I am looking to better understand the implications to US taxes by investing in a Portugal GV fund. The best info I could find was Instructions for Form 8621 (01/2022) | Internal Revenue Service but I could not make much sense of it. Most likely form 8621 would need to be submitted at the time of tax filling. Need to research further on Qualified Electing Fund. I also need to do further research to understand if any taxes are due during the investment period of a fund.
I do plan to discuss with a tax consultant. I am curious to know if anyone has already done some research on this and could share their findings.
There’s a ton of variables here. 8621 and its implications are the big one.
you will be liable for taxes if there is income and if there are gains; the terms on which you have to pay depend on whether you elect M-T-M or QEF or what. You’re also eligible for cap or ordinary loss if appropriate, again depending on election.
The biggest implication is that it will complicate your taxes somewhat. Beyond that? It Depends.
If you are a U.S. Citizen or permanent resident, there’s no doubt you would need to pay taxes on gains from the GV fund. There’s also the requirement of FATCA filing. But I would worry more about double taxation from both U.S. and Portugal. You would need to figure out the “foreign tax credit”, and what U.S. and Portugal tax treaty (if any) says.