Working for a foreign company while living in Portugal
"Does anyone work as a freelancer or independent contractor in Portugal with their business set up in the US?" The short answer for anyone in that situation: once you live in Portugal, Portugal taxes what you earn anywhere in the world. Where your employer, your client or your company is registered does not change that. It changes how you declare the money and where you pay social security.
1. When Portugal starts taxing you
Tax resident if you spend more than 183 days, in a row or not, in any 12-month period that starts or ends in the tax year.
Or you have fewer days but, on any day of that period, a home you appear to intend to keep as your habitual residence.
A day counts if you sleep in Portugal that night.
Once resident: IRS is charged on your total income, including income earned outside Portugal.
Residence normally starts on the first day of your stay, not on 1 January. If another country also treats you as resident, the tax treaty between the two decides who taxes first. That is a question for an accountant, and worth asking before you move.
2. Three common setups
Employee of a foreign company
Your salary is employment income. If the company has no Portuguese payroll, nobody withholds Portuguese tax from it: you declare it yourself in the annual IRS return, filed online between 1 April and 30 June of the following year. Which country's social security covers you depends on where the employer is and on any agreement between the two countries. Ask the employer, and get the answer in writing, before your first month in Portugal.
Contractor through your own foreign company (US LLC, UK Ltd)
Portugal looks at you, the resident, not only at the company. What you pay yourself is taxable in Portugal, and depending on how the company is set up and taxed abroad, its profit can be too. A company that is in practice run from your home in Portugal can also create Portuguese obligations for the company itself. These are not rules to work out from a forum thread. Get a Portuguese accountant, and if you are American, a US preparer who knows Portugal, before the first invoice, not after.
Self-employed in Portugal (recibos verdes)
You open an activity with the tax office (Finanças) and invoice every client, including foreign ones, through the recibos verdes system. Under the simplified regime, only part of what you invoice is taxed: 75% for the professions on the official list and 35% for other services. Portuguese business clients usually withhold part of each invoice at source; a foreign client with no presence in Portugal normally withholds nothing here. How it works step by step: recibos verdes explained.
3. Social security when you work for yourself
Rate: 21.4%.
On what: 70% of your income from services in the previous three months.
Declaration: every quarter, by the last day of January, April, July and October.
Payment: between the 10th and the 20th of the following month.
First year: your first enrolment starts on the first day of the 12th month after you open your activity, unless you ask for it earlier.
Americans: the US and Portugal have a social security agreement in force since 1 August 1989. For self-employment, if you would otherwise owe contributions in both countries, you pay only in the country where you live. Living in Portugal, that means Portuguese social security. You still file a US return every year and claim the exemption from US self-employment tax with a Portuguese certificate of coverage, which you ask from your Portuguese social security office.
4. NHR is closed, and IFICI rarely fits
The old non-habitual resident regime (NHR) was removed from the IRS code by Law 82/2023. Its replacement, the IFICI, taxes employment and self-employment income at a flat 20% for 10 years, if you were not tax resident in Portugal in any of the previous five years. But it only covers income from listed activities: higher-education teaching and research, jobs in certified Portuguese startups, research and development staff, highly qualified jobs in companies that receive investment support or export at least half of their turnover, and posts in companies recognised as relevant by AICEP or IAPMEI.
A remote job for a foreign company, or freelancing for foreign clients, is usually not on that list. Check the exact activity with an accountant before you count on 20%.
5. Nobody withholds for you, so set money aside
With a foreign employer or foreign clients, no Portuguese tax is taken during the year. The whole year's IRS arrives at once, after your return the following spring, and social security contributions run every month on top. Open a separate account and move a fixed share of every payment into it from the first month. Ask your accountant for an estimate based on your real income, not a percentage from a group chat.
US citizens: the US taxes its citizens on worldwide income wherever they live. Relief such as the foreign earned income exclusion or the foreign tax credit is only available if you file a US return. Expect two returns a year, and plan them together.
Checklist before you invoice from Portugal
- Count your nights in Portugal and know the date you become tax resident.
- Choose your setup with an accountant: employee, your own foreign company, or recibos verdes.
- Open your activity at Finanças before the first invoice if you go the recibos verdes route.
- Know which country's social security covers you, and keep the certificate if it is not Portugal.
- Do not plan around IFICI unless your activity is clearly on the list.
- Keep a separate account for tax and social security.
- Americans: keep filing in the US and coordinate both returns.
Moving to Portugal to work remotely for a company abroad? The visa side: the D8 digital nomad visa.
Guidance, not legal or tax advice — verify your case with official sources.