A guide to contracting in Portugal

contracting in Portugal

6th July 2018

While Portugal’s shock exit from the World Cup might be front of mind for most of us, there’s more to this European destination than football. In fact, if you’ve ever played 18 holes in Portugal, you’ll know that it is also home to some of the world’s best golf courses. Adrenaline-addicts can also take a surf board to its renowned beaches.

And, while there’s no doubt that Portugal is a fantastic place to spend your leisure time, it is also an attractive place to work. A rise in entrepreneurial start-ups, which the government is actively encouraging through the introduction of new visas, is creating particular demand for contractors within the IT arena. However, there is currently a talent shortage across virtually every sector, leaving 55% of Portuguese CEOs unable to find enough skilled professionals.

Contracting in Portugal: the legal bit

So, while it is clear that there’s plenty of opportunity for contractors from a range of specialisms who are keen to work in Portugal, there are a few key things to know beforehand.

Firstly, only non-EU nationals will need a work permit in order to take up a position, but in order to register as self-employed, you’ll need a fixed address in the country. Crucially, within a week of finding accommodation, you must inform the residency office of the local town. As part of the process, you’ll need to show copies of your passport and rental agreement, together with a description of your profession and the work you will be performing.

Once working, you’ll be liable for income tax at variable rates according to your earnings. The good news is that self-employed workers are exempt from social security payments for the first year.

Contractors in Portugal should also be aware of the system for claiming business expenses. If you earn less than €200,000 per year, 25% of your gross income can be offset by expenses without you needing to provide documentation. This percentage is unlimited if you earn over this amount, but you will need to supply records.

One last thing to be mindful of is that when you reach the end of your contract, a letter to the tax authorities is necessary in order to de-register.

With rules varying considerably for employed and self-employed workers, in order to ensure that you are compliant with local legislation we strongly advise partnering with a specialist international contractor management company. Contact the team today to find out how we can help you.


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