Would it make sense for you, Jordan, Lucas and I to have a zoom call to connect and maybe identify a GV attorney in PT and figure a path?
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I am in the early stages of the GV, but I thought I would add my name to this thread now. I am looking to use a Solo 401k for funding, and I would be ready to invest immediately if it were possible.
Perhaps there is strength in numbers here? Identifying a GV attorney, bank, as well as a fund or other investment that is willing to help sort the process out may be a bit easier if they know there are several interested investors looking to use this method. As I research funds or other investments (such as the Mercan Hotel deal), a legit investment that is willing to work with a Solo401k/SEP IRA investor would be much more attractive to me.
You may have already seen the 2018 article about a US investor who used a Solo 401k to purchase real estate for a Spanish GV. Iāll not link it yet as it is a bit light on details and posted on the Spanish real estate agentās website, but this at least implies it could be possible from an IRS perspective.
Jeff
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If we can make this work, it is a very attractive proposition in that it would avoid the form 8621 reporting requirement for PFICs:
Iām suddenly a lot more interested in seeing if we can make this work, and Iām totally on board with approaching this as a team.
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@nevadaandonward - Thatās correct, but if you are going to invoke an IRA structure, you now have to pay attention to whether UBTI rules apply. I am not saying they do, but they might depending on what the investment actually is. I would suspect this is more of an issue with something like a Mercan project versus one of the VC funds, where thereās something that looks structured like youāre a partial owner of a business and entitled to a share of the business income, vs being handed a dividend. Itās possible that there wonāt be enough UBTI to matter, but Iād be remiss in not mentioning it.
(This is one of those things where good intentions end up hurting - if youāre purchasing using post-tax money, then you want everything structured as flow-through from the underlying business, for tax reasons. If youāre funding pre-tax, the last thing you want is flow-through. This comes up in buying various Canadian unit trusts as well.)
@njnomad IME PT branches of US banks arenāt going to avail you of anything in this, really - banking licenses are per country and the PT branch of Citibank is still a PT bank subject to PT rules. Being a US Citibank customer might help you open the account with the PT bank (or not, often as) but as far as pt.gov is concerned, Citibank US may as well not exist.
Prove me wrong, but I would be VERY surprised if you get around the PT legal entity.
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Oh my, another interesting tax quirkāUBTI! International taxation==bottomless intrigue! Thank you for the guidance; Iāll read up on this.
Would it make sense to jump on a zoom call to discuss and share what we have collectively learned and perhaps debate the pros/cons?
S
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Hi Margaret - Thanks for posting so much information. My husband and I have also been exploring this avenue and have been told the same basic information that you have. It seems that setting up the Self-directed IRA and the LLC on the US side is not going to be too much trouble. But we too are trying to understand the PT side. We have a conversation scheduled with a PT lawyer next week, so hopefully we will learn some new information. To everyone on this thread, we would love to also be included in any joint effort toward figuring out the possibilities and will continue to share anything we learn.
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Thanks to everyone on hereā¦ Iām following with great interest although I have no helpful info to post at the moment. Will share anything I do find in the future and count me in for any group efforts!
Huge thanks to @NJNomad and @rochellegreayer for pioneering this effort, and to @jb4422 for incalculably valuable expert insights. I can barely sleep for the excitement of hearing what happens next. Do please keep us posted!
Iāll second the idea from @sethkgm that we might all enjoy meeting for a conference call to make introductions, build community, and exchange notes.
I welcome you to vote for potential time slots!
- Sunday Oct 4, 6 PM PDT
- Monday Oct 5, 6 PM PDT
- Tuesday Oct 6, noon PDT
- Tuesday Oct 6, 6 PM PDT
- Wednesday Oct 7, noon PDT
- Wednesday Oct 7, 6 PM PDT
- Otherāletās try again with new options
0 voters
So far we have no overlap in our poll votes. Heh. Iāll try again with new options if we donāt converge before Sunday. Let me know if you have guidance about preferred time windows. Iām encouraged that people are voting and expressing interest!
