One system at a time
Without the agreement, an American employed in Portugal would owe Portuguese contributions and, if paid by a US employer, US Social Security and Medicare taxes as well. The 1989 agreement assigns each worker to one country:
| Situation | Covered by | Paperwork |
|---|---|---|
| Employed by a Portuguese company | Portugal: 11 % employee + 23,75 % employer | none — Portuguese payroll |
| Sent to Portugal by a US employer for up to five years | United States | certificate of coverage from the SSA, kept by the employer; one-year extension possible with Portuguese consent |
| Sent for longer, or hired locally by the US company’s Portuguese affiliate | Portugal | Portuguese payroll (unless a section 3121(l) agreement keeps US coverage) |
| Self-employed living in Portugal | Portugal: 21,4 % on 70 % of turnover | no US self-employment tax; attach the Portuguese certificate to the 1040 |
| Self-employed living in the US working for Portuguese clients | United States | — |
| Remote employee of a US company living in Portugal | Portugal, in principle: the work is performed here and you were not “sent” | employer registers in Portugal or uses an employer of record |
The last row is where D8 visa holders get it wrong. A US employer with no Portuguese entity is still liable for Portuguese employer contributions on an employee who works from Portugal; the certificate of coverage covers detached workers, not remote workers who chose to move.
- 5 years maximum detachment under US coverage, plus one year by agreement
- 21,4 % Portuguese contribution for the self-employed, first twelve months exempt
- 6 US credits + 12 Portuguese months minimums to combine periods for a pension
- Art. 20(1)(b) — the US may tax Social Security benefits paid to a Portuguese resident
Combining years for a pension
Each country pays its own pension based on its own periods; the agreement only helps you qualify. A US retirement benefit needs 40 credits (ten years). With at least six US credits, Portuguese months are added to reach 40 and the SSA pays a partial benefit proportional to the US years. Symmetrically, Portugal (fifteen years for an old-age pension) counts US quarters once you have at least twelve Portuguese months. The Windfall Elimination Provision that used to reduce US benefits for people with foreign pensions was repealed by the Social Security Fairness Act in January 2025, so a Portuguese pension no longer cuts the US one.
Portugal’s pension age in 2026 is 66 years and 9 months; the US full retirement age is 67 for those born from 1960.
How the benefits are taxed
US Social Security paid to a Portuguese resident. The treaty (art. 20(1)(b)) lets the United States tax it; Portugal, as residence state, taxes it too as pension income — at the progressive rates after the 4 587 € deduction — and credits the US tax (art. 25(3)). The IRS taxes up to 85 % of the benefit depending on your other income, so the US tax is often small and the Portuguese tax is the larger figure. Non-resident aliens (a Portuguese spouse receiving a US survivor benefit, say) suffer 30 % US withholding on 85 % of the benefit — 25,5 % effective — unless the treaty reduces it; the US–Portugal treaty does not.
Portuguese pension paid to a US resident. Portugal taxes it under art. 20(1)(b) as a public pension (final withholding); the US taxes it as pension income with a credit.
Private pensions, IRAs and 401(k)s follow the general pension rule — residence state only — subject to the saving clause for citizens: Portugal taxes them, the US taxes them, the US credits Portugal. Distributions taken before the move are US-only; that is the planning lever.
Getting the certificate of coverage
US employer applies
Online with the SSA's Office of Earnings and International Operations, giving the assignment dates and the Portuguese address. The certificate is issued for the assignment, up to five years.
Portuguese side
The employee is registered with a NISS for health-system purposes but no contributions are due; the certificate is shown to Segurança Social on request.
Self-employed in Portugal
Register the activity with Finanças and Segurança Social; ask Segurança Social for the certificate that exempts you from US self-employment tax and attach it to the 1040 each year.
We register the activity, handle the quarterly Portuguese declarations and obtain the Portuguese certificate for your US return; for employers we set up the Portuguese payroll or an employer-of-record arrangement. Ask us which applies to you.
Questions
I work remotely for a US company from Lisbon. Can I keep paying US Social Security?
Only if your employer obtains a certificate of coverage as a detached worker — possible when the company sends you and the assignment is temporary. If you moved on your own initiative, Portuguese law makes the employer liable for contributions here, and most US companies solve it through an employer of record.
Is Medicare available in Portugal?
No. Medicare does not cover treatment abroad. Residents use the SNS (after registration with the residence permit) and usually a private policy; keep Part A if you may return, and weigh Part B premiums against the penalty for late enrolment.
Can I receive my US benefit in a Portuguese bank?
Yes. The SSA pays by direct deposit to Portuguese banks; benefits are paid in full to US citizens living in Portugal.
Sources and official references
- SSA — Agreement between the United States and Portugal on Social Security (in force 1 August 1989): art. 6 detached workers up to five years, self-employed by residence — checked 18.9.2026
- SSA — Totalization Agreement with Portugal (pamphlet): certificates of coverage, six US credits and 12 Portuguese months to combine periods — checked 18.9.2026
- Lei n.º 110/2009 (Código Contributivo), artigo 53.º — 34,75 % (23,75 % employer + 11 % employee); Decreto-Lei n.º 2/2018 — 21,4 % self-employed — checked 18.9.2026
- SSA — Social Security Fairness Act: repeal of the Windfall Elimination Provision and Government Pension Offset — checked 18.9.2026
- SSA — Nonresident alien tax withholding: 30 % of 85 % of benefits = 25,5 %, unless a treaty provides otherwise — checked 18.9.2026
- Portaria n.º 358/2024/1, de 30 de dezembro — normal pension age in 2026: 66 years and 9 months — checked 18.9.2026
- IRS — US–Portugal tax treaty, art. 20(1)(b): social security benefits may be taxed by the paying state; art. 25 relief — checked 18.9.2026