How the EOR Process Works in Portugal, Step by Step

Three things are settled before any paperwork moves: who is being hired, what they will be paid, and what the arrangement costs your company in full. Everything after that is administration, and most of it belongs to the provider rather than to you.

The commercial side is a service agreement between your business and the provider. It names the employee, the gross salary, the start date and the fee, and it sets out notice on both sides, data protection terms and what happens if the employment ends. A good agreement also states who carries the cost of statutory severance, since that is the one number that can move sharply later.

The cost side should be settled at the same time. In 2026 a Portuguese employer pays TSU at 23.75% on all gross pay with no upper ceiling, and pay is delivered in 14 instalments rather than 12. Workplace accident insurance is compulsory for every employee under Lei 98/2009, with premiums set by the insurer according to the risk class of the role, so it belongs on the quote as its own line. Contributions to the FGCT are suspended until 31 December 2026.

Employer of Record Portugal works to a flat fee from €499 per employee per month, with the employer costs shown separately rather than folded into a percentage. You can see how the fee is structured on our pricing page.

Portuguese payroll cannot run until the employee has a NIF from the AT and a NISS from Segurança Social. Both are ordinary requests, and an employer can ask Segurança Social for a NISS on behalf of a new foreign worker, but neither number arrives instantly, so they are the first thing the provider asks for.

• NIF and NISS, or the information needed to obtain them.
• A Portuguese IBAN for salary payment.
• Marital status, whether the spouse earns income, and the number of dependants, because these decide which of the 2026 withholding tables applies.
• Residence, since the mainland, Madeira and the Azores use separate withholding tables and separate minimum wages: €920, €980 and €966 a month respectively in 2026.
• Whether the employee is claiming IRS Jovem or the IFICI regime, either of which changes the tax treatment.
• The meal allowance arrangement: cash, which is tax free to €6.15 a day in 2026, or a meal card, tax free to €10.46.

Non-EU nationals add a step before any of this. They need a residence visa, most commonly the D1 for subordinate work, which requires a signed employment contract or a binding promise of one, so the contract is issued earlier in the sequence. Residence permits are then handled by AIMA, and the timelines there are measured in months rather than weeks.

The contract is drafted by the provider in its own name, sent to the employee for signature, and registered with Segurança Social before the first day of work. An open-ended contract needs no special form under article 110 of the Código do Trabalho, but a fixed-term contract must be in writing and must state the specific facts that justify the term, or it risks being treated as open-ended.

Probation is set at this point and cannot be fixed afterwards. Article 112 gives 90 days as the general rule for open-ended contracts, 180 days for technically complex or high-responsibility roles, roles needing special qualifications, positions of trust, first-job seekers and the long-term unemployed, and 240 days for directors and senior managers. Fixed-term contracts get 30 days, or 15 days where the contract runs under six months. If the employer fails to give the employee written information about probation on time, article 111(4) presumes the parties excluded it altogether.

Two filings sit around the start date. The comunicação de admissão must reach Segurança Social before the employee starts work, which is a change from the previous rule of notice within the 15 days before the start date; the service is described on gov.pt. Separately, article 107(4) requires written information on the core terms, including identity, place of work, job, pay, hours and probation, by day 7 after the contract starts, with the remaining items inside a month.

If the role is remote, a written telework agreement is needed as well. It covers the usual place of work, the schedule, pay, who owns the equipment and how often the employee attends on site.

The first pay run produces a recibo de vencimento showing gross pay, the employee’s 11% TSU, the IRS withheld and the net amount. The employer’s own 23.75% does not appear on the payslip but is paid across with the employee’s share.

Take a salary of €70,000 paid in 14 equal instalments of €5,000, to a single mainland resident with no dependants who is not claiming IRS Jovem or IFICI and receives no meal allowance. Under Table I of the 2026 withholding tables, the row up to €5,547 applies a marginal rate of 39.69% less a fixed €531.62, giving IRS of €1,452.88 for the month. Employee TSU is €550. Net pay per instalment is €2,997.12. On the employer side, TSU for the year is €16,625, which is where the total employer cost of about €86,600 comes from, before accident insurance.

