@drlward, we are just finalizing Portugal Opportunities Fundās study for US Investors and have created some unique strategies that will assist you in making the leap forward. If youāre interested, let me know and I will book a meeting with our US Tax expert and he can explain.
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Iād be glad to jump on the call to learn about your innovations and opportunities if you set up a āwebinarā. @tkrunning has been known to send out announcements about events of that sort.
Itās still a bit early in the cycle for me to arrange 1x1 calls with funds; I want to narrow down the field before I take up folksā time directly. Iām aiming to invest in early 2021 to avoid complicating my 2020 taxes.
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Thanks for this. Iām speakign with them next week and will see if I learn anything additional
I have read through much of the information on BlueCrow and watched their video. The BlueCrow interests me because it is conservative and not likely to lose much value based on the property class.
But I am skeptical of this for a number of reasons. Does anyone know if they are buying raw farmland to develop (e.g., plant vines and trees), or they buy already established farms?
Are they planning to sell the farmland during the 5-6 year GV period or does the investor only count on yields from the crops grown and sold?
Its a small company with experience in farming, but what about investment management?
@mmtravelguy From what I gathered it was established farmland. Itād make sense if they were leasebacks to either the original owner or larger ag companies.
Hi William,
Just to let you know that we have made a strategic decision to become FATCA compliant and our staff are going through training on this right now. I donāt know when it will take effect ā we do have to put systems in place ā but hopefully it will be within the next couple of months.
Regards
Gavin
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@gavin3 Thatās great news, thank you for sharing!
Along the same lines, I donāt know whether youāve read through the thread about PFIC, QEF, and Form 8621:
This is another critical requirement for āUS personā investors. Itās different than FATCA and FBAR and all of that. Regrets for the gratuitous complexity and redundancy of these tax compliance requirements! Fortunately, I donāt think that the PFIC-QEF requirement is an insurmountable added burden, and itās a strong selling point to attract American investors.
Thanks for pointing that thread out to me, David, very useful. I believe that this is included in the training our back office team is on, but I will confirm this.
I think now you can see why financial institutions around the world are so reluctant to have US clients ā the IRS requirements are so onerous and so arcane and the penalties for failure to comply are so high!
On an aside, I see that on the 30th of September your wrote āIāve considered owning non-rental property, but I think that has the unfortunate catch of qualifying me as a tax resident of Portugal, and subjecting my worldwide income to Portuguese taxation if Iām, not mistaken.ā I havenāt seen a response to that, possibly I missed it.
I think there are three points to make on this (from the Portuguese perspective, I donāt understand the US perspective):
- Unlike the US, Portugal doesnāt classify you as a tax resident unless you actually do live there for most of the year (over half the days) or ask to be a tax resident. Owning property does mean you have to report your Portuguese income even if not tax resident, but you are only taxed on this Portuguese income (and this should be covered by the Double Tax Treaty with the US so can be deducted from tax paid in the US). If you are not renting out the property and earning income on it you will not be paying any tax in Portugal and the tax return is very simple and straightforward.
- If you become a NHR of Portugal you pay no tax on global income and only 20% on Portuguese income. HOWEVER, your US tax obligations will remain unless you are non resident in the US, which I believe can be problematic ā the IRS I am told is reluctant for citizens to give up their tax residency.
- Portuguese tax law and filing is (by US standards) unbelievably simply and straightforward ā unless your affairs are very complicated it shouldnāt take you more than an hour to file by yourself (with no advice). And there is tolerance for mistakes (where it is clear there was no intent to defraud) so penalties are generally low (or more often non existent) if you get it wrong. However, I would recommend you still get advice the first time you do this, just to make sure you learn the ropes.
Despite the above, fund investment is still generally simpler and cheaper in all regards, with no capital gains tax and only 10% dividends tax. And you avoid having to pay rates and levies, etc, which do add up.
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Indeed, that is very good to hear! Iād be very interested in learning more about the funds that will be FATCA (and hopefully PFIC) compliant. Can you send me information if I send you my email address?
