Portuguese Golden Visa: The Optimal Retirement Plan for US Citizens

C2 Capital Partners
Sponsor

By Dario Montagnese

Retiring abroad is becoming a major trend among US high-net-worth individuals (HNWIs).

Between 2008 and 2021, the number of Americans who received social benefits abroad increased from 307,000 to 450,000, marking a growth rate of 46.5%.

As internal political tensions continue to rise alongside a surge in US inflation so drastic that it has a dedicated Wikipedia page, more American investors are considering spending their golden years in more stable countries that provide greater value for money.

Among the many destinations Americans choose, Portugal rapidly surges toward the top spot. Between 2017 and 2022, the number of American nationals residing in Portugal grew 239%.

Portuguese Golden Visa statistics mirror this trend as US citizens are now the dominant applicant nationality pool under the highly beneficial residency by investment program.

The Portuguese Golden Visa offers US citizens a simplified route to obtain Portuguese residency (and eventually citizenship if they achieve the requirements) through an investment that allows them to diversify their asset base in a stable economy. It is a comprehensive solution that perfectly fits the requirements of US HNWIs, especially those considering retirement abroad.

Retirement planning

Those who want to retire abroad need to consider two main aspects:

• The residency status
• Income

The US government already has a social benefit plan in the shape of its IRA or 401k; a retirement fund that houses money its beneficiaries cannot spend until they reach the age of 65.

However, the IRA and 401k’s regulatory flexibility opens an interesting door of opportunity for US investors. While they cannot withdraw the money, they can invest it, and more interestingly, they can invest it abroad.

This is where the Golden Visa becomes even more enticing. By investing €500,000 from their IRA or 401k into a Golden Visa qualifying fund, Americans can obtain a residency permit, make a profit, and prepare for their retirement before they reach 65 years of age.

By doing so early, Americans can set up their entire retirement plan easily and without any hassle. Suppose an investor does this at the age of 60, for example. In that case, they can obtain the Golden Visa through an IRA or 401k investment and qualify for Portuguese naturalization by the time they reach the age of retirement.

This proactiveness would allow them to obtain Portuguese residency or citizenship without actively committing money from their bank account but instead use funds that are frozen for the next five years.

If they apply for and obtain Portuguese citizenship, this opens yet another door to financial prosperity. By becoming Portuguese citizens and relocating to Portugal to spend their golden years, American HNWIs can then renounce their US citizenship to finally rid themselves of US taxation that follows them around the globe.

The Portuguese passport, which ranks 4th worldwide, is even stronger in terms of global mobility than the US one (which ranks 6th), providing visa-free travel to 191 destinations, two more than that of the US’ 189.

Among the countries a Portuguese passport holder can enter visa-free in the US, meaning former US citizens with Portuguese passports can travel at any time to see their families, check on their business, or just spend time in the US if they are ever homesick.

By combining the Portuguese Golden visa with the flexibility of the US IRA or 401k, American HNWIs can produce the ultimate retirement plan.

Portugal’s moderate government, affordable cost of living, high level of safety, outstanding climate, delicious cuisine, aesthetically stunning cities, and laid-back culture make it the perfect destination for US retirees.

They now also have the perfect route to Portugal.

Navigating the process

Investing abroad is a delicate procedure that requires expert help. The Portuguese Golden Visa is no different, especially for US investors.

US citizens who want to invest in a Portuguese fund must consider issues such as the Foreign Account Tax Compliance Act (FATCA), passive foreign investment company (PFIC) taxation, and more.

Utilizing IRA or 401k funds to invest in a fund also requires following certain steps to ensure best practices.

At C2 Capital Partners, we have extensive experience dealing with US investors who want to obtain a Golden Visa. We provide comprehensive solutions that align with US taxation requirements, and we make the process simple for American investors.

Our global footprint and holistic approach allow us to determine how to best approach any case to maximize our client’s benefits.

We provide American investors with the best solution in Portugal, allowing them to create the optimal retirement plan.

To learn more about the Golden Visa and how you can set up your retirement in Portugal, contact us directly at dario.montagnese@c2capital.pt or through our website.