Thinking about moving to Portugal with a US LLC? Understanding how your business structure is taxed is essential, especially with recent tax authority decisions and the updated NHR 2.0 regime.
In our latest Fresh Talks episode, we break down everything expats and entrepreneurs need to know about US LLCs in Portugal.
US LLCs: Transparent in the US, Opaque in Portugal?
In the United States, LLCs are typicallypass-through entities, meaning profits are reported on the owners’ individual tax returns. But inPortugal, the story can be different.
Recentbinding decisions from the Portuguese Tax Authority (2016 and 2024)have clarified thatmulti-member LLCs with management located outside Portugalcan be treated asopaque entities, allowing for potentially favorable tax treatment.
- Best Setup:Multi-member LLC + foreign management.
S Corps and Single-Member LLCs: Risky in Portugal
WhileS Corporationsare popular in the US for reducing payroll taxes, they can cause tax issues in Portugal. If you'reworking from Portugal, even remotely for a US entity, it could be classified asPortuguese-sourced income— triggeringsocial security and payroll tax obligations.
- Avoid: Single-member LLCs managed from Portugal.
How to Maximize NHR 2.0 with US LLC
Under the updatedNHR 2.0 (IFICI / TISRI)regime, foreign-sourcedpassive income(like dividends/distributions) can be tax-exempt for 10 years.
To qualify:
- Have a multi-member US LLC
- Ensure management is outside Portugal
- Avoid setting LLCs as professional companies or holding companies
When done correctly, you could benefit from theflat 28% tax rateor evenfull exemptionunder NHR.
Compliance Tips: Avoid Red Flags
To stay on the safe side of Portuguese tax law, make sure your setup includes:
- A professional director abroad (not a non-qualified family member)
- No operational control from within Portugal
- A clear narrative for choosing a US structure over a local one
Can Anyone Open a US LLC?
Yes.You don’t need to be a US citizen or residentto form a US LLC. However, US citizens are subject toglobal taxationand must still report income to the IRS, though tools like theForeign Earned Income Exclusioncan help.
Need Help Structuring Your US LLC for Portugal?
Our Fresh Portugal legal and tax professionals can help you:
- Create compliant US LLC structures
- Apply for the new NHR
- Manage international tax filings
