Can You Invest in Portugal’s Golden Visa Through an IRA or 401K?

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Last updated on June 4, 2024 | Est. Reading Time: 2 minutes

For American citizens considering residency in Portugal, the golden visa is one of the most appealing routes to residency. This visa is particularly appealing as it has minimal residency requirements–on the golden visa, permit holders only need to spend an average of seven days per year in Portugal to maintain residency. This is ideal for those that are still working or that aren’t ready to fully move to Portugal just yet. 

However, the challenge with the golden visa is the investment requirement. You might have the €500,000 required, but that investment is likely locked up in tax-efficient savings accounts such as IRAs or 401ks. 

For many people, particularly those still working, the best way to invest in the golden visa would be through a 401k or IRA, without withdrawing in order to do so, as this would avoid hefty tax penalties. But is this possible?

According to Jason Swan from Holborn Assets, “Yes, you can use your IRA or 401k investments to apply for Portugal’s Golden Visa. This approach is a game-changer, especially considering the usual financial burden of tapping into retirement funds prematurely. 

“Traditionally, early withdrawals could incur taxes up to 37% (plus a 10% additional tax burden if you’re under 59.5 years old). However, this innovative strategy, compliant with both IRS regulations and Portuguese laws, has already saved some applicants over 100,000 EUR by avoiding these steep penalties.” 

As well as avoiding penalties, keeping the money inside the savings vehicle would also ensure greater growth, as the example below explains. 

About the Golden Visa

There are a number of ways that applicants can invest in the golden visa program but, as of 2024, the most popular route is investing €500,000 in a fund, such as a venture capital fund. There are now a number of Portuguese funds investing in a variety of sectors including renewable energy, construction, or even wine, with some funds offering diversification across multiple funds. 

Like most visas, the golden visa offers residency in Portugal, which means the right to live in Portugal. After five years of residency – and potentially even less, as of 2024 – it’s possible to apply for citizenship. The requirements are fairly attainable, considering the language requirement is only an A2-level or higher, however applicants should also note the requirement to show ties to Portuguese society. 

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James Cave is the founder of Portugalist and the author of the bestselling book, Moving to Portugal Made Simple. He has visited just about every part of Portugal, including Madeira and all nine islands of the Azores, and lived in several parts of Portugal including Lisbon, the Algarve, and Northern Portugal.

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