Question:
US-Portugal Double Taxation
US citizen exploring move to Faro Portugal. Not retired. Remote working from Portugal for US business. Is income earned from US taxed by both countries? Thanks (source: Reddit)
Answer:
If you work remotely as an employee (W2) for a US business whilst living in Portugal, the U.S. business will need to register in Portugal to be compliant with labour laws. Most businesses won't bother, so you will end up with compliance risks. In addition, under the US-Portugal double tax treaty, this income is first taxed in Portugal, normally at fairly high progressive rates.
As a result, remaining employed for a foreign entity isn't a viable option.
The normal solutions are:
1. Work via an EOR - fully compliant but very high tax.
2. Become a contractor - taxes are due first in Portugal and normally no tax left to pay in the U.S., but there are labour law risks for the employers so some employers will not agree.
3. Work via a company - creates questions of corporate tax residency and P.E.
D8 VISA and Tax Residency
Question (source: Reddit):
Hi everyone,
I'm currently finalizing my D8 visa application and am trying to plan ahead regarding tax obligations.
While I know that simply having a residency permit or lease doesn't automatically trigger tax residency in Portugal, I also understand that long-term, if I intend to pursue citizenship down the line, I will have to establish myself as a Portuguese tax resident.
My U.S. income (W2) would place me in Portugal’s highest tax bracket, so I'm trying to be smart about navigating the transition, minimizing unnecessary tax exposure early on, while understanding that full compliance will eventually be necessary.
Specifically, I’d love to hear from others who have been through this:
When you first obtained your D8 visa, how did you manage the transition into becoming a Portuguese tax resident?
For those planning to apply for citizenship: when did you formally register as a tax resident, and were there strategic reasons for choosing that timing?
Any advice for minimizing tax burden during the early D8 period without jeopardizing long-term residency or citizenship applications?
I'm already coordinating on the U.S. tax side (FEIE, FTC, etc.), and also looking for 1099 jobs, but would really appreciate insights from people who have navigated this process directly within Portugal.
Thanks so much for any advice — I appreciate it!
Answer:
A D8 does not automatically make you a tax resident but it does require you to stay in the country for more than 6 months a year, and that DOES make you a tax resident, so eventually the tax authorities will catch up.
When you move to Portugal, you should inform the tax authorities that you became a tax resident within 60 days.
