I am a U.S. citizen but I work remotely for a U.S. company with no presence in the EU. If I were to live in Portugal on a D visa (i.e., D7), will my company owe taxes to Portugal? I am interested in residency in Portugal but unclear about the implications for the company I work for. What are my options?
Remote work from Portugal, as an employee for a foreign company, may require the company to register for the purposes of registering an employee in the country (payroll). It is most likely that Social Security contributions are due in Portugal and therefore the company would need to guarantee full compliance. Also, it is important to consider the implications in what regards the existence of a “permanent establishment” in Portugal, for tax purposes.
It is important to get a tax analysis done in order to understand what taxes will be due, where, and if there are any double taxation agreements in force. Notwithstanding, in the perspective of the employer company, social security might be due and it is possible that they fall under the existence of a stable establishment for tax purposes, depending on the representation powers of the worker in national territory.
Should you become a resident in Portugal, your employer would be unaffected, since the company doesn’t have any presence in Portugal. As your income is generated overseas, it wouldn’t be subject to any taxation on the employer’s side. Also, double taxation accords between Portugal and the US would apply, so there would be a need to analyze the situation and achieve the best possible solution for you.
Whether or not the company you work for based in the United States pays tax in Portugal will depend on the regime under which you work. In this sense, you would need to clarify some points before we can give you an answer.
Only if you stay more than 183 days in a country you will be considered a tax resident of that country. Should this happen, you would be required to pay taxes in Portugal, your company only has to pay corporate tax and others if applicable in the country where it was incorporated.
There is no impact for your US employer, as the company has no presence in Portugal (that is, if you cannot have powers to bind and sign contracts on behalf of the employer, otherwise the company will be deemed to have a permanent establishment in Portugal). In practical terms, your salary shall be paid gross (no withholding tax due in Portugal) and you will be taxed at your year-end as a tax resident in Portugal. Please bear in mind that you may apply for the status of Non Habitual Tax Resident, whereas any salaries and wages subject to tax outside Portugal (in the US) shall be exempt from tax in Portugal. We may elaborate further on the NHR Regime if you wish, but it is a more favorable tax regime applicable to expats in Portugal for a 10-year period. Should you not opt for the NHR, you shall be taxed on your worldwide income - including salaries paid in the US - and subject to progressive rates up to 48%. Any tax paid in the US (if any), will grant you an international tax credit to be offset against your tax due in Portugal.
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