What Is and Isn’t Actionable: A Recourse Framework for U.S. Investors in Portugal's Golden Visa Program Part II: The Mirage and the Misrepresentations
Part I addressed Portugal-facing remedies. Part II addresses the investment itself. For U.S. investors, the problem is no longer only whether Portugal preserves the old nationality timeline. The problem is whether the investment they bought was ever what it was represented to be.
Regulatory Hope or Hopium?
There is a live regulatory path that could still protect some Golden Visa investors. Article 7(2) of Lei Orgânica n.º 1/2026 preserves the prior nationality regime for “procedimentos administrativos pendentes,” and the government now has regulatory authority to define how that phrase applies in practice. Investor lobbying efforts are therefore focused on ensuring that pending AIMA residency processes, not only filed nationality applications, are treated as protected procedures where delays resulted from State backlogs rather than investor inaction.
While crucial, the regulatory process does not remove the separate private-market problem. Fund managers, promoters, and intermediaries sold financial products into a timeline-dependent immigration framework. If the regulations ultimately protect investors, that may reduce — but not eliminate — some damages and the number of claims seeking them. If the regulations do not provide relief for investors, the disclosure, suitability, liquidity, and U.S. offering issues that exist irrespective of the new law’s regulations could see significant litigation in U.S. federal and state courts.
This part, Part II, addresses the investment itself. The package U.S. investors were sold is substantially less than what was presented, and recognizing that is the precondition for any clear-eyed decision about what to do next.
What was sold
Investors who joined Portuguese Golden Visa funds were presented with a package: a five-year pathway to EU citizenship, tax-efficient returns on capital, and professional fund management equipped to serve international investors.
Each element of that package has now been shown to be substantially less than what was presented. The shimmering promise rested on three distinct illusions:
legal residency with a reliable five-year path to European citizenship
This became non-viable in practice due to years-long SEF/AIMA delays and António Leitão Amaro’s November 2025 disclosure that Golden Visa applications had been intentionally delayed.
built-in tax efficiency
While gains on fund investments for non-tax residents of Portugal are exempt from taxation in Portugal, those same gains are heavily taxed in the U.S. for American taxpayers. In fact, my research shows that the fund manager-issued PFIC AIS prepared for U.S. investors seeking a QEF election appear to be faulty market-wide.
preserved capital value
This remains to be seen. Many of the fund investments were high-risk endeavors, and even conservative foreign investments can become high-risk for Americans when the tax reporting does not satisfy U.S. requirements. Even if investment capital is generally preserved by the funds, the tax reporting faults in the market will indirectly compromise the capital preservation.
Examples:
Prohibited transactions that distribute IRAs: common, unreported, with considerable misinformation. No grey areas here. Deploying IRA savings into a civil-law jurisdiction where the qualifying asset cannot be held and administered solely for the IRA, and is instead tied to the investor’s personal immigration benefit, personal NIF, or non-IRA titling, does not meet the requirements of U.S. law. A prohibited transaction results in a deemed distribution of the IRA, which, if a traditional account, is subject to income tax on the full amount and may be subject to a 10% additional penalty if the taxpayer is under age 59½. It also subjects the investment to the full U.S. cross-border tax regime cascade. Many required filings have expensive failure-to-file penalties. Further, some early IRA-funded investors were coached to create a Portuguese Lda as part of a layering process. That does not prevent a prohibited transaction. It establishes a controlled foreign corporation for U.S. tax purposes and a Portuguese entity subject to Portuguese tax and reporting.
Foreign Grantor Trust exposure: possible, untested, unreported.
Controlled Foreign Corporation exposure for U.S. Shareholders: common, untested, unreported.
Passive Foreign Investment Company exposure: widespread, incorrectly tested, incorrectly reported for fund investors and possibly never tested or mentioned to fractional deed investors who have exposure due to related rental pool proceeds.
While the marketing has not matched the reality, investors nevertheless held on with hope and admirable patience. The President’s signature on the nationality law was the moment the shimmer broke and revealed that the oasis was never there.
Even though the citizenship pathway and timeline were never contractual terms of the funds and were changeable by parliamentary vote at any time, which is what just happened, in many cases the risks were not properly disclosed. The tax efficiency was never tested against U.S. reporting requirements, and the fund-issued documents were not equipped to support valid QEF elections. The returns themselves, once properly calculated under the PFIC regime and possible exposure to the CFC and foreign grantor trust regimes, may look nothing like what was modeled at subscription and could consume a meaningful portion of investment principal. Failure to file penalties could eclipse it. Inducement into IRA prohibited transactions adds a material tax bill to traditional IRA account owners who leveraged their retirement savings to invest.
