Foreign employer (no PT entity) – how are you paying Social Security?

Member since 16 August 2023

sandraawilliams153Active memberYesterday 16:32:11

Has anyone here worked remotely in Portugal as an employee (not freelance) for a non-EU company that has no entity or registration in Portugal?

In a normal PT employment setup, contributions are:

11% employee

23.75% employer

If the foreign employer can’t register in Portugal:

Can the employee just pay the 11% directly?

What happens to the 23.75% employer part?

Do you end up paying both?

Or is switching to self-employed basically the only workable solution?

Looking for real experiences — what did Segurança Social actually allow, and did it cause any residency issues?

Thanks in advance.

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JohnnyPT Portugal Expert

Member since 23 May 2020

JohnnyPTPortugal ExpertYesterday 17:34:07

5195

Hi sandraawilliams153,

As far as I know there are 3 options. The second option is by far, the one most commonly used by remote workers.

Option 1: Foreign Entity Registration (Non-Resident Employer / "Entidade Empregadora Não Residente")

Many companies think they need to open a branch /office in Portugal, but this is not necessary.

How it works: The company can apply for a Tax Identification Number (NIF) and a Social Security Number (NISS) as a foreign entity without a permanent establishment. As a company outside the EU, it is required to appoint a tax representative in Portugal.

Payment: The company will have an account with Segurança Social and pay the total 34.75%.

Many companies refuse to take this step due to the bureaucracy and the risk of ‘Permanent Establishment’ (which could oblige the company to pay corporation tax in Portugal on its global profits).

___

Option 2: (most common): Self-employed (Recibos Verdes)

If your company refuses to register, this is the route that almost every people take.

Contributions: As a self-employed worker, the rate is 21.4% (levied on 70% of your gross income, which gives an effective rate of around 15%).

Advantage in the first year: You are exempt from Social Security for the first 12 months of activity.

Residence: This is the safest solution for those with a D8 (Digital Nomad) visa, as it demonstrates regular income and contributions.

https://www.doutorfinancas.pt/carreira- … dos-a-ter/

https://www.gov.pt/servicos/obter-infor … dependente

___

Option 3. Employer of Record (EOR)

+info here:

https://www.globalexpatsupport.com/post … ed-to-know