PFIC-Compliant Funds: US Safe Harbor
Portugal Golden Visa funds providing PFIC annual statements and QEF election support. The only filter that matters for American investors.
For US investors, PFIC compliance isn't optional—it's essential.
Most Portugal Golden Visa funds qualify as PFICs (Passive Foreign Investment Companies) under US tax law. Without proper elections and annual statements, US investors face punitive "excess distribution" taxation that can exceed 50% of gains.
This page lists funds that explicitly support US tax compliance through QEF (Qualified Electing Fund) or Mark-to-Market elections—what we call the "US Safe Harbor" funds.
Why This Matters: Green Ocean Global is the only competitor explicitly filtering for PFIC. This is a massive arbitrage opportunity—most directories ignore US tax implications entirely, leaving American investors exposed to "toxic" fund options.
For detailed PFIC tax guidance, see our PFIC Guide and US Investors pages.
Understanding PFIC and QEF Elections#
What is PFIC?
A PFIC (Passive Foreign Investment Company) is any foreign corporation where:
- 75%+ of gross income is passive (interest, dividends, rents, royalties), OR
- 50%+ of assets produce passive income
Most Portuguese investment funds meet this definition, making them PFICs for US tax purposes.
The PFIC Tax Problem
Without an election, PFIC gains are taxed under the "excess distribution" regime:
- Gains are allocated across your holding period
- Each year's allocation is taxed at the highest marginal rate for that year
- Interest charges apply to "deferred" tax amounts
- Effective tax rates can exceed 50%
The QEF Solution
A Qualified Electing Fund (QEF) election allows you to:
- Include your pro-rata share of fund income annually (even if not distributed)
- Pay ordinary income rates on ordinary income, capital gains rates on gains
- Avoid the punitive excess distribution regime
- Requirement: The fund must provide an annual PFIC Annual Information Statement
Mark-to-Market Alternative
Some investors use Mark-to-Market elections:
- Recognize unrealized gains/losses annually
- Gains taxed as ordinary income (no capital gains rates)
- Useful when QEF statements unavailable, but generally less favorable
Important
QEF-Compliant Funds (Confirmed)#
The following funds explicitly market PFIC/QEF compliance and provide annual statements for US investors:
Pela Terra II (Regenerate)
| Attribute | Details |
|---|---|
| PFIC Status | QEF-Compliant |
| Cluster | Sustainable & Real Asset (Agriculture) |
| Manager | Pela Terra |
| ISIN | PTSFMQIM0007 |
| Term | 10 years (closed-end) |
| Min Investment | €500,000 |
| Target IRR | ~7% |
| Fees | 1% sub, 1.5% mgmt, 20% perf |
| Eligibility | AIMA Confirmed |
| Strategy | Regenerative agriculture in Alentejo region |
US Tax Support: Provides annual PFIC statement; explicitly markets to US investors.
3 Comma Portugal Golden Income Fund
| Attribute | Details |
|---|---|
| PFIC Status | QEF-Compliant |
| Cluster | Liquid & Open-Ended |
| Manager | 3 Comma Capital |
| Term | Open-ended |
| Min Investment | €500,000 |
| Target IRR | ~3.5% |
| Fees | 0% sub, 0.75% mgmt, 0% perf (TER ~1%) |
| Eligibility | AIMA Confirmed |
| Strategy | Diversified income-generating assets |
US Tax Support: Provides annual PFIC statement; QEF election support explicitly offered.