Portugal’s pattern
The citizenship timeline is not the only framework Portugal has changed on foreign investors who relied on it. The Non-Habitual Resident tax regime, for years a centerpiece of Portugal’s foreign-capital strategy, is now in the Constitutional Court. In Acórdão 366/2026, the Court ruled the NHR delegation architecture unconstitutional for category B income. While this ruling is specific to one litigant, the same reasoning threatens IFICI, the NHR’s successor regime. The pattern is consistent: Portugal builds incentive frameworks to attract foreign capital, foreigners rely on those frameworks to make life-altering decisions, Portugal then changes the terms, revealing that the program infrastructure was built on sand without transitional protections.
The Five-Year Path to Citizenship Mirage
The five-year path to citizenship narrative was itself a misrepresentation in functional terms. SEF and AIMA processing delays have made the actual timeline eight years or more for many applicants for several years already. A significant number of sales agents, promoters, developers, and fund managers were aware of this reality. Watch the replay of any promotional webinar from the past few years where Portuguese immigration counsel appeared alongside sales teams and narrated the program as if the SEF/AIMA backlog were a temporary condition about to resolve. The entire ecosystem continued to advertise five years to citizenship in marketing materials as if that could be true when it demonstrably was not.
The legislative change ratified by President Seguro on May 3, and published in the Diário da República on May 18 to take effect on May 19, 2026, did not transform a working program into a broken one. It stretched and codified a gap between what was advertised and what was being delivered that already existed, without fixing any of the underlying system. This is consistent with prior Portuguese patterns. When the government decided the Golden Visa clock would start at the time of payment rather than on the date of the first residency card, that change addressed the timing mechanism without addressing the underlying processing delays for biometrics appointments and residency cards. Now the timing mechanism is shifting back to the residency card date, and the underlying problems remain unresolved.
The nationalism nationality law also sent a clear message that immigrants of all kinds are now less welcome in Portugal.
A recent Público opinion piece framed the issue in three parts: what the ARI program legally created, what the Nationality Law left to legislative discretion, and what private actors sold as if it were a State guarantee. That framing is useful because it separates the legal content of the residence permit from the commercial narrative built around it.
ECO Sapo PT reported the same fault line from the government side. In a video posted on the Twitter and LinkedIn accounts of the Presidência do Conselho de Ministros, Rui Armindo Freitas, Secretary of State Adjunct to the Presidency, advanced the government’s position: the Golden Visa is a residence permit for investment with minimal physical-presence requirements, not an automatic mechanism for access to Portuguese nationality. ECO Sapo reported that the government is now criticizing the “commercial expectations created in the market” around Golden Visas and emphasizing that Portugal legislated investment residence permits, not automatic nationality guarantees.
Portuguese lawyers and Golden Visa investors quickly pushed back on the claim that the State played no role in creating the five-year citizenship expectation. Even as Portuguese State websites appear to be changing, they pointed to historical versions of official SEF / AIMA materials that described the ARI pathway as leading, after five years (or six if prior to 2018), to permanent residency and the possibility of Portuguese nationality.
If the State now says the Golden Visa was never a citizenship product despite historical evidence that suggests otherwise, the next question is who sold it that way, who repeated the five-year passport narrative, and what disclosures accompanied those sales.
The government’s position throws the fund market further into the line of fire, may expand scrutiny to include the full cast of market participants, and seems positioned to strand everyone there without government support. The private market amplified and monetized a State-created expectation, while fund managers and promoters continued selling investment products around that timeline long after administrative delays made the five-year outcome unrealistic.
CMVM, the Portuguese securities regulator, told Expresso that “The judicial route can secure contract annulment or compensation, as well as penalties and the return of commissions,” in cases where fund managers misled investors about a five-year path to citizenship. That is a signal that exposure may exist on both sides of the Atlantic. It also raises the obvious oversight question: where was CMVM while this market was being sold around a citizenship timeline the government now says was never part of the product? And what will be done now?
The Portuguese State and the private market both played roles that have led to investor confusion, frustration, and harm. Questions around whether Portugal can be sued for changing its nationality law exist alongside separate questions about who sold an investment product with an economic rationale dependent on a five-year citizenship pathway and a calibrated holding period, what risk disclosures were made, and whether U.S. investors were offered those securities through compliant channels. Some commentators are skeptical of broad State-liability theories, while still recognizing that AIMA delays, transitional-rule failures, and administrative opacity may support case-specific claims.
