Americans are the top investors in Portugal golden visa program. We have compiled important tips to make informed decisions when investing Portugal.
Portugal is a top country to live, invest, study and work in Western Europe. Infact Portugal is picked among the top 10 countries for American expats to live in. Some 5,000 american expats live in Portugal in Lisbon, Porto and Algarve calling Portugal second home.
Attractiveness of Portugal
- Sun, Warm climate and beaches.
- Proximity to North America with excellent flight connections from Lisbon/Porto.
- Safety, low crime with good quality of life.
- Retirement opportunity in Portugal
- Coastal properties are super attractive with sun and sea. Algarve is popular for surfing and outdoor sports
- Portugal as Second home in European shores
- Second citizenship option in EU after 5 years with free movement in schengen
- International schooling and best education system
- World class Healthcare and medical facilities
- Average property prices in Portugal cheaper compared to US cities
- Tax breaks with Non habitual residency scheme
- Attractive to American Crypto investors with tax breaks. Many Property developers accept bitcoin
The American beneficiaries of ARI / Golden Visa are entitled to:
- Residence visa waiver for entering Portugal;
- Living and working in Portugal, on condition that they stay in Portugal for a period of 7 or more days, in the first year, and 14 or more days, in the subsequent years;
- Visa exemption for free movement within the Schengen Area (as EU resident)
- Family reunification;
- Permanent residence status after 5 years
- Portuguese nationality by naturalization after 6 years.
Becoming a Portugal Resident
US citizens can travel to Portugal under the visa waiver agreement which limits stays to 90 days in 180 day period. If you want to stay more than this period, US citizens must apply for long term residency at the immigration office in Portugal. One such route is buying a property will automatically entitle you to golden visa residency issued for 1-3 years depending on the investment made. From 2026, US citizens will be subjected to ETIAS electronic authorization to enter Portugal.
Social Security
There is an agreement between the United States and Portugal became effective August 1, 1989, to improve social security protection for people who work or have worked in both countries. For Portugal, the agreement covers the laws governing benefits paid on account of old-age, disability, and death under the different schemes governing social insurance in Portugal.
Reporting & Compliance
Americans applying for Portugal must file (and potentially pay) federal US taxes.
Bank Account – You must open a bank account (legal requirement) and get tax number in Portugal before you apply for golden visa. The Custodian bank must be FATCA compliant bank in Portugal
Foreign Bank Account Report (FBAR): Mandatory for expats with over $10,000 cumulatively across foreign financial accounts. Statement of Specified Foreign Assets (Form 8938): Mandatory for expats whose foreign financial holdings exceed $200,000 on the last day of — or $300,000 at any point during — the tax year
FATCA – Be sure the Portuguese bank you open an account at is FATCA compliant and that they can provide custodian services to US investors.
PFIC – File IRS form 8621 annually starting from the first year of investment; otherwise, you will likely be subject to high-interest penalties. It’s highly recommended to use a qualified expert for this. Must for U.S. person that is a direct or indirect shareholder of a passive foreign investment company (PFIC)
It’s best to do the QEF election in the first year and annually after that. (It’s possible to make the election in a subsequent investment year, but it becomes more complicated). Ask if the fund provides a PFIC annual statement—for it to be valid, the statement needs to be issued by the PFIC and signed by the authorized representative.
401k Transfers – If you invest in golden visa through self directed IRA be careful IRS penalty, prohibited transactions and premature withdrawal before 59 1/2
Taxation
As a US citizen, you’re always liable for US tax on your global income, regardless of your Portuguese residency. You become a Portuguese tax resident if you spend over 183 days in Portugal or have your primary home there.
Portugal and US have double taxation agreement. Double Taxation Treaty: helps by allowing you to claim credits in the US for taxes paid in Portugal (or vice versa), but it’s not a perfect solution.
- Foreign Tax Credits (FTCs): You can use taxes paid in Portugal to reduce your US tax bill on the same income, avoiding double payment on that income.
- Foreign Earned Income Exclusion (FEIE): May exclude some foreign earned income from US taxes.
- Nationality-Based Taxation: The treaty has specific rules for US citizens, potentially allowing Portugal to tax US-source security income, requiring careful credit claims.
Please seek professional advice from a cross border tax expert or CPA