Thanks @gavin3, great reply & info!
Agreement and appreciation on many counts:
- Tax compliance for US persons, and the worldwide financial firms they invest with, is absurdly complex, and often spitefully punitive for expats especially (and donāt even get me started on California!) I completely understand why foreign firms want nothing to do with US persons.
- If you make an innocent mistake on your US / California taxes, maybe theyāll be merciful enough not to throw you in jailā¦ As for being spared from penalties and interest? hahahaha
- GV Fund investing seems like the simpler option indeed, assuming that the QEF paperwork is supplied
- Itās pleasing to know that tax compliance in Portugal is a breeze! Thatās good advice to get help the first time.
- Thanks to you and your colleagues for investing in the chore of supporting US persons as investors in your fund(s)!
For perspective, the only way for a US citizen to avoid paying US taxes on worldwide income is to become a long-term resident of Puerto Rico (complicated, no panacea) or renounce citizenship. And even then, weāre stuck with US indiciaāplace of birthāin our foreign passports forever, which evidently still scares off a lot of financial institutions.
Unfortunately Americans donāt get much benefit from the tax-advantaged structure of these funds. America taxes us on our worldwide income and gains, yet typically credits foreign taxes paid so long as they meet certain criteria. I feel like Iād be doing more good in the world paying taxes to Portugal than to the USA.
Along with @william.reichert, Iād be pleased to hear more about your investment opportunities. I think itās OK to post documents or links here. I think itās only direct contact information that is off-limits in public postings. Folks will be interested in hearing about the investment goals, management team and experience, fee and compensation structure, subscription interval, terms for adding new subscribers in subsequent years, planned duration of operation / liquidation plan if closed-ended, expected liquidity and use of leverage, extra perks (e.g. one fund has a high setup fee but includes GV processing), and thatās all I can think of.
Hi William and David (and anyone else interested).
Firstly, Thomas, please remove this post if it contravenes any rules.
Secondly, you can check out our website: www.portugalgateway.com for details on our fund, and Thomas also has allowed information on Nomadgate on the GV funds section - it may be best to first look there and contact us via Thomas just to make sure I am not abusing Thomasās hospitality and site rules in this post.
Finally, you can email [email address removed by moderator, please contact other users via private message] with your contact details and questions and I will reply: please note in that email that you saw this on Nomadgate so that I can let Thomas know. I would rather do that then post here, just to ensure I am not breaking site rules.
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david,
I updated the spreadsheet to indicate the two funds I have heard of that have stated they will issue an annual PFIC statement, those are Blue Crow and Blackbull. If anyone knows of any others, or if this info is incorrect let me know.
Any fund that takes US investors has to be FATCA compliant or they will get sanctioned by the US Treasury.
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The majority of the largest or well established fund managers, as well as the banks used to dealing with US clients/GV investors are aware of FATCA / PFIC/ QEF issues and will provide you with the relevant information and forms. Most of them are being assisted by one of the Big4 audit/accounting firms.
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After reviewing, I had a few questions and wonder if anyone who has had talked with the guys has some perspective on these points, but also generally as they apply to other GV funds
I had a call with Black Bull yesterday. They came across as a reasonable fund which is not promising a significantly higher returns. In fact their returns are among the lowest at 4% per annum. The real estate folks behind this fund are Stable Core.
Does any one who about Stable Core? I tried a google search but there is no website or reference to this company anywhere. This makes me skeptical
I talked to Artur @ Rock for a while, a while ago. My answers are a blend of having talked to him, and from dealing with hedge funds in general.
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Yes in theory thatās possible. This is normal and itās generally not a concern. Remember that thereās two separate entities here - the manager and the fund. The fund gives a mandate to the manager such that the manager does have full control of all investment choices. The manager does not have to have control of the fund by shares - it has control because the fund has voted it to have control. The fund can theoretically vote to replace the manager, sure, but if that happens then, well, that sort of defeats the point of investing in the fund, yeah?
