Payroll in Portugal

Payroll in Portugal

COVID-19 status update

As the situation in the Portugal continues to develop, Safeguard Global will be providing in-country intellect to our clients. As of today, we have not identified any disruption that will impact our ability to provide the service our clients expect.

 Learn more in our COVID-19 Resource Center.

Although Portuguese labor rules are considered less rigid than in many European countries, administering accurate and compliant payroll in Portugal still requires a firm understanding of the country’s distinct requirements and customs governing taxes, employment benefits and compensation.

Currency
The euro is the official currency of Portugal.

Payroll cycle
Employees in Portugal must be paid at least biweekly—via check, money order or direct deposit—and payment must be made on a workday, during working hours. Employers must provide a payslip detailing pay, benefits and deductions every pay period.

Taxes for payroll in Portugal

Corporate tax
The corporate income tax rate in Portugal is 21%.

Income tax
Employee income tax in Portugal is assessed on a progressive scale, with rates ranging from 14.5% to 48% depending on annual income. Income tax brackets are:

  • €0 – € 7,112: 14.5%
  • €7,113 – €10,732: 23%
  • €10,733 – €20,322: 28.5%
  • €20,323 – €25,075: 35%
  • €25,076 – €36,967: 37%
  • €36,968 – €80,882: 45%
  • More than €80,882: 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 they must 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%, and 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%.

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 Managed Payroll provider, we offer centralized multinational payroll in over 150 countries—with 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.

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.

Learn more about global payroll

Ready to pay workers in Portugal?