How investors arrived here
These were always high-risk investments. The Portuguese Golden Visa fund and fractional real estate market has operated largely outside U.S. regulatory frameworks. Marketing was conducted in many cases by intermediaries who were not registered to offer securities to U.S. persons. By U.S. standards, disclosures at the sales level were lacking and remain so.
A significant subset of U.S. investors entered these positions on the basis of trust in advisors who themselves lacked the regulatory framework to provide proper disclosures, or on the appeal of European citizenship that overshadowed dispassionate evaluation of the investment vehicle. That is what effective marketing can do. Even the investors who engaged qualified counsel, read offering documents, and asked questions may have ended up exposed because the disclosures were not sufficient and because cross-border legal and cultural norms do not align. Many investors, accustomed to robust investor protections in the U.S. as a standard baseline, simply assumed compliance on the part of the Portuguese issuers that was never in place despite claims of funds being “fully regulated.”
Fund Investors
Fund structures are complex in ways that retail investors are not equipped to evaluate independently. For many U.S. investors in these funds, this was their first private investment, made directly, outside of a regulated brokerage. Many of those same investors would have been restricted from accessing the offerings entirely if U.S. accreditation, qualified purchaser, and registration rules had been respected.
Portuguese fund managers have begun publicly establishing defensive positions in business press. IMGA, which manages over €500M for more than 1,000 Golden Visa investors, told ECO Sapo that it cannot rule out lawsuits against the fund manager itself in connection with the nationality law change. IMGA also acknowledged that it had avoided direct marketing to U.S. investors precisely because of regulatory complexity. The absence of direct marketing does not, by itself, create a valid U.S. registration exemption; reverse solicitation is often overstated as a safe harbor. IMGA’s concession implicitly recognizes the registration and licensing questions that arise when U.S. capital is solicited without proper authorization. ECO Sapo also reported public responses from other Golden Visa fund managers, including Optimize (€350 million, approximately 800 clients), 3 Comma Capital (€130 million, approximately 400 investors), Pagani Capital (500+ investors), and Heed Capital (€100 million, 370+ clients), each addressing investor concern, legal predictability, or the impact of the nationality law change on fund demand. Heed Capital’s public position is that the fund “communicates continuously to investors that rules may evolve.”
Some of these statements, coming from professional fund managers signaling that they understand the exposure exists, appear designed to establish a defensive posture in advance of possible litigation, including the position that investors should have understood regulatory frameworks could evolve. That defense addresses sophistication and risk acknowledgment but does not address whether the offerings themselves were properly registered, whether the intermediaries who solicited U.S. capital were licensed to do so, or whether the disclosures provided to investors met U.S. standards.
The "investors knew the rules could change" defense also runs into the offering documents themselves. Marketing presentations and informal communications about the five-year pathway are not the same as risk disclosures in the subscription agreement, prospectus, or management regulations. Subscription documents in this market commonly shift immigration-pathway questions to the investor's own legal counsel and treat political risk at the fund level as generic reference to changes in tax law. They often do not disclose that the citizenship timeline itself could be legislatively modified during the holding period in a way that materially alters the investment thesis. Under U.S. securities law standards, risk disclosure happens in the offering documents, not in the manager's recollection of conversations. Material omissions can be the basis of a Rule 10b-5 claim. U.S. damage claims can include far more than the material misstatements about citizenship timelines. They may also include claims for tax losses rooted in fund manager misstatements.
Auditors bear risk, too
If a Portuguese fund raised U.S. capital without a valid registration or exemption under U.S. securities law, that U.S. capital may be subject to rescission claims. Rescission exposure sits on the fund’s balance sheet as a contingent liability from the moment unregistered U.S. capital is accepted. A fund manager who fails to tell the auditor that U.S. investors were brought in without registration or exemption is failing to convey a material contingent liability that the auditor may be required to evaluate under applicable auditing standards. If the auditor has knowledge of the liability or facts suggesting its possibility, and fails to inquire further or require appropriate treatment in the financial statements, the auditor may create separate professional-liability exposure.
An auditor who did not surface that exposure in the audited financial statements, including any required disclosure regarding contingent liabilities or going-concern considerations where the rescission exposure is material relative to net asset value, may have issued an opinion that fails to reflect the fund’s true contingent-liability profile. Investors and creditors who relied on those audited financials in deciding to subscribe or remain invested may have a separate basis for claims against the auditor under U.S. and Portuguese professional-liability frameworks.
