Employer of Record (EOR) in Portugal

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  1. Overview: Portugal
  2. Global PEO and Payroll
  3. Global HR Compliance
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
Other counrtries

Global PEO and Payroll in Portugal

What Is a Global PEO?

A global PEO (Professional Employment Organisation) can offer various HR services to assist an organization in managing its payrolinsurance, and safety policies. These services include administering health insurance benefits, establishing employee handbooks and HR policies, and managing risk and compliance.

A global PEO provides HR and payroll services to businesses of all sizes. It becomes the Employer of Record for tax purposes and provides employee benefits packages under its tax identification numbers. This allows businesses to save time and money on their HR and payroll functions.

What Is Co-employment Model?

When an organization partners with a Professional Employment Organization (PEO), it engages in a co-employment relationship with the PEO that assumes legal responsibility for the entire employment journey of its international employees, including streamlined and compliant onboarding and ongoing management and offboarding procedures. The global PEO client retains control of its day-to-day business operations, just as it did before entering the co-employment relationship.

Utilizing a PEO allows certain global employment-related risks to be managed and liabilities mitigated for the global PEO client. This includes stabilizing employment-related expenses and mitigating liabilities such as taxes, social security, and worker's compensation.

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What Services Can a PEO Provide in Portugal?

1. Expert guidance on how to enter foreign markets quickly and compliantly

As a business owner, you must stay ahead of the competition and expand into new markets as quickly and efficiently as possible. This can be challenging, however, due to the time-consuming and costly process of establishing an international subsidiary.

One of the most challenging things about expanding a business is finding the right international expansion partner, successfully determining the proper market entry mode talent engagement mechanism, and streamlining your operations overseas. However, the initial local entity establishment can be very laborious and costly.

Acumen International removes all those obstacles with its tailored Express Global Employment solution that helps businesses optimize global employment operations and attain faster growth. This unique solution can save you a tremendous amount of time and up to 70% on expansion costs.

Our all-in-one solution includes a comprehensive global workforce and compliance assessment SaaS tools, global PEO services, and HR operations support, making it easy for you to extend your business into new markets without hassle.

2. Global Employment Done Right in Portugal: Global HR Compliance

Global employment and international workforce management should be aligned with regulatory compliance requirements, tax, labor, and employment law to minimize legal risks. Misalignment of hiring practices can lead to costly penalties, litigation, and reputational damage.

Achieving current compliance standards is imperative in today's volatile employment environment. However, responding to these changes and protecting your organization from costly penalties and reputational damage can be burdensome and overwhelming.

Do you feel burdened by the labyrinth of laws and regulations? Do you feel your company doesn't have a comprehensive compliance strategy? Do you constantly fear tax and labour law changes?

PEO in Portugal: All-in-one Solution

Imagine there is a way to eliminate this risk to your organization without increasing costs orrisking a lawsuit. Acumen Global helps organizations with their HR management, such as benefits administration, payroll support, and employment law compliance, and suggests cost-effective solutions.

Acumen Global PEO can help you with that. We offer our clients a 'one-stop shop' approach to their global employment needs, from express global cost and compliance burden assessment to legal and compliant talent engagement solutions, immigration, and HR support services to full-fledged payroll and benefits administration.

Acumen Global PEO service portfolio streamlines benefits and administration deliverables across multiple jurisdictions while automating compliance mechanisms to reduce risk, lead time, and costs.

3. Global Payroll Administration and Tax Filing in Portugal

With multiple companies operating across borders, everyone must take care of payroll and keep their employees happy and productive. Managing payroll, benefits, compensations, taxes, and benefits can be a major challenge for growing a business worldwide.

When you hire international teams not based in your core country of operation, every day is a journey into unknown quantities, unexpected expenses, and paperwork nightmares. However, when you hire through Acumen's PEO services, workers are paid directly, and the employer has control of their global workforce.

Acumen Global PEO is a world-class global PEO and Payroll service provider in Portugal that streamlines your payroll process while cutting down on the administration cost in Portugal. Acumen will:

  • manage payrolls in Portugal;
  • calculate and file employee taxes;
  • provide an in-country legal entity and infrastructure;
  • support your team with in-country administrative HR tasks;
  • pay out as single or group payments to your employees in Portugal- seamlessly and promptly.

3. Benefits Administration in Portugal by PEO

If you are like most busy C-level executives, all you want to accomplish is running your business. You have little time or energy for the intricacies of navigating the complexity of international payroll, local taxes, compensations, and benefits management. 

Imagine if managing these complex services at all locations worldwide was as effortless as using a native tongue. 

