Hire and pay your global team in 242 locations — with compliant contracts, IP assignment, and one B2B invoice. The entire back office — without the back office.
.avif){kind=icon}
Two ways to engage your global team — depending on who they are and what you need.
.avif)
The specific scenarios Kleos solves. From scaling teams across borders to clean IP transfer for due diligence — without the operational layer.
.avif)
.avif)
.avif)
Industry-specific challenges, solved. Whether you're a SaaS startup, a game studio, or a Web3 protocol — Kleos is built for how you actually operate.
.avif)
.avif)
Portugal · Contractor taxation guide · 2026
Hiring in Portugal?
Here’s where the money actually goes
Start with the calculator: enter what you pay and see what reaches your contractor. Below it — what each tax takes, the one month of the year that can produce a bill on your side, and what it costs you if Portugal reads the arrangement as employment.
General information, not tax or legal advice. Portugal’s labour reform was rejected in parliament on 19 June 2026, so the Labour Code is unchanged. Treat every number here as a starting point and check the regime
on your own contract.
on your own contract.
Enter what you pay.
See where it goes
Two Portuguese contractors can quote you the same rate and keep very different amounts of it. What decides it is not usually the regime. It is which coefficient their activity code attracts.
Two taxes on their side
And what can land on yours
Portugal taxes a contractor on a fixed fraction of what they invoice, and collects contributions quarterly. With no establishment here you are not a withholding agent, so the whole invoice leaves your account.
Income tax is charged on a share of what they invoice. A named profession is taxed on 75% of it, work with no entry of its own on 35%. The rest is presumed to be costs.
Today, 2:15pm
A named profession – 75% of gross
Tomorrow, 11am
No entry of its own – 35%
of gross
of gross
Tomorrow, 2pm
Ceiling on the regime – $234,000
Contractors carry their own social security, at 21.4% of a base equal to 70% of what they invoice, declared quarterly. Their first twelve months of activity are usually exempt. Nothing sits on your side.
Today, 2:15pm
Rate – 21.4%
Tomorrow, 11am
Base – 70% of services income
Tomorrow, 2pm
Declared – January, April, July, October
Nothing leaves your account but the invoice. A Portuguese payer with organised accounts withholds 23%, or 11.5% on work with no entry of its own. That duty sits on payers based here, so you withhold nothing and file nothing. Two things can still cost you, and both are your decision.
Today, 2:15pm
You withhold – 0%
Tomorrow, 11am
Over half their year – 7–10% of what you paid
Tomorrow, 2pm
Letting them sign for you – a taxable presence
A year in the life of your Portuguese contract
Quarterly —
Jan, Apr, Jul, Oct
Jan, Apr, Jul, Oct
The declaration that sets the rate
Your contractor reports the previous quarter to Segurança Social. That sets the contribution base for the next three months, which is why their net can move without your rate moving.
1 April
to 30 June
to 30 June
The Anexo SS
With their IRS return they list every business purchaser by tax number, and what each paid. Your company appears here whether or not you have a Portuguese tax number.
Usually November
The assessment you did not ask for
Segurança Social cross-references those figures and assesses contracting-entity status on its own initiative, for the whole country in one annual run. Where one purchaser took more than half a contractor’s year, that purchaser owes 7%. Above 80%, 10%.
The 20th of the month after
Payment falls due
Notification arrives in the Segurança Social Direta inbox. Payment is due by the 20th of the month after it, so a November notice means 20 December. A company that never logs in misses both dates.
Before you sign
Deadlines are the contractor’s problem. How the work actually runs is yours — and of the eight things Portugal weighs, five are the law’s own list. The checklist is below.
Are you working with
them legally?
Tick what’s true of your arrangement. Two of the first five is generally taken as enough for the law to assume employment, and you are then the one who has to prove otherwise. The last four are not in the law’s list, but an inspector reads them the same way. Aim for none.
The work is done at a place belonging to you, or one you specify
.png)
The equipment and tools they work with are yours
You set the hours they start and finish
You pay a fixed amount at regular intervals
They hold a management or leadership role inside your organisation
You pay a holiday or Christmas allowance, or a fourteenth payment
The contract stops them taking other clients, or you are their only client
They take instructions on how the work is done, not only on what is delivered
Over the 75% line. They can now qualify as a TRADE — if they also have no employees, use their own equipment and work differently from your staff. Same tax either way, but a TRADE contract has to be written and registered with the SEPE, and the duty to tell you sits with them.
Three things to check
before you agree a rate
Which coefficient their activity code attracts, what share of their year you represent, which year of activity they are in, and how the invoice is marked. All four change the number that matters to them.
Which coefficient their code attracts
Ask which activity code they registered. A named profession is taxed on 75% of gross; only code 1519 drops to 35%. On $36,000 that is $3,118 to them, so a programmer on 1519 is misfiled, not cheap.
