Remote work is no longer a novelty—it’s a mainstream employment model that allows professionals to live and work wherever they choose. Portugal has quickly become one of the most sought-after destinations for digital nomads and expats. Its mild climate, affordable cost of living, and high-quality infrastructure make it an attractive choice.

But what does it take to legally live and work in Portugal while being employed by a foreign company? This guide will explore the legal landscape, tax obligations, visa options, and employment structures available to remote workers. By the end, you’ll understand how to ensure compliance and protect your employment rights, even when your company isn’t locally based.

Can you legally work remotely from Portugal for a foreign company?

Yes, it’s possible to work remotely in Portugal for a company located abroad. However, there are key legal and tax implications to consider. Portuguese law doesn’t prevent foreign nationals from living in Portugal and working remotely for non-Portuguese employers. Yet, the type of employment arrangement you have—employee or freelancer—affects your obligations.

As a freelancer (self-employed), you must register for Portuguese Social Security and file taxes as a resident if you’re in the country for more than 183 days per year. For employees working remotely for a foreign company, local labour laws might not apply directly, but tax residency rules and the nature of your employment contract can influence your compliance obligations.

Tax and visa requirements for remote workers in Portugal

Visa requirements

Many remote workers and digital nomads start on a tourist visa, typically allowing stays of up to 90 days in most European countries. However, long-term remote work in Portugal requires a more formal visa.

Portugal’s recently introduced digital nomad visa is explicitly designed for remote professionals. To qualify, you need proof of steady income from a foreign source, a clear remote work arrangement, and adequate health insurance. The application process involves submitting your remote work contract, financial documentation, and proof of health coverage.

Tax obligations

If you spend more than 183 days per year in Portugal, you become a tax resident. This means you’ll need to declare your worldwide income and pay Portuguese income tax (IRS). For freelancers, this includes registering as self-employed, charging VAT where applicable, and paying into the Segurança Social system.

For employees of foreign companies, the situation can be complex. Even if your employer doesn’t have a local entity, you might still be required to pay Portuguese taxes and social contributions. It’s vital to consult with a tax professional to understand these requirements and take advantage of double taxation treaties that may reduce your tax burden.

Employment vs. freelancing in Portugal: which is better?

Freelancing in Portugal

Freelancers benefit from greater flexibility and the ability to work for multiple clients. However, this comes with significant administrative and financial responsibilities. You’ll need to:

• Register with the Portuguese Tax Authority and Segurança Social.
• Handle quarterly VAT filings and annual tax returns.
• Cover your own health insurance and retirement contributions.

Freelancing doesn’t provide the same benefits as being an employee. You won’t receive paid leave, statutory sick pay, or employer-sponsored pension contributions.

Employment in Portugal

Employees hired by a company—whether local or foreign—are entitled to statutory benefits under Portuguese labour law. This includes:

• Paid holidays and sick leave.
• Employer contributions to Social Security and health coverage.
• Protection under local labour regulations.

If your foreign employer isn’t set up in Portugal, an Employer of Record (EOR) can serve as your local legal employer. This allows you to retain the benefits and protections of being an employee while still working remotely for your non-Portuguese company.

Challenges of working remotely in Portugal for a non-portuguese company

Remote workers employed by a foreign company often face several challenges:

• Payroll and tax compliance: Ensuring accurate tax withholding and Social Security contributions can be complicated without a local payroll system.
• Employee benefits: Freelancers miss out on employer-sponsored benefits like pensions, health insurance, and paid leave.
• Legal protections: Contractors may have limited legal recourse compared to employees, leaving them vulnerable if disputes arise.
• Misclassification risks: Improperly categorising workers can result in fines or back payments for both the worker and the company.

To address these challenges, it’s crucial for remote workers and their employers to fully understand local labour laws, establish proper employment contracts, and ensure compliance with all payroll and tax obligations.

How an Employer of Record simplifies remote work in Portugal

A Portuguese Employer of Record (EOR) can resolve many of these challenges. By acting as your legal employer, the EOR ensures full compliance with Portuguese labour laws and tax regulations while enabling you to work remotely for your foreign company.

For employees, the EOR becomes your local employer. They handle:

• Payroll processing and tax withholding.
• Employer contributions to Social Security and health insurance.
• Ensuring compliance with Portuguese labour laws.

For example, a digital nomad from the U.S., Ava, had been working for a German tech firm while living in Lisbon, Portugal. Although she handled her own invoicing and taxes, she started encountering difficulties with compliance. Portuguese authorities questioned her residency status and income reporting, and she worried about potential fines.

Ava partnered with a Portuguese Employer of Record (EOR) to address these issues. The EOR employed her locally on behalf of the German company that didn’t have a legal entity in Portugal, provided her with a Portuguese work contract, and ensured proper payroll, tax deductions, and social security contributions.

With their guidance, she could fully comply with Portuguese labour and tax laws while continuing to work for her German employer. The EOR’s support resolved her compliance concerns and gave her peace of mind, allowing her to focus on her job and enjoy her life in Portugal.

Benefits of using an EOR in Portugal

• Compliance: The EOR manages payroll and tax filings, ensuring you meet all legal requirements.
• Benefits: Access to employee protections, from healthcare to paid leave.
• Simplicity: The EOR handles all employment administration, reducing complexity and risk.
• Flexibility: Continue working for your foreign company while enjoying local benefits.

Work remotely from Portugal

Portugal offers digital nomads and remote workers an excellent quality of life, but working remotely for a foreign company comes with legal and tax obligations. Understanding your visa requirements, tax responsibilities, and the differences between freelancing and employment is essential.

An Employer of Record in Portugal can help streamline the process, offering a compliant, straightforward way to live and work in Portugal while retaining the benefits of a local employment structure. Contact us today and enjoy peace of mind, knowing their taxes, benefits, and contracts are handled in accordance with Portuguese regulations.