If you also have trouble finding a right fit International PEO partner or if you are confused about which benefits management companies would be ideal for your case, feel free to connect you with our benefit administration advisors, so they can analyze your company's needs and provide you guidance on how to go about finding the right fit.

4. Comprehensive Human Resource Support in Portugal

Acumen's experienced HR professionals are here to help with the many challenges of international expansion. From creating a successful employment strategy to guiding proposed countries' modes of entry, we can help you get started in your new venture.

With our expert advice, you can create compliant agreements and policies and ensure a smooth transition for your employees.

5 Global HR Compliance Issues C-level Executives Must Know

A global PEO can help you identify and mitigate the employment-related risks associated with expanding your company's operations into new markets, including the strategic, operational, tax, financial, and compliance risks that exist when expanding your business internationally. By conducting a comprehensive risk assessment, we can provide recommendations to ensure your business continues to thrive abroad.

Global employment risk can be a significant factor in business expansion strategy. Still, organizations should identify their key risk drivers and develop prevention and mitigation plans to reduce the chances of any adverse outcomes.

  1. Continuous tax changes
  2. Worker misclassification risk
  3. Hour and wage compliance issues
  4. Compliance with local immigration laws
  5. Keeping track of and adhering to local benefits and compensation regulations.

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How a Global PEO and Payroll Service Provider Helps Lighten Your HR Load in Portugal

1. Time Savings

The time you save by outsourcing international payroll to a professional employer organization (PEO) can be put toward other areas as you seek to grow your business. With the help of a PEO, you can avoid tax and non-compliance risks while reducing the time and effort required to calculate overtime, paid time off, and employer taxes. Working with a global PEO can also ensure that your international payroll is done correctly and on schedule, minimizing potential errors or problems.

2. Shared Tax Liability

A global PEO and payroll service provider protects you from costly tax liabilities across multiple foreign jurisdictions. A trusted global PEO can provide timely deduction and withholding notices, ensuring that employment taxes are paid on time and in full. With the help of a reputable PEO, you can rest assured that the IRS will not come knocking at your door unexpectedly.

3. High International Employee Retention in Portugal

Issuing late payments can demoralize international employees, robbing them of the trust and respect they need to work effectively. A global PEO partner helps keep your employees happy and productive by ensuring your payment processes run smoothly and saves you money and effort.

4. Centralized Payroll Management in Portugal. Easy Billing

PEO and payroll services are often underestimated and undervalued by global business owners. Payroll is a vital part of operating your business in Portugal, offering a way to account for employees' time on the job accurately. With fully compliant payroll-related processes such as correct tax and social security deductions and transmittal of payments, PEOs offer an entirely integrated experience that can result in quicker onboarding and offboarding times and less friction during payment processing.

5. Optimised International Workforce Management in Portugal

Since a PEO handles your payroll and HR in Portugal, they can be an indispensable ally for optimizing your international workforce management strategy. With the ability to accurately account for employees’ payroll, benefits, compensation, and taxes, a global PEO can help you streamline onboarding and offboarding processes, saving both time and money.

Additionally, PEOs are experts in payroll administration and social contributions coverage, so they can help you save money on your workers' comp premiums each payroll cycle. You don't need to pay upfront or undergo an audit at the end of the year - PEOs take care of it all! This makes managing your workforce a smoother process - faster, easier, and more cost-effective.

6. Transparent Employee Payment Structure

PEO and payroll services are essential for any business with international employees. However, it's not simply a case of properly managing taxes and benefits - the focus must also be on providing global employees with clear information to accurately reflect their wages and make withholdings necessary to receive a fair paycheque.

What’s the Difference between a PEO and an EOR in Portugal?

Shared vs. Sole Liability

An employer of record (EOR) is the legal employer of employees. They are responsible for all the liabilities and obligations associated with working for them, whereas a PEO operates through a co-employment model. This means that while a PEO shares ownership and liabilities, the EOR assumes all liabilities for the workers.

Shared vs. Sole Control over Employment in Portugal

The other big difference between PEOs and EORs is in the way that they function with regard to hiring workers. With a PEO, you retain many rights and responsibilities over who you hire. An EOR, on the other hand, takes full responsibility for hiring workers - a role often provided by staffing agencies.

