Portugal Country Guide 2022

Portugal

Portugal is a country located on the Iberian Peninsula of Southwestern Europe; it has a warm climate, lots of opportunities for entertainment and recreation, and a very safe environment. Portugal has a high quality of education and medicine, good road networks, and excellent tax benefits for foreigners; the cost of living is also on the low side compared to the rest of Europe.

People living in Portugal are very friendly and welcoming, but they generally have a relaxed pace of life, which can be jarring for people who are used to punctuality; the weather ranges from very hot summers to very rainy winters, and there is no central heating.

  • Capital: Lisbon
  • Spoken Languages: Lisbon
  • Currency: Euro (EUR)
  • Minimum monthly wage: EUR 822.50 (Gross)

Entry Visa

Citizens of EU/EFTA Member States and Switzerland can enter Portugal with an identity card or a valid passport; other foreign citizens may enter with a valid Schengen visa.

Work Permit / Residence Permit

Citizens of EU/EFTA Member States and Switzerland can live and work without a work or residence permit in Portugal. However, they do have to apply for a Residence Permit if they intend to stay in the country for more than 3 months.

Other foreign nationals must obtain a work permit and a residence visa. The application for the work permit is done by the employer at Labor Authorities; in order to grant a job to a foreign national, they must have proof that the position could not be filled by an EU/EAA citizen. After the work permit has been approved, the employee can apply for a work visa at a Portuguese consulate, which requires proof of health insurance; this visa is valid for several months, and allows the individual to enter Portugal and start work.

After entering the country, the employee must register at the Social Security Office, and apply for a residence permit for work at the Portuguese Immigration and Borders Service (SEF) before their work visa expires.

Social Security Registration

Individuals must register with social security after entering the country.

Working Hours

A standard working week in Portugal is 8 hours/day, or 40 hours/week. Overtime cannot exceed 2 hours daily, and must be compensated at a higher rate.

Public Holidays

  • 01 January (New Year’s Day)
  • Good Friday (Not a standard date, usually March/April)
  • 25 April (Freedom Day)
  • 01 May (Labour Day)
  • 10 June (Portugal Day)
  • Corpus Christi (Not a standard date, second Thursday after Whitsun)
  • 15 August (Assumption Day)
  • 05 October (Republic Day)
  • 01 November (All Saint’s Day)
  • 01 December (Restoration of Independence)
  • 08 December (Immaculate Conception Day)
  • 25 December (Christmas Day)

Vacation Allowance

The minimum number of vacation days per year is 22 working days, which can be taken until 30th April the following year.

Sick Leave

The first 3 days of sick leave in Portugal are covered by the employer, at a rate of 89% of the standard wage. Additional sick leave is covered by social security, up to a maximum of 1,095 days, provided the employee has worked for 6 consecutive calendar months before the illness. Pay is 55% for the first 30 days, 60% for the next 60, 70% from the 91st day until the 365th, and 75% for the rest.

Maternity / Paternity leave

  • Maternity: 30 days before birth (optional), 42 days after birth (mandatory). An additional 30 days are granted for multiple births.
  • Paternity: 20 days; 5 right after the birth (mandatory), remaining 15 within 6 weeks. 

Termination & Severance

  • Maternity: 30 days before birth (optional), 42 days after birth (mandatory). An additional 30 days are granted for multiple births.
  • Paternity: 20 days; 5 right after the birth (mandatory), remaining 15 within 6 weeks. 

Notice Period

The standard notice period is 30 days for a contract up to 2 years, and 60 days for contracts over 2 years.

Social Security

Employee social security contributions are deducted automatically from the wage; employer contributions are paid by the employers themselves. Social security contributions cover sick leave, birth and adoption, disability, retirement, unemployment, death and work-related accidents or illness.

Employer Contribution (%)Employee Contribution (%)Total (%)
23.75%11%34.75%

Pension

Pensions in Portugal are funded by social security contributions; all individuals who have worked and paid social security in Portugal for at least 15 calendar years are eligible.

Taxation

The Portuguese fiscal year runs from January 1 to December 31.

Tax Rates

The following progressive rates apply for 2022.

Taxable Income (EUR)Total Tax (%)
0 – 7,11614.5%
7,117 – 10,73623%
10,737 – 15,21626.5%
15,217 – 19,69628.5%
19,697 – 25,07635%
25,077 – 36,75737%
36,758 – 48,03343.5%
48,034 – 75,00945%
75,010 +48%

Special Allowance for Expatriates

The NHR (Non-Habitual Resident) Scheme is a tax status granted in Portugal for foreigners who become new residents, provided they have not been taxed in Portugal for 5 years preceding the application. The application must be submitted until 31 March of the year following the year of registration as a resident.

This scheme is granted for a period of 10 years, and offers a 20% flat tax rate on employment income instead of standard progressive rates.

Tax Returns

The annual income tax return is filed between 1 April and 30 June for the previous tax year. It can either be completed online, or in paper form.

Double Taxation

Portugal has international double taxation agreements with multiple other countries, which can reduce payable tax on certain incomes, or alleviate the need to pay tax on the same income in both countries.

Health Insurance

Public health insurance in Portugal is covered by social security contributions, and foreigners are also entitled to the benefits. This insurance typically covers only a percentage of the cost.

Cost of Living

The cost of living in Portugal is one of the lowest in Western Europe. The estimated monthly cost for a single person is around EUR 1,000 – 1,300, with 500-700 going to rent.


How We Can Help

We provide a full set of services in Portugal allowing corporate clients, recruitment agencies and professional contractors to operate in an optimal manner while ensuring that all local employment obligations are taken care of.

Access Financial offers the following solution in Portugal:

  • Self-Employed Solution

If you would like to discuss how Access Financial can help in Portugal, please contact us.

Disclaimer

WE HAVE PREPARED THIS AS A GUIDE ONLY; IT DOES NOT FORM PART OF AN OFFER. PLEASE REQUEST ILLUSTRATIONS BASED ON YOUR SPECIFIC CASE FROM ONE OF OUR SOLUTION MANAGERS.