Key Advantages of These Funds for US Investors:
- Annual PFIC Information Statements provided
- QEF election documentation support
- Experience with US investor reporting requirements
- Tax advisor coordination available
Funds with Unknown PFIC Status#
The following funds are AIMA-eligible but have not confirmed PFIC/QEF compliance. US investors should independently verify before investing:
Hospitality & Capital Preservation Cluster:
- Mercan Hospitality Fund I
- Ando Europe (Stag)
- Lakeview Hospitality Fund
Strategic Growth / VC & PE Cluster:
- Indico VC Fund II
- Lince Innovation II
- BlueCrow Growth
- Iberis Greytech
- C2 Legacy Buyout
Sustainable & Real Asset Cluster:
- Aim Forest Fund
Open-Ended Funds:
- Optimize Portugal Golden Opportunities Fund (ISIN: PTOPZWHM0007)
Recommended Due Diligence for US Investors:
- Contact fund manager directly: Ask if they provide PFIC annual statements
- Request sample statement: See the format before committing
- Confirm timeline: When are statements issued? (Typically by March 15 for prior tax year)
- Engage US tax advisor: Ensure proper elections are filed with your return
- Document everything: Keep all correspondence for IRS compliance
Note: "Unknown" status does not mean non-compliant—it means we have not independently verified PFIC support. Many funds may provide statements upon request.
Note
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US Investor Due Diligence Checklist#
Before investing in any Portugal Golden Visa fund as a US citizen or resident:
Step 1: PFIC Verification
- Confirm fund provides annual PFIC Information Statement
- Request sample statement format
- Verify statement timeline (typically issued by March 15)
- Confirm fund's experience with US investor base
Step 2: QEF Election Planning
- Engage US tax advisor familiar with PFIC rules
- Prepare Form 8621 for initial and annual filings
- Understand annual income inclusion requirements
- Plan for liquidity to pay tax on undistributed income
Step 3: Golden Visa Alignment
- Confirm fund meets AIMA eligibility (Dual Determination)
- Verify minimum investment meets €500k threshold
- Check fund term vs citizenship timeline (Liquidity Mismatch)
- Review operating company test compliance
Step 4: Documentation
- Obtain fund prospectus (prospeto)
- Review management report (relatório de gestão)
- Keep copies of PFIC statements
- Document all elections filed with IRS
Red Flags for US Investors:
- Fund manager unfamiliar with PFIC requirements
- No US investors in existing investor base
- Unable or unwilling to provide annual statements
- Vague responses about tax documentation
Coordinating with Tax Advisors#
PFIC compliance requires coordination between:
1. Fund Manager (Portugal)
- Provides annual PFIC Information Statement
- Calculates ordinary earnings and capital gains per share
- Issues statements by deadline (typically March 15)
2. US Tax Advisor
- Files Form 8621 with your return
- Makes QEF election (first year) or maintains existing election
- Reports annual income inclusion
- Tracks basis and holding period
3. Immigration/Golden Visa Counsel
- Confirms fund AIMA eligibility
- Manages visa application and renewals
- Monitors regulatory changes
Finding the Right Advisors:
US Tax Specialists:
- Look for CPAs/attorneys with specific PFIC experience
- Ask about Portugal Golden Visa fund experience
- Confirm familiarity with Form 8621 and elections
Cross-Border Firms:
- Some firms specialize in US-Portugal tax coordination
- GFDL (US-Portugal focus) mentioned in regulatory ecosystem
- Boutique firms with expat investor experience
Cost Expectations:
- Initial setup and election: $2,000-5,000
- Annual PFIC reporting: $500-1,500 per fund
- Complex situations may cost more
For more on US tax implications, see our US Investors and PFIC Guide pages.
Frequently Asked Questions
Without a QEF or Mark-to-Market election, you face the punitive "excess distribution" regime. Gains are allocated across your holding period, taxed at the highest marginal rate for each year, with interest charges. Effective tax rates can exceed 50%. This makes non-compliant funds essentially unsuitable for US investors.
You can only make a valid QEF election if the fund provides an annual PFIC Information Statement with the required data (ordinary earnings, capital gains per share). If the fund does not provide this statement, the QEF election is not available, and you default to the excess distribution regime.
Currently, only a small number explicitly market PFIC compliance (Pela Terra, 3 Comma Capital). However, other funds may provide statements upon request. Always verify directly with the fund manager before investing.
Consult a US tax advisor immediately. You may be able to make a "purging" election or use Mark-to-Market going forward, but there may be tax consequences for prior years. The sooner you address this, the better.
Yes. If you own shares in a PFIC, you must file Form 8621 with your tax return each year. This is required whether or not you received any distributions. Failure to file can result in penalties and extended statute of limitations.
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