Remote work
in Portugal.

Q: What are my options if I want to hire a remote employee in Portugal?

If you want to hire a remote employee in Portugal , you have two options: Option 1: Hire a freelancer Hiring freelancers in low-cost markets is a popular option for companies looking to scale their operations at a low cost; however, it comes with serious risks, including the risk of employee misclassification. If discovered, your company will face serious fines and back taxes in the country of offense. Option 2: Open a local entity This is a good option to limit risk and hire employees compliantly; however, it is an extremely resource-intensive option that would require local knowledge of relevant employment laws. It would take months and tens of thousands of dollars to get set up properly in Portugal. Option 3: Engage an international employer of record This is the most affordable option that offers full compliance. By engaging an employer of record like Horizons, you mitigate the risks of employee misclassification and human error, placing all employment responsibility on Horizons. You retain full control of your employee while Horizons takes care of the day-to-day HR responsibilities like payroll, social contribution allotment, benefits administration, and more.

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Remote work in Portugal – Overview

Portugal is considered a very good location to work remotely. In fact, Momondo ranked Portugal #1 worldwide for living and working remotely. The low cost of living, low cost of amenities, and mild climate mean that employees earning income from foreign companies can afford a good lifestyle in the country. Portugal’s location lends itself well to traveling throughout Europe (including visa-free travel to the Schengen area) or Northern Africa, and the relaxed Southern European business culture present in Portugal might be appealing for remote workers.

Note: If you employ remote workers in Portugal, then a home office allowance is mandatory.

Remote work in Portugal – Laws & Regulations

Remote workers in Portugal have a variety of options to be able to live and work legally in the country, including the Portugal digital nomad visa (from October 2022).

Citizens of EU nations have the right to live and work in Portugal. If the EU citizen wants to live and work in Portugal longer than 3 months, they must apply for a residence permit and get a tax identification number.

For non-EU citizens, the path to live and work in Portugal was less clear before October 2022. For non-EU citizens who wanted to live and work remotely in Portugal the following options are possible:

Portugal digital nomad visa. From October 30 2022, Portugal opened applications for its version of the digital nomad visa. Options for the Portugal digital nomad visa include a 1 year option or a renewable option for up to 5 years. The primary requirement for the Portugal digital nomad visa is making four times the national minimum wage (or about $2,750 per month). Other requirements include showing a Portuguese bank account funded with sufficient means of sustenance, proof of address in Portugal, and a NIF number. According to Portugalist’s guide to the NIF, this can be obtained online or in-person.
The Portugal digital nomad visa is a huge improvement on previous options for remote work in Portugal – largely because it’s a visa designed for working professionals. Compared to the D7 visa for example (where monthly earned income doesn’t count toward the €7,200 annual income requirement), the Portugal digital nomad opens the opportunity to live, work, and travel in Schengen Europe to thousands worldwide.
D7 visa. The D7 visa is often mistaken for a digital nomad visa and is often used as such; however, the D7 visa was originally designed for those earning passive income who want to have residence in and pay taxes in Portugal. Some digital nomads may use the D7 visa for residency and tax compliancy purposes. The process of obtaining a D7 requires the applicant to establish tax residency; after tax residency is established, the remote worker in Portugal may then apply for a Non-habitual Resident (NHR) status, which greatly lowers the tax burden on foreign income for 10 years.
Portugal Entrepreneur Visa. The Portugal entrepreneur visa is for applicants who have a business plan and intend to establish an enterprise in the country. If the business idea isn’t good/original enough, applicants may be rejected for this visa.
Self-employment Visa. This option is for applicants who can prove that they will provide services and work to Portuguese companies.This visa is attractive as it grants to right to travel visa-free in Schengen countries.
Working visa through EOR. Another option for those who want to work remotely in Portugal is to gain employment through a company looking to hire in the country using an international EOR employment model. In such cases, the hiring company will often provide visa support through their EOR partner. This option is both for candidates changing job, and for those who remain at the same company in a new location. Contact us if you want to hire remote workers in Portugal. Each mobility situation is different, so we would need to conduct a free consultation and assess each case individually.

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FAQs

Is Portugal a good country for remote work?

Culturally, Portugal is an excellent country for remote work. From a legal/compliance perspective, it can be somewhat complicated for remote workers. One way to make the process smooth is to engage Horizons, who will take care of employment and tax compliancy.

What are my options if I want to hire a remote employee in Portugal?

If you want to hire a remote employee in Portugal, you have two options:

Option 1: Hire a freelancer

Hiring freelancers in low-cost markets is a popular option for companies looking to scale their operations at a low cost; however, it comes with serious risks, including the risk of employee misclassification. If discovered, your company will face serious fines and back taxes in the country of offense.

Option 2: Open a local entity

This is a good option to limit risk and hire employees compliantly; however, it is an extremely resource-intensive option that would require local knowledge of relevant employment laws. It would take months and tens of thousands of dollars to get set up properly in Portugal.

Option 3: Engage an international employer of record

This is the most affordable option that offers full compliance. By engaging an employer of record like Horizons, you mitigate the risks of employee misclassification and human error, placing all employment responsibility on Horizons. You retain full control of your employee while Horizons takes care of the day-to-day HR responsibilities like payroll, social contribution allotment, benefits administration, and more.

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"I truly appreciated the thoroughness and the professionalism of Horizons personnel while we hired internationally with them. They were knowledgable on all subject matters pertaining to international employment."

Gary PaskyVP Software Development, PICS ITech (USA)

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