What share of their year you are
Above half of their year you become a contracting entity and owe 7% of what you paid; above 80%, 10%. Group companies count as one. Ask what share you represent, and ask again at renewal.
Which year of activity they are in
Year one nets far more than year three on the same invoice: no social security for twelve months, and a reduced coefficient for two. Both fall away if they draw a salary or a pension.
The questions
The ten that come up most when companies hire in Portugal.
Can we hire a Portuguese contractor without a Portuguese entity?
Yes. A service contract with a registered trabalhador independente needs nothing from you locally — no registration, no filing, no presence. What you cannot do is run it like employment, because two of the five signs in the checklist below will usually shift the burden of proof onto you.
Do we withhold Portuguese tax?
No. The withholding duty in article 101 of the IRS Code sits on paying entities with organised accounts in Portugal. Where the invoice is issued to a purchaser with no seat, establishment or effective management here, the income is not subject to withholding, and the contractor marks it “não residente sem estabelecimento”. The 23% you may see quoted is the rate a Portuguese payer applies to a named profession.
Could hiring a contractor here create a permanent establishment for us?
Not by itself. Article 5 of the IRC Code carves out companies acting through an independent agent, provided that person works in the ordinary course of their own business and carries their own commercial risk. It goes the other way if you give a contractor authority to conclude contracts that bind you, or if they habitually negotiate deals you sign without substantial change.
What is a contracting entity, and could we become one?
Where one purchaser takes more than half a contractor’s annual services income, Portugal charges that purchaser a social security contribution of 7%, rising to 10% above 80%. It applies to what you paid, is assessed the following year, and arrives without warning.
Our contractor says they are “on recibos verdes”. Is that a status?
It is the invoice, not the status. They are issued through the Portal das Finanças, and the status underneath is trabalhador independente with an open activity, and the questions worth asking are which coefficient their code attracts and which year of activity they are in.
Is a one-off invoice enough for a short project?
For one genuinely occasional piece of work, yes. An ato isolado needs no open activity and carries no social security obligation at all. There is no longer a money limit — the €25,000 threshold was repealed on 1 July 2025 — so what governs is whether the work is genuinely one-off. If it turns out to be regular, the tax authority can require the contractor to open activity and treat what came before accordingly.
What happens if Portugal reads the arrangement as employment?
Two of the five signs above is generally taken as enough for the law to assume employment, with disproving it your job. The bill is retroactive: 23.75% employer contributions on everything you paid, the 11% that should have come off their side, and the holiday pay and leave never given. It is also a very serious offence, from about $2,390 and scaling with your turnover. ACT can start the case without the contractor taking part, and whether it can name a company with no Portuguese entity is not settled.
Did the labour reform change any of this?
No. The Trabalho XXI package was rejected on first reading on 19 June 2026 and never reached committee stage. The Labour Code is unchanged, and any guidance still describing that reform as pending was written before the vote.
Our contractor asks about NHR. Does that affect us?
No, and it is almost certainly closed to them. NHR was repealed from 1 January 2024, with grandfathering running to 2033 at the latest. Its successor, IFICI, taxes eligible income at 20%, but eligibility runs through a Portuguese employer, certified startup or recognised entity — which a foreign company with no local presence cannot provide.
How do we actually pay them?
Euro, SEPA transfer to an IBAN, the same as any European supplier. Agree euro billing so the conversion is not silently taken out of their rate, and expect large or irregular payments to draw routine bank compliance questions. Or Kleos becomes the Contractor of Record. Flat $50 from you, zero from the contractor, and the rate you agree is the rate that reaches them.
General information only, not tax, legal or accounting advice. Figures reflect rules in force in 2026. IRS bands are those in Lei 73-A/2025 for the mainland; Madeira and the Azores are not modelled. Simplified-regime coefficients are 0.75 for activities in the article 151 table and 0.35 for those outside it, with the article 31 expense test applied against a €4,587.09 deduction; first- and second-year reductions are article 31(10) and (11). The regime ceiling is €200,000; the ato isolado ceiling was repealed on 1 July 2025. Social security is 21.4% of 70% of services income, or 25.2% for an ENI, capped at 12 × IAS, which is €537.13 for 2026. Contracting-entity contributions under articles 140 and 168(7) of the Código Contributivo are 7% above 50% dependency and 10% above 80%, assessed only above six times the IAS; whether they reach a payer with no establishment here is a question on which we take no position. Permanent establishment is article 5 CIRC. The employment presumption is article 12; fines are in units of account worth €102. Amounts are in US dollars at an indicative 1.17 USD/€. Confirm your position at portaldasfinancas.gov.pt and seg-social.pt, or with a qualified Portuguese adviser.