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Situation 1:

  • Portuguese Citizen
  • Starting job with US company, will be working from Portugal
  • US company does not have any official presence in Portugal.

So, where do I pay tax -- in US or Portugal?

What taxes should the company pay?

  • 1
    Hey Donald exactly the same question. Did you find out how it works? – Rui Marinho Apr 1 '13 at 17:01
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If you're not a US person and is not physically present in the US - you're not required to pay taxes to the US. Why would you?

As to Portugal - you need to consult with the local tax specialist, but being a citizen and being employed locally by a foreign entity, I would guess you'd be classified as a contractor/self-employed and taxed accordingly. Again, just a guess, but that's how it would work in any country I know or lived in (so far several and still counting).

As to the company - they probably would pay no taxes for you, unless they establish a local (EU/Portuguese) company to pay you a wage. If they're in the US and you're in Portugal, you're likely to be paid as a contractor, i.e.: you pay your own taxes.

Both you and your company have to consult with a licensed professional, which I am not, of course, so take my (or anyone else's on this site) response with a grain of salt.

By the way, why did you mention Sweden? Did you mean that they don't have any official presence in Portugal?

  • As to the company - they probably would pay no taxes for you, unless they establish a local (EU/Portuguese) company to pay you a wage. My company is also not Portugal based, and are worried that by employing me as a contractor they will be exposed to paying taxes in Portugal. They mentioned the ABC test in US: thebalancesmb.com/… Seems very unlikely to me, any idea? – Michael May 14 at 20:17
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A Portuguese citizen working for a U.S. company in Portugal is not required to pay U.S. income tax. I imagine you would pay Portuguese income tax, and you might also have to pay some sort of Portuguese self-employment tax. This would be required in the U.S. if the situation was reversed. You should check with a Portuguese tax adviser to be sure.

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I am not a professional in this matter!
It all depends on your relation with the US company. If you are their employee, chances are you need to at least file federal US tax, (it might be $0 but you MIGHT need to file it anyway).

Definitely ask the company, I bet they already have tax specialists, and they can answer this question.

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