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Portugal

Among expats, Portugal’s advantageous tax regime is a well-known draw (along with Port wine and 300 days of sunshine a year). The government has for the past decade implemented a range of structural reforms to prioritize foreign investment and an ambitious EU-funded reform agenda aims to accelerate climate and digital transitions. After a deep post-pandemic recession, strong domestic demand and the return of tourists has buoyed the economy.

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At a Glance

Local Bank Acct.

Yes

Representation

Yes

Local Representation

PAYROLL FREQUENCY

Monthly

Local Registration

No

EMPLOYER TAXES

26%

Of Gross Salary

13TH/14TH SALARY

Yes

13th and 14th

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Good to Know

  • Portugal is a business-friendly country although the setup of a local entity can take weeks. Many entities hire employees in Portugal as remote workers. Registering as a NRE (Non-Resident Employer) is possible as long as there is a very limited number of employees (1-3) and their activity does not imply a PE (Permanent Establishment).

  • It is easy to find advisors and employees that are fluent in English and Spanish (French-speaking people are available as well although not in the same numbers).

  • Expats are moving to Portugal to take advantage of the NHR (non-habitual resident) regime which offers lucrative tax breaks to foreign residents for a period of 10 years. A qualifying individual is taxed at 20% for income received as an employee (as long as it is from a high added-value activity) and can receive income from abroad without being taxed, even though it has to be declared (e.g. rents). Pensionists can take advantage of this regime as well, paying only 10% in personal income tax.

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Top Challenges

Billing Regulations

Despite its small market size, Portugal’s extensive local requirements — especially those related to billing — tend to surprise multinationals (SAFT-PT rules, certification of software, QR Code, Digital Signature). Every company, regardless of size or type, has to follow strict rules for sales invoicing.
he losses in 2020.

Legal Mandates

Local legal entities (e.g. "Lda.") are mandated to appoint a local CC (Certified Accountant) and to use a software compliant with the local rules, namely SAFT-PT (a .xml file). The most common approach is to engage a local accounting firm to comply with these requirements.

Talent Availability & Cost

The unemployment rate in Portugal is low, so finding and retaining talent is a challenge. Salaries are also rising even though they remain lower than in most western EU countries. Social Security charges come in at 23.75% for the employer and 11% for the employee (without any cap).

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Next Steps

  • Are you considering the Portuguese market? You don’t know what you don’t know — and that’s where our local expertise comes in. Our expert-led managed services and technical consulting are designed to help you thrive in Portugal and throughout the world, regardless of regulatory complexity.

  • We back up our expertise with GateWay, our pioneering global expansion management system (GXM) that empowers you to effortlessly and compliantly manage your international footprint. This platform is your one-stop-shop for global growth.

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