If You Used Your IRA to Invest in a Portuguese Golden Visa Fund in 2025, Read This Before Year-End
Over the past year, many Americans have been told they can use their self-directed IRA to invest €500,000 (around $600,000) in a Portuguese Golden Visa fund to qualify for residency for themselves and their families. It sounds efficient, until you look at the U.S. tax side.
From a U.S. perspective, using retirement assets to obtain a personal immigration benefit carries a significant risk of being treated as a prohibited transaction under the Internal Revenue Code. Once that happens, the entire IRA is treated as disqualified and deemed distributed on the first day of the year. That means the full account balance becomes immediately taxable income.
What That Means in Plain Terms
If the IRS determines your Golden Visa investment is a prohibited transaction, the financial impact can be severe, and the penalties are not only limited to the account owner. If any other immediate family members also benefitted from the IRA’s assets, they may carry their own tax liability. For a family of three for example (the IRA owner, spouse, and child), total U.S. tax and penalty exposure can range from $500,000 to over $2 million, depending on the facts and duration of noncompliance.
Once a prohibited transaction occurs, the IRA’s tax-deferred status is gone. There is no way to restore it.
Why Audit Risk Is High
Portuguese banks and financial institutions are required to share account information for all American clients with the U.S. government each year under international reporting agreements. At the same time, Portuguese law requires that Golden Visa investments be made using the investor’s own personal funds.
That means when an IRA is used to make a Golden Visa investment, Portuguese banks and funds will report the individual investor’s name and tax number, while the IRA custodian in the U.S. reports the same assets as belonging to a retirement account. The two sets of reports don’t match, and those mismatches are automatically flagged in IRS systems. These cases are easy for the IRS to identify and often lead to review or audit.
Even when Golden Visa investments are held through omnibus or pooled accounts, Portuguese financial institutions must still disclose information on U.S. investors behind those accounts under FATCA. The reporting may look different, but the IRS still receives the data, and the mismatch with IRA custodian filings remains.
Who Stands to Gain the Most from Acting Before Year-End
Families with dependents on their visa applications. Each dependent listed can be treated as a “disqualified person” receiving a personal benefit. Acting now can prevent ongoing excise taxes from compounding for each family member.
Traditional IRA owners. Because traditional IRAs are fully pre-tax, the entire account balance becomes taxable when disqualified. Paying tax now, before audit and penalty exposure increase, is almost always less costly.
Investors in open-ended or redeemable funds. If the fund allows partial or full redemption, it may be possible to unwind the transaction or redirect the investment before year-end, strengthening the case for limited penalty treatment.
Taxpayers under age 59½. The 10% early-distribution penalty applies only if the IRS determines a disqualified transaction has occurred and the IRA owner failed to report it. Voluntary correction reduces both penalty exposure and audit friction.
Those without residency approval yet. Investors whose visas have not yet been issued are in the strongest position to cancel applications and document that no immigration benefit was ever actually received.
For these groups, taking action before the end of the tax year can mean the difference between a manageable correction and a multi-year, multimillion-dollar audit.
The Cost of Waiting vs. Acting Now
Many investors hope to wait and see. That’s risky. Waiting until the IRS initiates contact means higher taxes, higher penalties, and much higher legal fees during a drawn-out audit process.
By contrast, investors who act in the same year as the implicated transaction can often reduce their exposure to a fraction of what it would otherwise be. Acting early doesn’t make the problem disappear, but it turns a potentially catastrophic issue into a manageable one.
Defending a cooperative, compliance-first position may be three to four times less expensive than fighting a high-friction audit after the fact.
What You Can Still Do Before Year-End
If you invested in a Golden Visa fund through an IRA in 2025, there is still time to:
Determine whether your structure creates prohibited-transaction exposure
Estimate your potential U.S. tax and penalty impact
Evaluate whether the transaction can be unwound or corrected within the same tax year
Prepare and file required IRS and Treasury forms to minimize long-term exposure
Every situation is different, but timing is critical. Once the tax year closes, many mitigation options disappear.
Talk to a U.S. Tax Attorney
If you or your clients used a self-directed IRA to invest in a Portuguese Golden Visa fund, contact us to understand your options. Acting early can mean the difference between a controlled correction and a multimillion-dollar audit.