The auditor’s signature represents that the financial statements present fairly, in all material respects, the position of the fund. A fund carrying unresolved rescission exposure to its U.S. investor base may not present fairly unless that exposure is evaluated and, where required, disclosed.
Fractional Real Estate Investors
The Portuguese Golden Visa pathway brought a meaningful number of United States investors into fractional real estate as a precursor to or alongside the fund pathway. These real estate investors are essential allies in the broader community. They share the same forums, face the same administrative hurdles, and experience the exact same betrayal by a state that altered the rules midstream.
While their analytical situation overlaps regarding the nationality law, it diverges significantly on the asset side if the asset is purely real estate, and in many cases, it may not be under U.S. law.
A significant portion of fractional Golden Visa offerings may have been structured in a way that brings them within U.S. securities law, even though they were marketed as real estate. The pattern: developers utilized a highly standardized co-ownership (copropriedade) model, selling undivided fractional shares of large hotel developments rather than discrete residential units. Such offerings were commonly packaged with a mandatory rental pool framework: a guaranteed or optimized annual yield, zero operational control by the investor, and a contractually mandatory guaranteed buyback timed precisely around the time-to-passport horizon. The investor received a few complimentary nights a year at a property managed entirely by a major international hospitality brand, but had no say over operations, leasing, or management.
When a developer packages fractional deeds with a mandatory or heavily marketed rental-pool arrangement and promises to collect rent and distribute proceeds as returns to passive investors, the offering may cross the line from a real-property sale into what the Supreme Court and SEC define as an investment contract (footnote 1). By packaging the real estate deed with a centralized income generating mechanism, the developer is selling more than brick and mortar. The developer is selling a managed investment program through a real estate wrapper. The Ninth Circuit’s en banc decision in Hocking v. Dubois, 885 F.2d 1449 (9th Cir. 1989), applies this framework to condominium sales offered together with rental-pool and rental-management arrangements.
A narrower set of fractional arrangements may fall outside this analysis: pure deeded interests in discrete residential units without mandatory pooling, exclusive rental agents, or material occupancy restrictions. Those are genuinely closer to real estate. The dominant marketed structure in the Portuguese Golden Visa hotel pathway is not.
How this shifts litigation posture under U.S. securities law
Recognizing these fractional setups as securities fundamentally changes the litigation landscape for impacted fractional real estate investors and the institutions that supported them, funneling them into the same legal pathways as fund investors.
If the fractional arrangement constitutes an investment contract, it is a security. The developer may face liability under § 12(a)(1) of the 1933 Act for conducting an unregistered offering targeting United States persons. They also face § 12(a)(2) and Rule 10b-5 exposure if the marketing materials overstated the reliability of those pooled rental returns, failed to disclose underlying fee layers and vacancy risks, or promised a 5-year path to Portuguese citizenship. It’s possible that the statute of limitations for claims under § 12(a) has passed for some investors. Rule 10b-5 claims generally run from discovery of the misstatement or omission, subject to applicable repose limits. A separate rescission theory may exist under § 47(b) of the Investment Company Act for contracts made in violation of the Act, though the scope and private enforceability of that remedy remain contested.
The promoters who marketed these hotel and fractional developments for a commission may be exposed under § 15(a) of the 1934 Act as unregistered broker-dealers. Furthermore, the defense of being a mere transactional utility erodes for the commercial banks involved if they were deeply integrated into the distribution framework. If a bank set up specialized escrow accounts tied to the rental pool, cleared subscription funds derived from unauthorized United States solicitation, and processed periodic rental distributions back to American citizens, that conduct may support claims that the bank facilitated an unregistered securities distribution chain. When a financial institution provides custom banking services that validate and operationalize a potentially unregistered securities offering, exposure to secondary-liability claims becomes a viable pressure point.
Investors who discover their deed was actually a securities offering should not assume their U.S. tax position is unaffected. The two regimes interact, and the interaction requires specialist analysis before any voluntary action.
This hidden exposure is exactly why a dispassionate, forensic tax diagnostic should precede legal recourse. Investors are poorly positioned to leverage these classification defects in a U.S. court without first understanding and documenting their own regulatory posture. Once the tax exposure is known and documented, however, that same liability may become part of a damages theory under Rule 10b-5, alongside misrepresentations about the advertised five-year timeline to citizenship.
