Your employee wants to move to Portugal. Here’s what HR needs to check. 

• Moving an employee to Portugal involves more than approving a remote working request. HR must assess immigration, employment law, payroll, tax, and compliance obligations before the move.
• Employees working from Portugal may become subject to Portuguese employment protections, tax residency rules, social security contributions, and statutory benefits, even when employed by a foreign company.
• Employers should review risks such as permanent establishment, update contracts and policies accordingly, and ensure the correct payroll, immigration, and HR processes are in place.

While it is estimated that upwards of 200,000 people emigrate from the UK each year, but not all these individuals will leave their old jobs behind.

Years on from the pandemic, it has become clear remote work is here to stay. While many companies have implemented return-to-office (RTO) policies, mandating a certain number in-person working days, flexible and remote working policies are still common. As a result, employers are often faced with the challenge of workers wishing to ‘work from anywhere'.

While this can cause complexity if handled incorrectly, in many cases, employers can facilitate requests from workers to move abroad. But to do so, HR departments need to check several key areas to ensure complete compliance in every aspect of the move.

In your case, your worker is eyeing a move to Portugal, no doubt attracted by its quality of life, targeted relocation financial incentives, and flexible immigration pathways.

Many remote professionals frequently utilise the specialised Portugal Digital Nomad Visa, moving to hubs like Lisbon and Porto. Meanwhile, to balance growth, the Portuguese government actively incentivises workers with the Emprego Interior MAIS programme, an initiative that provides up to €3,759.91 plus additional allowances, to those who relocate to less populated in-land locations.

So, before confirming that your employee can continue working at your company after they move to Portugal, your HR team needs to ensure compliance in the following areas:

Does your employee have the right to work from Portugal?

It’s easy to assume that because your employee already works for your company, a move abroad is straightforward. However, employing overseas is complex, and Portugal has specific visa and residence requirements depending on the individual’s nationality and intended duration of their stay in Portugal.

If your worker is an EU citizen, they will have the right to work in Portugal indefinitely. However, if they are a UK citizen, they will need to ascertain the correct visa and work permits. Mauve Group’s dedicated global experts can streamline the visa application process, taking on the administrative burden, saving you time, money, and stress, and ensuring your employee has the best chance of being granted the appropriate visa.

Will Portuguese employment law apply?

Portugal’s employment framework will differ from your home market. Factors like working hours, annual leave, public holidays, termination procedures, tax withholdings, and employee protections will likely all apply to your worker, once they are living in Portugal – even if they remain employed by your organisation.

Seem like too much to handle in-house? An Employer of Record like Mauve Group will function as the worker’s in-country employer, taking care of payroll, tax, and HR, ensuring your employee has on-the-ground support and is totally tax compliant, meanwhile you retain responsibility for their day-to-day management.

What are the payroll and tax implications of your employee working from Portugal?

When an employee wishes to move overseas, a common challenge faced by workers is handling tax. If the individual spends more than 183 days in Portugal within a 12-month period or lives there the majority of the time, they will become liable for Portuguese income tax on their worldwide income.

You will need to determine where income tax should be paid, whether Portuguese payroll registration is required and whether you are subject to employer social security obligations. Portugal's social security system generally requires both employer and employee contributions, although exemptions may apply in certain circumstances, such as temporary postings covered by an A1 certificate within the EU.

Mauve Group’s Global Payroll service takes the headache out of paying your workers abroad. We handle all tax withholdings, ensuring your workers are paid the right amounts, in the right currency, at the right time.

Is there a permanent establishment risk

If an employee begins carrying out activities from Portugal that generate revenue for your company, you may inadvertently create a taxable business presence in the country. This is called permanent establishment (PE).

Being found to have set up a permanent establishment can lead to backdated taxes, fines, and legal trouble – so it’s crucial that you get ahead of this and get up to speed on PE and how it may impact you if your worker moves to Portugal.

For more information on permanent establishment, and how Mauve Group can help you handle it, visit our article What is permanent establishment?

What benefits need to be reviewed?

Portugal has mandatory employer obligations which will not be the same as those of your home country. Employees in Portugal are entitled to 22 working days of annual leave, as well as differing public holidays and Christmas bonus payments known as 13th and 14th month salaries.

The sick leave provisions, parental leave rights, and workplace health and safety requirements that your employee is entitled to will also be different to what you are used to providing them at home. Mauve Group’s team can support with ensuring that your worker gets everything they are entitled to in line with Portuguese law, as well as keeping on top of any and all changes to local legislation that may apply.

How should HR update policies and contracts?

HR teams should consider whether your existing employment arrangement remains compliant once the employee relocates. A move to Portugal may well require updates to the employee's contract, policies, and HR documentation to reflect local legal requirements and working arrangements.

Your HR team should also re-examine HR policies and update these to address areas like remote working, data protection, and health and safety.

Portugal has specific rules relating to remote work. For example, that employers must provide all necessary hardware, software, and ergonomic tools, and must reimburse increased household expenses like electricity and internet. These rules may need to be reflected in your company policies.

How Mauve Group can help you and your worker with their move to Portugal

With three decades in the global employment solutions space, Mauve’s team of experts are ready and waiting to support you with our suite of services, ranging from Employer of Record, to Visa and Immigration, Global Business Expansion, Global Payroll, Global HR Consultancy, and more.

A worker moving overseas may seem like a lot to take on, but with the right help from a trusted partner like Mauve Group, you can keep your top talent while providing them with flexibility and support.

Contact our team today to find out how we can help.

Frequently asked questions

Can my employee legally work remotely from Portugal while employed by my company?

It depends on their nationality, visa status, and right to work in Portugal. While EU citizens can generally live and work in Portugal without a visa, non-EU nationals, including many UK citizens, may need the appropriate visa or residence permit.

Do I need to run Portuguese payroll if my employee moves to Portugal?

Potentially yes. If the employee becomes tax resident in Portugal, employers may need to register for payroll, withhold Portuguese income tax, and make employer social security contributions, unless a specific exemption applies.

Does Portuguese employment law apply to my employee after they relocate?

In many cases, yes. Employees living and working in Portugal may be entitled to Portuguese statutory rights, including annual leave, public holiday entitlements, employment protections, and certain remote working rights, even if they remain employed by a foreign organisation.

International remote working can offer significant benefits for both employers and employees, but a move to Portugal requires careful planning to ensure compliance across immigration, employment, payroll, and tax considerations.