Setting up and managing payroll in Portugal
After decades of economic uncertainty, Portugal has recovered significantly to become an area of real growth and potential. This, along with the country’s rich, diverse culture and excellent quality of life make it a popular place to do business.
If you and your organization are interested in expanding into Portugal, one of the initial steps will probably be establishing an official entity in the country, setting up a payroll, and hiring employees. Unfortunately, this can regularly take longer than expected, with complex administrative procedures and unique business laws that can stall progress.
One way to bypass the process of setting up payroll in-country is to utilize the system of Portugal payroll outsourcing for the complex administrative work and ongoing management. At Horizons, we will establish and run your Portugal payroll, ensuring full compliance with local legislation. Our Portugal payroll outsourcing services are perfect for organizations with or without a Portugal-based entity.
If you have an entity in Portugal
If your organization already has an entity registered in Portugal, then we can help you by setting up and managing your in-country payroll. We’ll ensure everything is in full compliance with Portuguese legislation and ready to go as quickly as possible, so you don’t have to worry about the complex details and can focus on your expansion.
If you don’t have an entity in Portugal
If your company does not have an established entity in Portugal, we can recruit your new workforce through our Portugal subsidiary. This service enables your organization to bypass the long and complex process of establishing an entity. Additionally, we can provide our standard payroll and setup service to help you focus solely on a successful expansion into Portugal.
The simplest way to expand into Portugal
Portugal payroll guide
What are payroll tax and withholdings rules in Portugal?
Employers and employees in Portugal must both contribute towards social security benefits. Employees need to pay around 10-15% of salaries, whereas employers need to pay around 23.75%.
The progressive income tax rates are between 14.5% and 48% of salary, based on income level. The corporate tax rate is 21%.
Entitlements and terminations
Employees in Portugal who are not in a probation period are entitled to notice of termination. For terminations in Portugal, the length of notice varies based on the length of time with an employer:
- Under one year of employment = 15 days of notice
- Between one and five years = 30 days of notice
- Between five and ten years = 60 days of notice
- Over ten years = 75 days of notice
These notice periods do not apply if the employee is in a probation period. In some cases, employees may be entitled to severance upon termination. The usual rate is generally around 20 days of pay for every year that someone has been employed.
How to establish Portugal payroll outsourcing
One option for your payroll in Portugal is to establish it internally. This can be a viable choice for larger organizations looking to build a long-term presence in the country, but it can also be very expensive and can cause delays.
The easiest way to access all the benefits of employing locally, with none of the difficult administration, is to outsource to Horizons. We will offer our Portugal subsidiary to act as the employer of record for your local workforce, whether you already have an entity in Portugal or not.
We can also take care of the payroll setup and management, as well as any HR, legal compliance, contracts, and more. This flexible and tailored service is designed to help you successfully expand into Portugal without delays.