Employer of Record vs Portuguese Company: Which Route to Pick

You can either incorporate a Portuguese company and become the employer yourself, or you can use an Employer of Record that already holds one. The first route usually means a sociedade por quotas (Lda), or a sociedade unipessoal por quotas where there is a single owner. The company is registered at the commercial registry, registers as an employer with Segurança Social and runs payroll under its own name. The second route leaves the legal employment with the EOR while you choose the person, set the work and manage them day to day.

An EOR is a different animal from a temporary work agency. An empresa de trabalho temporário needs a licence from the IEFP under Decreto-Lei 260/2009 and supplies workers to whichever client needs them. With an EOR you pick the individual, that individual works for your business alone, and the paperwork is an ordinary employment contract under the Código do Trabalho.

There is a third option that sits between the two. A foreign company with no permanent establishment in Portugal can obtain a Portuguese tax number, file a start-of-activity declaration and register with Segurança Social as an employer without incorporating anything. That removes the formation step, but every registration, insurance policy, monthly return and payment stays with you.

Employer of Record Portugal employs staff through its own Portuguese company, a sociedade unipessoal por quotas registered at the commercial registry in Lisbon. The employee signs with that company, holds a Portuguese contract, and appears on a Portuguese payroll from the first payment.

The incorporation itself is the easy part. Under Empresa na Hora a company is created the same day at the counter for €360, and the founders leave with the articles of association, an access code for the certidão permanente, an access code for the company card and the company’s Segurança Social number. All partners have to attend in person. Registering a trade mark at the same time adds €200 for one class and €44 for each further class.

The online route, Empresa Online, costs €220 if you accept a pre-approved model of articles and €360 if you draft your own, with an urgent service at €440 and €720 respectively. It needs a qualified digital signature, so in practice a Cartão de Cidadão, the Chave Móvel Digital or a lawyer or solicitor acting for you. A bespoke company name means a certificado de admissibilidade from the RNPC, at €75 normally or €150 urgent.

Capital is rarely the obstacle. Partners set the amount freely as long as each quota is at least €1, and cash contributions can be deferred to the end of the first financial year. Under Empresa na Hora the founders declare that the capital will be deposited, and the deposit window is five business days.

What follows the incorporation is where the work sits: a start-of-activity declaration with the Autoridade Tributária e Aduaneira within 15 days of the registry filing, a beneficial owner entry in the RCBE within 30 days, a contabilista certificado to take responsibility for the accounts, workplace accident insurance in place before anyone starts, occupational health and safety services, and a company bank account. Banks ask for the certidão permanente, the company card, the RCBE entry and identification for every partner and signatory, and those checks take as long as they take when the owners sit outside Portugal.

The registry fees are small and the running costs are not. Incorporation is €360 at the counter or €220 online with model articles, plus €75 if you need a name certificate. After that, an accountant for a small Lda is quoted at roughly €150 to €500 a month, indicative and excluding VAT, with payroll often charged on top at about €15 to €30 per employee per month. Workplace accident insurance is compulsory for every employee and is priced by the insurer against your activity code and claims record, so it has to be quoted rather than assumed.

On the EOR side the comparable figure is our flat fee, which starts at €499 per employee per month and covers the employment, the payroll and the filings. See what the monthly fee includes before you model it against an entity.

One number does not move. The employer’s TSU of 23.75% is a statutory cost of employing somebody in Portugal in 2026, and it is charged on both routes, on salary, on the holiday and Christmas subsidies and on commissions, with no upper limit. Comparing routes on social security is a dead end. Compare them on overheads.

That is why headcount decides so much of this. A single hire has to absorb the whole accounting retainer, the insurance minimums and the finance time on its own. Five or ten employees spread the same fixed costs, and at some point the entity is simply cheaper.

A Portuguese company that employs people files something every month. The Declaração Mensal de Remunerações goes to the Autoridade Tributária e Aduaneira by day 10 of the following month, the IRS withheld from pay is paid over by day 20, and social security contributions are paid by the 25th under the 2026 contribution cycle. Each new employee has to be notified to Segurança Social before they start work, and the same applies to changes and to leavers.

The annual layer is smaller but no less compulsory. The Relatório Único on staff, pay, training and safety is filed in the window from 16 March to 15 April, the RCBE entry is confirmed each year by 31 December, and the statutory accounts go through the contabilista certificado. Our post on how Portuguese payroll works month by month sets out the calculations behind those filings.

Employment law adds its own duties whoever the employer is. Written information on at least 18 items has to reach the employee, with the core items inside seven days of the start. Every employee is entitled to at least 40 hours of training a year. Accident insurance and occupational health services are not optional extras.

Collective agreements are the part foreign finance teams miss. In Portugal the applicable instrumento de regulamentação coletiva follows the employer’s own business activity, not the employee’s job title, so the activity code your company registers can pull it into a contrato coletivo or a portaria de extensão with pay scales and conditions you did not plan for. Agreements are deposited with the DGERT and published in the Boletim do Trabalho e Emprego, and they can be searched before you choose an activity code.

Set against each other, the difference is the size of the thing you are taking on. An EOR is a monthly fee and an employee. A company is an asset with obligations attached, and those obligations run whether or not the person you hired stays.

Neither column is the “right” one. The left column is a way to have somebody employed and paid correctly in Portugal without building anything. The right column is what you build when Portugal becomes part of how the business operates rather than a place where one person happens to live.

Incorporate when the company is doing more in Portugal than employing people. If you are invoicing Portuguese customers, holding assets, applying for grants or bidding for public work, you need the entity for reasons that have nothing to do with payroll, and once it exists the marginal cost of employing through it falls sharply. The same applies when a Portuguese team reaches the size where a local accountant and a payroll routine would exist anyway.

A branch is worth knowing about as a halfway house. A foreign company can register a sucursal at the commercial registry for €170 online or €200 at the counter, with an urgent service at €370 and €400. A branch has no separate legal personality, so the parent carries the liability, and the parent’s own constitutional documents have to be produced with certified translations.

An EOR earns its place in the cases where an entity would be premature. A first hire in a market you are testing. A specialist you found in Porto who will not wait while a bank completes its checks. Cover for a role while an entity is being put together. Short projects, fixed-term work and acquisitions where staff need an employer on a specific date. Our EOR services in Portugal page sets out what is covered for the monthly fee.

Moving between the routes is normal and it is not wasted effort. Companies commonly employ through an EOR while the Lda is being formed and the bank account opened, then transfer the employees across once the company can run payroll properly. The employment history, seniority and accrued entitlements move with the employee, so the decision you make now is not a decision you are stuck with.