Assess the health of your investment
Now that legislative risk has materialized, investors should assess where their investments actually stand. I support viable collective action toward a fair transitional regime. I also want to separate the Portuguese-side advocacy from the investment analysis.
The excitement and rosé-colored glasses that led many investors to subscribe to Golden Visa funds and hotel projects helped fund managers and promoters sell what they sold: unproven vehicles offered through promoters without a verifiable track record of returning foreign retail investor capital. Most investors are focused on the passport. The investment impacts are durable whether or not Portugal’s leaders find their way to a transitional regime between the former law and the new one. While the regulatory wheels turn, have a look at the health of your investment.
Ask yourself:
Q1: Would I have made this investment absent the advertised immigration benefits?
The fee drag and tax risk on these investments alone would suggest the answer for many U.S. investors is no. Promoters are paid commissions ranging from 3% to 10% for bringing investor leads to funds. If that lead is a U.S. investor, the commission payments are not lawful unless the promoter is a registered broker-dealer or regulated affiliate (§ 15 of the ‘34 Act). They typically are not. You can check any broker or firm name here: https://brokercheck.finra.org/.
Beyond the legal question, that is a substantial portion of investment principal that does not produce investment returns. A €35,000 finder fee on a €500,000 subscription is extraordinary. It is well above the norm in regulated markets, where placement agent compensation is closer to 1-3%, split between the agent representing the fund and the agent who brings the investor. In regulated markets, placement agents are also subject to FINRA rules including adhering to Regulation Best Interest (17 CFR Part 240) which establishes a “best interest” standard of conduct for broker-dealers and associated persons when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities. That regulatory protection was absent when Golden Visa funds were marketed to Americans by unregistered broker-dealers.
Had the fund managers worked with a regulated broker-dealer, their marketing materials and disclosures would have been diligenced for compliance with U.S. law. I offered this service to many fund managers as a regulated affiliate of a broker-dealer. My engagement terms required that they forgo working with unregulated promoters, and I explained why: doing so can void a registration exemption per § 15 of the '34 Act and convey rescission rights to all investors. That is itself a material risk that requires disclosure. They passed.
Had a U.S. investor been placed by a regulated broker-dealer in the context of a compliant fund placement engagement, U.S. tax exposure risk would have been part of the conversation. Claims would have been tested for veracity and defensibility. That work was not done for most U.S. investors in this market. The intermediaries who brought investors to these funds were paid for the introduction rather than for investor protection. The downstream U.S. compliance picture was left to be someone else’s problem whenever it was discovered. That day has come.
The investment thesis for most U.S. investors in these funds rested on the citizenship pathway. Strip the citizenship pathway from the analysis and the picture differs by vehicle.
For FCR investors (closed-ended funds), what remains is an illiquid, opaque, foreign-denominated position in a vehicle that appears to produce deficient U.S. tax reporting and create significant downstream compliance risk.
For OIA investors (open-ended funds), the investment may be liquid and the portfolio visible, and yet it remains a foreign-denominated position in a vehicle that appears to produce deficient U.S. tax reporting and create significant downstream compliance risk.
For fractional deed investors, the investment is an illiquid, foreign-denominated interest in a hotel operation where the investor holds neither operational control nor reliable exit, and which may carry the same U.S. tax and securities compliance risk as the fund pathway despite being marketed as real estate.
Once the facts are made plain regarding U.S. tax exposure, for the substantial majority of investors, the answer to the question about whether you would make this investment absent immigration benefits is likely to be no. Add to that the risk of substantial capital loss, and the fact that some hotel projects appear to already be defunct, and the cause for concern compounds.
Decisions about whether to remain in the program and whether to pursue legal recovery should be made with full information rather than on the assumption that the original investment thesis is intact. It may not be. If no one has audited the fund or development on your behalf and no one has validated whether the U.S. tax reporting being provided actually meets U.S. standards, I’m here when you’re ready.
Q2: Is the halo effect clouding my view?
Migration agents, fund managers, and lawyers who presented a shortlist of funds may very well be nice, likeable people. Likeable people can be both likeable and legally liable for securities violations. Meaning well does not preclude culpability. Bernie Madoff was exceptionally well-liked. Allen Stanford was widely loved and respected in the Caribbean. Ricardo Salgado was considered a brilliant dealmaker.
Look around and assess whether those folks you like so much are fighting to preserve the five-year pathway you were promised, or whether they are already rewriting the sales pitch after the fact. Some market participants are now recasting the Golden Visa as a standalone investment-residency product, urging investors to separate it from the citizenship framework that drove demand for years, pretending legal residency was always the goal — as if they have never met their own investor clients — and claiming that permanent residency remains unaffected.
