You can work from Portugal for a company based elsewhere in three main ways. The choice changes your contract, taxes, social security and protection.
1. A Portuguese contract, through an intermediary
Many foreign companies hire in Portugal through a local entity or an Employer of Record (a company that is the legal employer in Portugal on their behalf). You get a Portuguese employment contract: holiday and Christmas allowances, social security and income tax withheld at source, and the protection of Portuguese labour law.
- It is the simplest and best protected option if you want stability.
- Ask whether the advertised salary is gross per year and in how many payments it is paid.
2. Self-employed (recibos verdes)
You can provide services to the foreign company as a self-employed worker, issuing invoices.
- Before you start, you register the activity with the tax authority (Portal das Finanças) and take on income tax (category B) and self-employed social security contributions.
- VAT rules for services to foreign businesses differ from services to clients in Portugal. Check with an accountant before your first invoice.
- There is no paid holiday, no allowances and no dismissal protection: compare the offer with a gross employment salary, not a net one.
3. Your own company
Some people invoice through a single-member company. It has fixed costs (accounting, for example) and usually pays off only above certain earnings. Decide this with an accountant.
Where you pay tax
As a rule, if you live and physically work in Portugal you are a Portuguese tax resident, and income from that work is taxed here even when the company is foreign. Long periods working in another country can change this.
Benefits to check
- IRS Jovem: lowers income tax for young people in their first working years. Conditions on the Portal das Finanças.
- Programa Regressar: people returning to Portugal after emigrating may, for some years, be taxed on only part of their employment income. Conditions and deadlines on the Programa Regressar site and the Portal das Finanças.
Day to day
- Time zones: confirm the required overlap hours before you accept.
- Pay in another currency: banks' exchange fees can be high; compare options before your first salary.
- Equipment and costs: ask whether the company provides a computer or pays for internet and coworking.