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 typically pass-through entities, meaning profits are reported on the owners’ individual tax returns. But in Portugal, the story can be different.

Recent binding decisions from the Portuguese Tax Authority (2016 and 2024) have clarified that multi-member LLCs with management located outside Portugal can be treated as opaque entities, allowing for potentially favorable tax treatment.

  • Best Setup: Multi-member LLC + foreign management.

S Corps and Single-Member LLCs: Risky in Portugal

While S Corporations are popular in the US for reducing payroll taxes, they can cause tax issues in Portugal. If you're working from Portugal, even remotely for a US entity, it could be classified as Portuguese-sourced income — triggering social security and payroll tax obligations.

  • Avoid: Single-member LLCs managed from Portugal.

How to Maximize NHR 2.0 with US LLC

Under the updated NHR 2.0 (IFICI / TISRI) regime, foreign-sourced passive 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 the flat 28% tax rate or even full exemption under 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 resident to form a US LLC. However, US citizens are subject to global taxation and must still report income to the IRS, though tools like the Foreign Earned Income Exclusion can 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

 

Get professional guidance, start your cross-border setup today.