Payroll & Employment Guide: Portugal

Hiring in Portugal

If you plan to hire employees or remote workers in Portugal, you must comply with statutory wage thresholds, employment contract rules, social security obligations, and any applicable sector-specific collective bargaining agreements (CBAs).

Before onboarding talent, employers should understand the impact of salaries, statutory bonuses, employer social-security contributions, and other mandatory benefits on total employment cost. It is also important to align your policies with Portuguese Labour Code requirements on working time, leave, and termination procedures.

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Employee Benefits

Employers in Portugal must provide a range of mandatory statutory benefits. Many organisations — especially in tech, healthcare, and professional services — offer enhanced packages to stay competitive in the talent market.

Mandatory Benefits:

• Statutory annual leave of at least 22 working days
• Christmas bonus equal to 1 month’s salary
• Holiday bonus equal to 1 month’s salary
• Social security contributions for both employee and employer
• Sick leave benefits funded via Social Security, subject to eligibility
• Maternity and paternity leave benefits under statutory rules

Leave Policies:

• Annual leave: minimum 22 working days plus 13 national holidays
• Sick leave: paid under Social Security, typically 55–75% of salary depending on duration and conditions
• Parental leave: maternity leave of 120–150 days, paternity leave of 28 mandatory days, and shared parental leave options

Healthcare:

• Universal public healthcare through the National Health Service
• Many employers offer private health insurance as an additional benefit

Combining statutory benefits with attractive perks such as meal allowances, remote-work support, and private healthcare helps employers attract and retain top talent in Portugal.

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Taxes in Portugal

Portugal operates a progressive income-tax system supported by employee and employer social-security contributions. Employers are responsible for withholding wage tax (IRS) and remitting both tax and social security contributions on a monthly basis.

Personal Income Tax (IRS) – Example Bands:

• 14.5% up to ~€8,500
• 23% up to ~€13,500
• 28.5% up to ~€19,600
• 35% up to ~€25,800
• 37% up to ~€38,600
• 45% up to ~€75,000
• 48% above €75,000

Tax Allowances & Reliefs:

• General tax credits for individuals
• Health and education expense deductions
• Dependent-related deductions
• Meal card tax incentives when provided in eligible formats

Employers must configure payroll systems to apply the correct IRS withholding rates and social-security contributions according to current tables and employee circumstances.

Payroll in Portugal

Employers in Portugal must pay employees in line with employment contracts and any applicable CBAs. Salaries must meet at least the national or sectoral minimum wage, and employees are entitled to statutory bonuses.

Base Salary:
The base salary is the fixed monthly amount before bonuses and allowances. It must meet or exceed the Portuguese national minimum wage or any higher minimums set by CBAs.

Minimum Wage:
National minimum wage is generally in the range of €915–€1,000 per month (depending on region and sector). Some industries or CBAs may stipulate higher minimum pay levels.

Payment Schedule:

• Salaries are typically paid monthly, on the last working day
• Holiday bonus (1 month’s salary) is usually paid before vacation
• Christmas bonus (1 month’s salary) is paid by December

Additional Payments:

• Mandatory 13th and 14th-month salaries (Christmas and Holiday bonuses)
• Optional benefits: meal cards, transport allowances, remote-work stipends, and other allowances

Taxes & Social Security:

• Employee social security contribution: 11% of gross salary
• Employer social security contribution: 26.5% of gross salary
• IRS (income tax) withheld each payroll period and remitted by employer

Payroll Reporting Requirements:

• Monthly: social-security declarations and IRS wage-tax submissions
• Annual: employee income statements and employer reporting to authorities

Key Deadlines:

• Salary payment: last working day of the month
• Taxes & contributions: monthly remittances
• Payroll declarations: monthly and annual filings

Payroll Currency: EUR.

Looking for support in setting up compliant payroll and bonuses in Portugal?

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Legal Regulations

Portugal’s labour framework is primarily governed by the Portuguese Labour Code and sectoral collective agreements, which define employment rights, wage minimums, working hours, and safety requirements.

Total Employment Cost:

• Employer social security contribution: 26.5% of gross salary
• Employee social security contribution: 11% of gross salary
• Minimum wage guidance: €915–€1,000/month (subject to region/sector and updates)
• Probation periods: typically 90–240 days, depending on role and contract

Employers must ensure compliance with working-time limits, rest periods, leave rules, health & safety obligations, and any additional requirements set out in applicable CBAs. Documentation, record-keeping, and timely reporting to authorities are key compliance pillars.

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Work Permits & Visas for Portugal

Non-EU nationals require a valid work visa or residence permit to be legally employed in Portugal. The type of permit issued depends on job role, contract duration, salary level, and skill profile.

Types of Permits:

• Highly Qualified Worker Visa
• EU Blue Card
• Tech Talent Visa
• Work Visa for Skilled Employment

Employers must ensure that prospective employees obtain the correct permit before starting work, and that social-security registration and tax documentation are complete. For organisations without a Portuguese entity, using an EOR can significantly reduce immigration and compliance risk.

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EOR & PEO Services in Portugal

With Employer of Record (EOR) and Professional Employer Organization (PEO) services, you can hire and manage talent in Portugal with reduced complexity and risk.

Employer of Record (EOR) in Portugal:

Using an EOR allows you to hire employees in Portugal without setting up a local legal entity. Your EOR typically handles:

• Legally compliant employment contracts under Portuguese Labour Code
• Monthly payroll and salary disbursement
• Wage tax (IRS) and social security remittances
• Mandatory benefits administration (including bonuses)
• Onboarding, offboarding, and HR documentation
• Ongoing compliance monitoring

PEO Services in Portugal:

PEO services support your HR and administrative functions while you remain the legal employer. Typical PEO support includes:

• HR support and day-to-day workforce administration
• Payroll management and benefits processing
• Compliance with Portuguese labour laws and CBAs
• Drafting and maintaining compliant employment contracts

These models reduce administrative burden and help international employers stay compliant when building teams in Portugal.

EOR in Portugal

Payroll Calculator

Use Dhi ADT’s payroll calculator to estimate salaries, employer social-security contributions, employee deductions, and net pay under Portugal’s payroll rules. Model different salary levels and benefit scenarios to understand your total employment cost.

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