Global PEO and EOR Comparison

ATTRIBUTE PEO EOR
Employment Model Co-employer Sole Employer
Permanent Establishment Factor Can only work with clients who have a registered in-country (state) entity Facilitates foreign expansion without setting up an entity
Key Services Global employment, payroll, benefits, immigration (visa, work permits), mobility Global employment, payroll, benefits, immigration (visa, work permits), mobility
Responsibilities Responsible for the entire array of HR functions Responsible for a portion of HR functions
Tax Administration Depending on local tax regulations may require taxes to be filed under the client's taxpayer ID Files taxes under own Taxpayer ID Number
Payroll Funding Requires advanced payments from the client Provides payroll funding
Local Entity Establishment Required Optional
Local Entity Ownership Does not own the entities. Instead, partners with a local or global third-party provider. A PEO  does not allow you to hire in countries where you do not have a local entity. 100 % owns legal entities in the country of service. Allows to hire a workforce in other countries without setting up a business entity
Liability Shares responsibilities and liabilities Assumes all responsibilities and liabilities. EOR hires the employees in the new country under its local business entity and takes on all of the legal risks.
Legal Advice Optional 100% compliance required
Global Labour & HR Compliance Optional 100% compliance required
Insurance May require the client to provide their own insurance. Provide general liability (GL) and workers’ compensation (WC) insurance coverage.
Benefits Provides higher quality employee benefits at competitive prices Provides higher quality employee benefits at competitive prices
Employment Agreement The client must draft and sign the employment agreement with an employee. Drafts and signs the employment agreement directly.
Pricing Structure - Fixed monthly fee per employee - Percentage of payroll plus applicable taxes - Fixed monthly fee per employee - Percentage of payroll plus applicable taxes

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Acumen International - Your Professional Employer Organization in Portugal

Navigating the Portuguese legal system and adhering to employment and taxation regulations can be challenging for businesses, especially if you are not a native Portuguese speaker.

Partnering with Acumen International as a global Professional Employer Organization (PEO) provides you with the local knowledge and support you need to conduct business in Portugal without concern for legal and compliance risks. Whether representing international client companies or taking your business operations abroad, Acumen International’s Global PEO and payroll service allows you to hire and payroll local and ex-pat employees in Portugal. With Acumen in your corner, you can quickly and efficiently onboard and compensate your employees without the risk of legal repercussions.

Payroll and Taxation in Portugal

Employment Taxes in Portugal

Personal Income Tax (PIT)

Residents in Portugal, for tax purposes, are taxed on their worldwide income at progressive rates. Non-residents are liable to income tax only on Portuguese-source income, which includes not only that portion of remuneration that can be allocated to the activity carried out in Portugal but also remuneration that is borne by a Portuguese company or permanent establishment (PE). For the purpose of applying the tax rate, the taxable income is divided by two if the taxpayers are married and not judicially separated, as well as in the case of de facto marriages, whatever the circumstances, should they opt for joint taxation.

Social Security Contributions in Portugal

These contributions cover family, pension, and unemployment benefits. Foreign residents may be exempt from social security in Portugal if they contribute to a compulsory social security system in a European Union (EU) or a country with a bilateral social security agreement with Portugal, provided they are in possession of the relevant certificate of coverage.

Payroll Cycle in Portugal

There is no official legal date that salaries must be paid. However, it must be paid at least once a month and by the last working day. It is also possible to pay employees bi-monthly.

13th salary in Portugal

Employees are entitled to 14 monthly payments per annum:

  • 11 payments corresponding to 11 months of work actually performed
  • A 12th payment corresponding to holiday remuneration
  • A 13th payment corresponding to a holiday bonus and
  • A 14th payment corresponds to the Christmas bonus.

Non-payroll Taxes in Portugal

There are three VAT rates: the standard rate, and the intermediate rate.

Supplies of Services

Supplies of services are subject to VAT in Portugal whenever: acquired by taxable persons that have their business, a fixed establishment, domicile, or residence in Portugal to which the services are provided (B2B rule) or supplied to non-taxable persons if the provider has established its business, a fixed establishment, domicile, or residence in Portugal from where these services are provided (B2C rule).

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How Acumen’s International PEO and Payroll Service Can Benefit Your Business in Portugal

Compensating your local and ex-pat workforce in Portugal and closely adhering to Portuguese taxation requirements can divert your attention and resources from activities that help your business grow. A reliable global employment solution like Acumen’s Global PEO and Payroll service can take a substantial burden off your shoulders so you can focus on running your company.

Outsourcing the administrative and compliance tasks involved in employee payroll is one approach, but we have a better solution. Acumen International offers a global PEO and payroll solution that goes beyond outsourcing. We hire and compensate your global workforce on your behalf and take care of all the payroll details while ensuring full compliance with Portuguese labor and taxation laws.

It is important to note that Acumen does not provide international global payroll services as a standalone solution but only as a part of our global PEO and Payroll solution. Our comprehensive global PEO and payroll services are just some benefits of partnering with Acumen International. We make it easy for you to achieve your business goals in Portugal by officially employing and compensating your best-selected global talent - locals and ex-pats - without concerns for legal and compliance risks faced by global employers.

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