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Management fees are a total gotcha across the board, always everywhere, and you should be concerned. Itās not just the stated numbers either. Some funds are structured such that the management can pass through the managerās expenses too - imagine how well that can go, huh? Yet maybe itās part and parcel. (One fund I am in, ALL expenses are passed through. This sounds terrible. But the manager only gets paid anything if the fund makes > 10% after expenses. So it works out.)
You gotta scrutinize, and being an unsuspecting unsophisticated investor is always a bad idea, GV or not. Youāre asking the right questions, and thatās good.
Ideally you would see the managers invested in the fund, as youād think (though itās certainly not a given). And the management fee applies to them too.
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No. The original investors can get diluted on a capital call they donāt participate in, of course.
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This is an interesting point and I discussed it with them. This answer is based on what he said, and my own knowledge.
Itās actually quite simple. The fact that you can get a 0% easy mortgage doesnāt mean that they can get a 0% easy mortgage, especially at any scale. One person with one mortgage, easy to evaluate risk. One company with 20 mortgagesā¦ complicated risk profileā¦ higher interest rates. And capitalās always more expensive for small businesses than large businesses.
Also, construction loans are a different beast. If you have to deal with the gubmint or with a bank, thereās going to be strings and conditions; it takes longer to do deals because of all of the paperwork and assessments and blababla, thereās typically milestones to meet for construction loans and thatās more hassleā¦ contractors donāt want the risk of having to wait for your bank to pay the next installment. Cash in the bankās simply way easier. Thatās worth something.
And yes, A/P can just walk away if it goes bust, sure. That saidā¦
In a way, I find these kind of funds (BC fits here too) a little more trustworthy, because they have local investors, not just GV. A GV investorā¦ are you really willing to go through the trouble of hiring lawyers in foreign countries to go after a fund? Even a class-action - imagine trying to put one together. But Bluecrow has those original Portuguese brothers with several million invested. If they have several million invested, they probably have another mil with which to hire lawyersā¦ who will probably quickly call the GV investors and offer to represent them too (more legal fees)ā¦ Think about it the right way, thatās a shotgun muzzle resting lightly against their temple, and BC isnāt so big that they can just ignore it. A/P say theyāre into it for 1mm on their own and they have another 1-2mm of friends-n-family. Assuming you believe them, and assuming itās not some kind of massive coordinated fraud - if they screw it up, they are so, so, so fāed along other dimensions than merely being out money - like, never being able to face your mom, or having very lonely Christmases for the rest of your life.
- Lince is just the accountant, so to speak. Someone has to do all the nasty accounting crap, and Artur/Pedro donāt know how to do that, so they hire it out. Lince gets a tiny cut for doing it. Here, we call them āfund administratorsā. Itās a commodity business that in the US various banks (but not all) are involved in, and they charge a few basis points for the service. Itās annoying work, but EOD itās just book-keeping, so it doesnāt cost that much to do at scale; someone like Lince will have a āpush these 5 buttons and sign hereā sort of roadmap for a fair bit of it. Artur and Pedro have to front any abnormal upfront costs but they have the money to do that, see above.
I think the appropriate analogue for Lince is Northern Trust. Theyāre a broad spectrum financial services provider, offering wealth management and investment funds, and are a bank as well. They also offer fund support services - we use them as a fund administrator for the fund I work for.
(In a way, this is also good. Lince would be doing at least some basic due diligence - the last thing they want is to be associated with a scandal and get named in a lawsuit; expensive and bad for biz. Doesnāt guarantee fund performance, but it guarantees theyāre not complete incompetents. Though now Iām curious what due diligence Lince does do in such a case.)
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Hello Rahim,
I see that you monitor this forum. I am curious after reading through various messages if you can make a pitch why your fund is different than the others or more appropriate in light of the various concerns of US investors.
Thanks.
yes, I didnāt find any info on āStable Coreā via web search. When I checked with Blakbull, I was told four individuals of Stable Core are engaged as fund advisory team. You can see some introduction on these guys on Blackbullās PPT , but the question is why there is NO any public info about the entity of their fund advisory?! I decide to skip it.
Hi, so what options have you narrowed down to?