decisions for your Golden Visa residency-by-investment
Paul Stannard, Chairman and Founder of Portugal Pathways and the Portugal Investment Owners Club, said: “It is U.S. people’s responsibility to make annual returns on their worldwide income and assets, and whilst it is not a requirement of the Portuguese authorities, we make it an absolute priority to validate this before any investment considerations are set in motion.”
This QEF-compliant reporting and approach treats income similarly to U.S. mutual funds, potentially resulting in more favourable tax treatment.
Complex Financial Reporting Obligations
American investors are used to contending with extensive financial reporting obligations. Any foreign accounts or investments that collectively exceed $10,000 must be disclosed annually to the U.S. Treasury through the Report of Foreign Bank and Financial Accounts (FBAR).
Separately, the Foreign Account Tax Compliance Act (FATCA) requires disclosure of foreign financial assets if their value exceeds a certain threshold, which begins at $50,000 for single filers residing in the United States.
These forms are mandatory regardless of whether any tax is owed, and failure to file them can result in significant penalties.
Inadequate Documentation from Portuguese Funds
It is important to have cross-border tax advisors who understand U.S. and Portuguese tax law.
Portugal Pathways can facilitate those discussions with the right tax advisors, such as providing a Schedule K-1 or other familiar IRS-compliant forms.
This makes it easier for American taxpayers and their accountants to determine what has been earned or lost in a given tax year, often reducing the overall administrative burden.
Estate Planning Concerns
Estate planning can also be more complicated for U.S.-connected individuals who acquire Portuguese residency and later become full-time residents abroad.
In some cases, heirs may not benefit from the same step-up in cost basis for inherited foreign assets as they would for U.S.-based investments, potentially leading to higher tax liabilities upon inheritance. These cross-border estate issues require careful consideration and planning, especially if the investor intends to reside permanently in Portugal or elsewhere in the European Union.
There is no inheritance or gift tax in Portugal, but again, it is important to have the right professional advisors to manage your estate and assets held in the U.S. and Portugal.
Is the Portugal Golden Visa Alternative Investment Fund Route Still Worth Considering?
Despite these complications, investing in a Portuguese fund for the purposes of securing a Golden Visa can still be a smart and effective strategy for the right individual.
Such funds offer diversified exposure to sectors like Portuguese technology, renewable energy, tourism & hospitality, and media & international events. They do not require the investor to manage property, deal with tenants, or handle the other complications associated with real estate.
Moreover, alternative investment fund-based Golden Visa applications tend to be processed more quickly than those associated with other investment types.
Paul Sheedy, special advisor at the Portugal Future Fund, an alternative investment fund approved for Portugal’s Golden Visa residency-by-investment, said: “We have hundreds of U.S. investors who have invested in the Golden Visa or are considering it and it is really important that they have the QEF-compliant reporting for their U.S. tax returns.
“This is really important to us, and we pride ourselves on ensuring we meet all the requirements to ensure that progressive tax rates are not applied to their Golden Visa investment.
“This creates extra work for the fund managers, but we feel we have a duty to ensure that we make it an easy process for U.S.-connected investors and their families wanting to secure EU dual citizenship and an EU passport after five years through Portugal’s Golden Visa.”
However, U.S. investors must proceed with care. Portugal Pathways can arrange an initial discovery call to discuss your objectives and ensure that the right cross-border tax advisors and immigration lawyers are available to support your family’s Portugal Golden Visa application.
It is also prudent to think about the long-term exit strategy for the investment and how it can be structured to minimise tax consequences at the time of redemption, always bearing in mind that you must maintain the investment in Portugal until you secure your dual citizenship and EU passport, or you will invalidate your Golden Visa.
Ultimately, Portugal’s Golden Visa remains a compelling opportunity, particularly as the country’s fund industry matures and becomes more sophisticated.
For U.S.-connected investors, the key is to approach it with a full understanding of the tax landscape and a carefully developed plan.
The Golden Visa can certainly be a doorway to European residency, but for Americans, it is best opened with legal and financial guidance in hand.
Portugal Pathways is hosting a webinar on 10 June – Securing EU Residency Through Portugal’s Golden Visa. Register now to secure your place and learn more about this unique investment opportunity.
About Portugal Pathways
Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on luxury property, wealth management, and tax optimisation, including post-NHR tax regime planning, as well as private healthcare, IFICI tax incentive applications, money transfers and bespoke relocation solutions to enhance life and investments in Portugal.
About Portugal Future Fund
The Portugal Future Fund strategically invests in key sectors, driving growth and innovation across Portugal. Approved for Portugal’s Golden Visa residency-by-investment, it offers a unique opportunity for impactful and rewarding participation.
About Portugal Investment Owners Club
The Portugal Investment Owners Club, or P Club for short, is a unique investor membership community designed for discerning individuals, families, and organisations committed to exploring and capitalising on life in Portugal and enjoying money-can't-buy experiences and exclusive events.
Disclaimer: The information on the Portugal Pathways and Portugal Investment Owners Club (P Club for short) websites and in email communications is for general informational purposes only and should not be construed as legal, tax, or financial advice. You should consult and check with a qualified professional advisor before relying on any information provided on this website or in email communications. As it relates to investments in Golden Visas or other wealth management solutions offered by regulated and professional advisors, it is important to note that past performance is no guarantee of future returns. Private equities can be highly illiquid and come with risk and should always be under professional independent advice. Golden Visa investments need to be held for 6 to 7 years to allow for permanent citizenship/passport in the EU.
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