How to pay a US company legally from Portugal
Portugal's 1994 tax treaty with the United States sets a 10% withholding rate on service fees — the same as Spain — and the Banco de Portugal and CMVM govern the payment infrastructure. SEPA handles the EUR leg without friction, but the USD conversion and SWIFT leg require a bank or fintech with competitive FX rates. Portugal also has the IFICI regime (formerly NHR) which can affect the tax position of qualifying residents.
The regulatory framework
In Portugal, the Banco de Portugal (BoP) is the primary regulatory body governing payment systems and cross-border transfers. The legal framework for payment services and e-money is heavily influenced by the EU's Second Payment Services Directive (PSD2). This means that while domestic and intra-EU payments are highly standardized, outbound payments to non-EU jurisdictions like the United States fall under stricter scrutiny for Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance. Financial institutions must report significant cross-border transactions to the BoP to monitor capital flows and ensure compliance with international sanctions and tax laws.
Withholding tax
When a Portuguese entity pays a US company for services, the transaction is subject to the US-Portugal Income Tax Treaty, which has been in effect since 1996 (signed in 1994). Under this treaty, the withholding tax (WHT) on most standard business services is generally reduced or eliminated, provided the US company does not have a permanent establishment in Portugal. However, specific types of payments, such as royalties or technical fees, may still attract a withholding tax.
| Payment Type | Standard Portuguese WHT Rate | Treaty Rate (US-Portugal) |
|---|---|---|
| General Business Services | 25% | 0% (if no permanent establishment) |
| Royalties | 25% | 10% |
| Dividends | 28% (individuals) / 25% (corporate) | 15% (generally) |
To benefit from the reduced treaty rates, the US company must provide a valid certificate of tax residence (Form 6166 issued by the IRS) to the Portuguese payer before the payment is made. Without this documentation, the Portuguese entity is legally obligated to withhold the standard domestic rate and remit it to the Portuguese Tax and Customs Authority (Autoridade Tributária e Aduaneira).
What founders get wrong
Founders often assume that because they use modern fintech platforms like MB Way or Multibanco for domestic transactions, paying a US vendor will be just as simple. These domestic networks do not process international wire transfers to the US. Attempting to route a large B2B payment through consumer-focused apps often results in blocked transactions and compliance flags.
Another common mistake is ignoring the NIF (Número de Identificação Fiscal) requirement on the invoice. Portuguese tax law requires all invoices, even those from foreign vendors, to include the Portuguese entity's NIF to be fully deductible as a business expense. If the US company issues a generic invoice without your NIF, you may face challenges during your annual tax filing.
Finally, many entrepreneurs overlook the currency conversion spread. Sending euros directly from a traditional Portuguese bank account (like Caixa Geral de Depósitos or Millennium BCP) to a US dollar account often incurs a hidden markup on the exchange rate, in addition to the SWIFT transfer fees.
The practical path
- Request a compliant invoice: Ensure the US company provides an invoice that clearly states their business name, US address, EIN (Employer Identification Number), and your Portuguese company's name, address, and NIF.
- Obtain tax documentation: If the payment is for services that might trigger withholding tax (like royalties), request a Form 6166 (Certificate of U.S. Tax Residency) from the US vendor to apply the reduced treaty rate.
- Choose your payment channel: For smaller or routine payments, fintech solutions like Wise or Revolut Business offer competitive EUR to USD exchange rates and lower fees than traditional banks. For larger, complex transactions, use your corporate account at a major Portuguese bank (e.g., Santander Portugal, Millennium BCP), but negotiate the FX rate beforehand.
- Execute the transfer: Initiate the payment using the US company's wire routing number and account number. If using a traditional bank, this will be processed via the SWIFT network. Ensure you select the option to cover all intermediary bank fees (OUR instruction) so the US vendor receives the full invoiced amount.
- Retain documentation: Keep the invoice, the proof of payment, and any tax residency certificates on file. Your accountant will need these to justify the expense and any applied withholding tax exemptions during your corporate tax return (Modelo 22).
Edge cases
If you are operating under the Non-Habitual Resident (NHR) tax regime (or its successor, the IFICI), your personal tax situation regarding foreign-sourced income is highly specific. However, when your Portuguese registered company (Lda.) pays a US vendor, the corporate tax rules and the US-Portugal tax treaty apply, regardless of your personal NHR status.
For exceptionally large transactions (e.g., acquiring a US subsidiary or paying a massive licensing fee), the Banco de Portugal may require additional documentation to clear the AML checks. Your bank will likely ask for the underlying contract, a detailed explanation of the business purpose, and potentially a clearance certificate from the tax authority.
When you don't need us
If you are a freelancer (autónomo) paying a small monthly subscription for US-based software (like AWS, Google Workspace, or a CRM), you do not need complex advisory services. You can simply use your Portuguese corporate credit card. The software company will handle the local VAT compliance (often charging the standard 23% Portuguese VAT via the reverse charge mechanism or their own local registration), and the transaction is straightforward.
What we do
Keystone Bridge Global helps Portuguese founders and expanding enterprises structure their cross-border operations efficiently. We ensure that when you engage US entities for advisory, formation, or strategic services, the invoicing is compliant with both IRS and Autoridade Tributária standards. We navigate the US-Portugal tax treaty to minimize withholding leakage and provide clear, actionable steps for executing the payments without triggering compliance delays at the Banco de Portugal.
For the broader picture on this topic, see our guide on how to pay a US company from your country.
See also
- Best Payment Processors for Non-Residents — Full Comparison For more context, see LLC vs C-Corp for Portugal founders.