Permanent residency (PR) has not been functionally available in at least six years. Applying for PR requires an appointment with AIMA, which is not available to book. (Some applicants report they have had luck booking a different type of appointment with AIMA and then asking the clerk to process an application for PR when on site.) It also appears to require proof of housing in Portugal, a requirement antithetical to an investor visa program whose main benefit is that the investor is not required to live in Portugal, a country with a well publicized housing crisis that removed real estate from the Golden Visa program in 2023 under the guise of resolving that same housing crisis. Lawyers differ on what housing evidence AIMA requires from Golden Visa applicants seeking permanent residency. Some report that AIMA has relaxed the requirement in practice for Golden Visa PR cases. Even if so, that practice appears informal, uneven, and difficult to document, casting it more as wishful thinking than reliable guidance in an already unstable program trajectory. For investors who bought a low-stay, fund-based immigration strategy, “maybe AIMA will be flexible” about proof-of-housing requirements is not a reliable substitute for the five-year citizenship pathway they were sold.
Without permanent residency, there is presently no clear path to exiting investments after five years while retaining a pathway to apply for nationality. The market is suggesting that PR has not changed and that the timeline to exiting an investment holding hasn’t changed, but those assurances ring hollow. By current measures, PR is also part of the mirage and without intervention by one or more State agencies, investment holdings could stretch to 12 to 17 years. That’s an extraordinary amount of time to have €500,000 tied up in a high-risk, high-fee, low-return opaque offering riddled with IRS tripwires.
Q3: Am I entirely confident that my U.S. tax position is defensible?
U.S. investors have widely forgone individual or professional diligence and relied on forum posts and Portuguese fund managers to determine their own U.S. tax positions. This is a bigger risk than the investment itself and could result in six- or seven-figure penalty and tax exposure.
Four things here:
Such exposure could be actionable against fund and project managers via damage claims under Rule 10b-5, particularly when the tax documents provided to investors were incorrect, misleading, or never furnished.
The courts are increasingly turning to an objective definition of willfulness in FBAR cases (footnote 2). Reliance on someone else is not a defense that will meet the standards of reasonable cause for international transactions. Add “purchased an illegal public security” on top and it may be exceedingly difficult to convince anyone that you’re a victim of faulty tax reporting in a way that reduces associated penalties. (Part III covers the willfulness standard in detail.)
Separately, no reasonable cause argument tolls the § 6511 three-year statute of limitations for reclaiming taxes paid under the wrong regime. The clock is running on refund claims regardless of how strong the underlying tax position is.
Having your fund units held in omnibus custody may seem like a convenience, but it could expose you to extraordinary penalties if relevant U.S. tax filings are missed.
The government’s regulatory process may decide who remains eligible for the old nationality timeline. It will not decide whether private market actors adequately disclosed the risk that the timeline could fail.
Coming next
Part III lays out the temporal risk framework that distinguishes pre-investment risks (which were accepted by investing and are not actionable now) from post-investment risks (which continue to evolve and many of which admit of meaningful action). It also addresses the assumption of invisibility underlying some current investor thinking, what continuing assessment looks like, and what action implies in practice.
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Amy Short is the Principal of Golden Visa Direct and PFIC Help, a forensic tax exposure diagnostic practice serving U.S. investors in Portuguese Golden Visa funds.
This material has been prepared for information and educational purposes only. It is not intended to provide, nor should it be relied upon for, tax, legal, or investment advice. Each investor should consult appropriate tax, legal, and financial professionals regarding individual circumstances.
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1.The Supreme Court established the investment contract test in SEC v. Howey Co., 328 U.S. 293 (1946). The Securities and Exchange Commission addressed this type of scenario in Release 33-5347, which establishes that offering real estate units alongside a mandatory or heavily emphasized rental pool arrangement can transform the real estate transaction into a securities offering.
The mechanism described appears to meet every prong of the Howey test:
The investor provides capital to purchase the fraction.
The investors’ fortunes are tied together through a common enterprise — the hotel operation — with each investor’s economic outcome dependent on the same managerial efforts.
The investor expects a profit derived entirely from the managerial efforts of the developer who handles the leasing, maintenance, and collection.
The investor possesses zero day to day operational control over the real property.
2. United States v. Reyes, No. 24-2333 (2d Cir. Jan. 7, 2026).