Working and Employment Contracts in Portugal

An overview of the process to be followed by foreigners (EU and non-EU) coming to Portugal for work or self-employment. Information on how and where to register with the authorities (immigration, social security, tax) and the paperwork required.

Non EU citizens need a work permit (Autorização de Trabalho) in order to work in Portugal. A future employer can apply for this from the provincial labour office. An entry visa is also required from the Portuguese Immigration Office (Serviços de Estangeiras e Fronteiras, SEF).

Nationals of an EU country need simply to have a Residence Permit (Cartão de Residência) which is obtained from the Portuguese Immigration Office (Serviços de Estangeiras e Fronteiras, SEF).

Also see AngloINFO INFOrmation Page Foreign Residence Permits in Portugal

Arriving in Portugal to Work

Anybody who works in Portugal must contribute to Social Security and pay taxes. On arrival in Portugal a number of official tasks must be carried out as soon as possible.

These are:

Get a Residency Card (Cartão de Residencia). This is an official legal document that all EU and non-EU citizens must get from the Portuguese Immigration Office (Serviços de Estrangeiros e Fronteiros)
Sign up with Social Security (Segurança Social). Whether the applicant is contracted full or part-time for a company, or is self employed they must pay social security contributions
Get a Tax Code (Numero Fiscal de Contribuinte) which is obtained from the local branch of the Director-General of Taxes (Direcçaõ-Geral dos Impostos) in the area where the applicant lives.

The Social Security and Tax departments will need to be shown the following documents:

Passport or Identity Card (Passaporte/Bilhete de Identidade)
Authorised photocopies of tax returns for three years from the country of origin
National Insurance Number (or similar) from country of origin
A completed Direcção de Serviços de Cadastro Form IPS 01/97/03 to get a Portuguese tax number (Numero Fiscal de Contribuinte). Forms are available from the local tax office in the area of residence. The form can be handed in at any tax office or Inland Revenue Client Services Office or Desk (Serviço de Apoio de Contribuinte)

A temporary slip (talão) will be issued and the tax number will be sent to the registered home address within a few weeks

Working for an Employer (Segurança Social por Conta de Outrem)

If the employee is contracted either full time or part time to a multinational company, Portuguese company or foreign company operating in Portugal then social security contributions will be deducted automatically from the monthly salary depending on what is earned. The employer usually has to match this by paying around 24 percent while the employee pays 11 to 15 percent.

Being Self Employed (Trabalhador Independente)

EU citizens who are self employed are responsible for paying their own social security contributions. These can be paid at the Post Office (Correios de Portugal) or via the ATM Multibanco machines. A book of green receipts – Modelo Nº 6 - (actually now blue) called Caderneta de Recibos Verdes will be issued for a small fee by the local tax office in the area of residence.

From 2007 a percentage must be deducted directly from the green receipt book for each invoice issued. Payments will still be made on a monthly basis and any differences between payments and the final calculation will be reconciled at the end of the tax year.

For every service and invoice sent a receipt will need to be issued and the following details filled in:

Tax payer's name and address
Tax payer's number (Número Fiscal de Contribuinte)
Activity exercised (Actividade Exercida)
Client's Name (Nome de Clinete)
Client's tax number
Amount being charged (Importância)
Value Added Tax (IVA)
Sub Total (Amount + IVA)
Income Tax retained at source (Retenção na Fonte)
Amount received after deductions (Importância recebida)

The receipt must be dated and signed and the top (blue) copy sent with the invoice to the client, while the (white) carbon copy is retained in the book for an accountant.