Here is a related question: if we join forces, and we have compatible investment objectives, is there a potential economy of scale (for incorporation fees, tax and legal representation, stature, etc.) launching a single LLC funded by our self-directed IRAs and solo 401Ks? I have no expertise in these matters but I see no obvious obstacle to having multiple shareholders. This might also allow for diversification of investments, e.g. splitting between two or three favored investment funds. Are there risks that I havenāt foreseen?
I intuit that the big question is whether the Portuguese immigration authorities will get the idea and sign off on it as legit. It sounds like theyāre OK with this when the LLC or trust has a single, traceable owner.
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Hi everyone. I have been giving this some thoughtā¦
I have a SDIRA that owns a US LLC. The IRA is the sole member/owner of the US LLC and I (the beneficiary) am just the manager of the US LLC. I have used this LLC to make investments in several countries in Latin America and Europe.
If a Portuguese LLC is required for a GV investment, I wonder if a similar setup could be created? I would want the US LLC to be the single member/corporate owner of a Portuguese LLC and I would be named as the manager. This would allow me to make investment decisions, but the ownership would be by the US LLC and ultimately, my SDIRA.
Any thoughts / comments?
2 Likes
It seems clear that a Portuguese bank account is needed. Is it necessarily the case that both a Portuguese LLC and an American LLC are needed, or might it be possible to get by with just one of those entities? Each layer adds complexity and cost.
Other folks have had difficulty opening the Portuguese bank account with the appropriate naming that keeps things legally tax-advantaged. Iām not clear on whether they were attempting to open the bank account via the LLC or for the SDIRA/solo 401k directly. Other sites offering 401k offshoring services advise that they can open LLCs and bank accounts in various mix-and-match combinations of countries. I mean to inquire about whether they have experience opening a Portuguese bank account for an SDIRA LLC based in any country; that would seem to solve the problem for GV investment.
Another thought related to what @nevadaandonward wrote: can a US LLC get a NIF in Portugal? That would be required in order to open a bank accountā¦
2 Likes
Since there was no overlap of votes in the last poll, letās try again with fewer choices:
- Thursday Oct 8, 6 PM PDT
- Sunday Oct 11, 6 PM PDT
0 voters
I donāt know how to set up a Zoom call; can someone else create a meeting for the appointed hour?
Iām excited to connect with all of you, share experiences, and brainstorm about ideas to make this happen!
[Edit: oops, I accidentally voted only for Thursday. Either day is fine for me.]
Agree, gratitude to the pioneers. I am very interested in the learnings here as well.
Hi - I pay for the extended service for zoom (so we can have a longer meeting if needed) - I can set it up. Will post the links here later today (I canāt do tonight - so if that is what wins out - then someone else will have to set it up).
Rochelle
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Here are the meeting details for zoom on Sunday night.
Rochelle Greayer is inviting you to a scheduled Zoom meeting.
Topic: Portugal Golden Visa/ IRA chat
Time: Oct 11, 2020 06:00 PM Eastern Time (US and Canada)
Join Zoom Meeting
Meeting ID: 812 3416 4330
Passcode: 383432
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Dial by your location
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Meeting ID: 812 3416 4330
Passcode: 383432
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I was just going to post today that I had nothing new, but I see I missed out on the Zoom call. I thought I had notifications turned on, but they are now!
I have had a few conversations with a some of the fund contacts and attended the Mercan webinar today. Iāve been told that using the Solo 401k should be possible, but I was not given any specifics, and none of them mentioned clients that have actually done it. Mercan did state that I just needed a Portuguese company that was 100% owned by me.
Mercan interests me, but I do worry about the UBTI issues raised by @jb4422. It is hard to imagine getting a clear response from the IRS on this in a timely fashion, but could still be a question for a US tax attorney. The VC funds just seem an easier choice at this point, although I would not rule Mercan out completely.
It seems having both a US and PT LLC is the safest option at this point. I was planning on reaching out to both US and PT lawyers next. I have a friend that is about to purchase a GV fund (with non-IRA money), so I was going to start with his contacts unless this group has other suggestions.
Search for āUBTI blocker companyā. There are well-explored solutions for the UBTI problemā¦for a price.