Two features of Portuguese withholding surprise people the first time. The tables are applied to the month in isolation rather than to a cumulative year-to-date figure, so the annual outcome is squared up in the tax return; in this example the employee has withheld roughly €1,250 more than the final liability and receives it back on assessment. And because employer TSU has no ceiling, the employer cost keeps rising in a straight line with salary, with no point at which contributions stop. Our guide to Portuguese payroll takes the calculation apart line by line.

Three deadlines govern the month, and they do not move for anybody. The DMR, the Declaração Mensal de Remunerações, goes to the AT by day 10 of the month after payment. IRS withheld from employees is paid over by day 20, under article 98 of the CIRS. Social security contributions are paid by the 25th under the 2026 cycle.

The social security side is mid-reform. Decreto-Lei 127/2025 replaces the old monthly remuneration return with a pre-calculated declaração à Segurança Social, which the employer confirms by day 20 of the following month; silence counts as acceptance. Contributions are then payable between day 1 and day 25. Joining is voluntary during 2026 and becomes mandatory on 1 January 2027, and employers with fewer than ten workers may continue to use Segurança Social Direta. Changes to employment contracts are reported by day 10.

Annual filings sit on top of the monthly ones. The Relatório Único, covering staff, pay, training and health and safety, has a legal window of 16 March to 15 April for the previous year, though the deadline has been extended in practice in some years. Modelo 10 is due by 10 February for income not already reported through the DMR.

For a company using an EOR, none of these calendars appear in its own accounts. They are the provider’s obligations, carried out under the provider’s tax and social security numbers, which is the main practical difference between using a provider and running Portuguese payroll yourself.

Portuguese employees receive 14 payments a year, and the two extra payments have their own timing rules. The subsídio de férias, governed by article 264 of the Código do Trabalho, equals base pay plus the payments tied to how the work is performed, and is due before the holiday is taken, or proportionally where the holiday is split, unless the parties agree otherwise. The subsídio de Natal, under article 263, is one month’s pay and must be paid by 15 December.

Both are pro-rated in the first year of employment, in the year the contract ends, and across periods when the contract is suspended. An employee who joins in September therefore receives a part-year Christmas subsidy that December, not a full month’s pay, and the same logic applies on the way out.

Tax on the subsidies is calculated separately from the month in which they land. Article 99-C(5) of the CIRS requires the withholding on each subsidy to be worked out on its own rather than added to that month’s salary, which is why an employee receiving salary and holiday subsidy in the same month does not jump into a higher withholding row. Where a subsidy is paid in twelfths across the year, which is allowed by written agreement or by a collective agreement, article 99-C(6) requires the proportional share of tax to be withheld from each payment; check with your provider which approach it applies as standard.

The subsidies also count towards TSU, so the 23.75% employer contribution applies to all 14 payments. Our article on the holiday and Christmas subsidies covers the pro-rating rules in detail.

After the first quarter the work becomes routine, and the provider is handling absence, leave, changes and statutory reporting rather than set-up. Employees earn at least 22 working days of paid annual leave, and in the year of hire they earn two working days per full month of contract up to 20 days, usable after six full months of service.

Sick leave is a common first test. Under article 255(2)(a) of the Código do Trabalho the employer does not pay sickness absence where social security protection applies, and the ISS benefit has a three-day waiting period, so the first three days are unpaid unless a collective agreement or company policy tops them up. The benefit is then 55% of reference pay for up to 30 days, 60% for days 31 to 90, 70% for days 91 to 365 and 75% beyond that. Employees can self-declare illness through the SNS 24 service for up to three consecutive days, at most twice a year.

Changes are handled by addendum: you decide on a pay rise, a promotion or a move to telework, and the provider drafts the document for signature. Each employee is entitled to at least 40 hours of training a year under article 131. When the arrangement ends, the route depends on the reason. Resignation carries 30 days’ notice up to two years of service and 60 days above that. Redundancy of a post carries employer notice of 15, 30, 60 or 75 days by length of service, and compensation of 14 days’ base pay per full year of service for time worked from 1 May 2023, with earlier service calculated on the transitional rates.