Contracting in Portugal – latest news

9th March 2022

Working in Portugal has always been a popular path for global contractors given the country’s appeal on many fronts. For contractors looking to settle in Portugal and set up limited companies or even entrepreneurs seeking to launch their start-ups, the business and work environments are among the best in the EU with many government incentives helping the transition. However, compliance is imperative and they must declare the right amount of taxable income to avoid issues with local tax offices. Within this blog, we round up the latest travel news from Europe’s most westerly nation and the wider EU.

The good news is that tourism in Portugal has taken off once again, with citing impressive increases from the country’s National Statistics Institute or Instituto National de Estatística (INE). Figures for January revealed that the number of accommodation booked rose by 183.7% year on year, with overnight stays rising by an even bigger amount (185.9%). Although below January 2020 rates, nonetheless, the evidence points to a solid recovery for a sector that is so important to the country’s GDP. Foreigners accounted for over half the near-two million overnight stays, representing a colossal monthly increase of 308.7%.

As for the country of origins of those visitors, it won’t perhaps come as a surprise to learn that of the foreigners who booked overnight stays in Portugal, British tourists topped the charts with 14.6% of the total, followed by Germany (13.4%) and fellow Portuguese speaking country Brazil in third place (9.4%). The true potential of the sector indicates that 41% of establishments remained closed during January – compared to 37% in December – as a result of the Omicron variant. “Portugal’s economic recovery could be at risk if we do not have enough people to fill those jobs when tourists return,” warned Julia Simpson, President of the World Travel and Tourism Council (WTCC).

And following the conflict in Ukraine, the Portuguese government also acted swiftly to suspend its golden visa programme for Russian citizens, including those from Belarus. The Serviço de Estrangeiros e Fronteiras (SEF), part of the Ministry of Internal Affairs and responsible for immigration and border control, reported that the programme had generated €277.8m compared to the €32.5m from Ukrainian citizens. In exchange for financial investment in the country, programme participants can become tax residents and obtain a Portuguese passport. Similar schemes have been halted in the EU.

Regarding travel restrictions, the Portuguese government decided to relax its rules in February, with visitors from the EU and EEA able to enter the country as long as they have completed a passenger locator form and hold a valid EU Digital COVID pass vaccination certificate or equivalent. The individual in question must have been vaccinated within the last 270 days with recovery certificates also accepted with the proviso that the positive test is registered in the last 180 days. PCR and rapid antigen tests must be taken within the last three days or 24 hours respectively. Tighter rules apply for those entering the country by land with face masks still mandatory in indoor venues.  

EU travel restrictions lifted for global contractors  

In other news, Austria removed almost all its restrictions on 5 March, except public transport and shops which still require FFP2 (filtering facepiece) mask-wearing by its citizens and those visiting the country. Clubs also opened again on the same day. Austria applies the 3-G rule, which means that visitors must be either vaccinated, recovered or present a negative test. “To prove your ‘3-G’ status, you can use the NHS Covid app or the EU Covid Pass. Printed versions and medical certificates of vaccination or recovery are also accepted,” Austrian authorities said in a statement.

Its fellow German-speaking neighbour removed all countries from its high-risk list as of 3 March. The change means that all travellers entering Germany regardless of their country of origin are now able to visit without the need to quarantine or take any pre-entry tests. The Robert Koch Institute (RKI), the federal government agency responsible for disease control and prevention, decided to dispense with all extra safety measures as it deems Omicron to not be as potent a threat to public health as previous variants. A valid vaccination certificate, proof of recovery or negative test are the sole requirements.

Elsewhere, the Balearic island of Mallorca is looking to boost tourism from Nordic countries – Denmark, Norway and Sweden – who are the third biggest visitor group after Germany and the UK. Another top tourist destination, the Mediterranean island of Cyprus, has also removed further restrictions for fully vaccinated or recovered travellers. And on a final positive note, a press release from the International Air Transport Association (IATA) has estimated that overall traveller numbers would continue to rise and reach four billion by 2024, equating to 103% of pre-pandemic 2019 levels.

As we’re seeing, restrictions are easing allowing both EU and non-EU nationals to move more freely across member states, and with economies recovering lost ground, this will create increasing opportunities for workers. But as well as securing work permits and any relevant documentation, global contractors must remain compliant with the requirements of the local tax authority – understanding tax systems and rates, tax returns and residency implications. If you’re unsure about tax compliance in your country, our 6CATS International experts can guide you every step of the way.

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