Countries
Pay in Portugal
Pay employees in Portugal
Administrating timely, accurate and compliant payroll in Portugal requires a deep understanding of local tax, reporting, employment and compensation requirements. With our payroll solutions, you can count on in-country expertise and support to help ensure your workers in Portugal are paid correctly, compliantly and on time - every time.
Taxes, employee compensation and benefits
Our local experts provide up-to-date guidance on the specific tax legislation, compensation requirements and benefits expectations for processing payroll in Portugal.
- Corporate, income and regional taxes
- Social taxes, including pensions, healthcare and unemployment
- Compensation for holidays, vacation and various types of leave
- Other withholdings and employer contributions
We administer payroll in various ways:
- EOR, our employer of record solution that allows you to employ and pay international workers even if you don’t have a local entity
- Global Pay, our local payroll solution for your operations in a specific country
Taxes for payroll in Portugal
Corporate tax
The corporate income tax rate in Portugal is 21%.
Income tax
Effective Jan. 1, 2023, Portugal’s personal income tax rates for residents of mainland Portugal in Europe and minimum and maximum amounts of annual income for each tax bracket are as follows:
- Up to €7,479: 14.5%
- €7,480 - €11,284: 23%
- €11,285 - €15,992: 26.5%
- €15,993 - €20,700: 28.5%
- €20,701 - €26,355: 35%
- €26,356 - €38,632: 37%
- €38,633 - €50,483: 43.5%
- €50,484 - €78,834: 45%
- More than €78,834: 48%
In addition to income tax, employees with an annual income of €80,000 to €250,000 are subject to a solidarity surtax of 2.5%, and those with an annual income exceeding €250,000 must pay a solidarity surtax of 5%.
Employers are required to withhold income tax and remit payments to the government on behalf of their employees. Employers must file and remit taxes monthly and also provide employees with an annual tax summary by January 20.
Portugal’s two autonomous regions, the Azores and Madeira, each have their own income tax rates.
Social Security
Social Security contributions are divided between the employer and employee. At for-profit companies, the employee contribution rate is 11%, and the employer rate is 23.75%. At nonprofit organizations, the employee rate is also 11%, but the employer rate is 22.3%.
Contributions are administered by the Ministério do Trabalho, Solidariedade e Segurança Social (MTSS), and they cover benefits such as pensions, sick leave, parental leave, unemployment insurance and family benefits.
Unemployment
There are two separate funds that employers must pay into for unemployment benefits:
- Fundo de Compensacão do Trabalho (FCT), at a rate of 0.925% of an employee’s salary
- Fundo de Garantia de Compensacão do Trabalho (FCGT), 0.075% of an employee’s salary
Additional payroll tax
Employers with an above-average number of workers on fixed-term contracts must pay an additional payroll tax. The rate is based on the difference between an employer’s number of fixed-term contracts and the industry average, with a maximum tax rate of 2%.
Updated: 26.09.2023
Employee compensation and benefits in Portugal
The Portuguese Constitution and Labor Code define employment regulations and the MTSS administers social benefits.
When processing payroll in Portugal, you’ll need to consider the following employment regulations:
Partner with Safeguard Global for your payroll in Portugal
Hundreds of organizations depend on our global payroll experts to ensure their payroll processing is accurate and compliant with local tax and employment requirements.
We support payroll in Portugal in various ways: through our employer of record solution, as a local payroll provider for your Portuguese operations, and as part of a managed provider solution for your global organization.
As an employer of record in Portugal, we handle payroll for your Portuguese workers, ensuring accuracy and compliance, while you manage their day-to-day contributions.
As a local provider of payroll in Portugal, we can help your Portuguese operations:
- Comply with Portuguese labor laws and regulations
- Deduct the appropriate tax and social security withholdings
- Ensure your employees in Portugal are paid accurately and on time
As a global payroll provider, we offer streamlined processing across countries, currencies, languages and time zones— to help companies gain global visibility to pay data and make smarter workforce decisions.
Whether you need payroll support in Portugal through an employer of record, a local provider or as part of a comprehensive global payroll system, contact us to let our experts find the right solution for you.
Disclaimer
The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.