Corporate relocation of employees to Portugal

In the contemporary global economy, international employee transfers have become a pivotal element of the expansion strategies of numerous corporations. Relocating personnel not only facilitates the exchange of knowledge and cultural interaction within the organization but also bolsters its competitiveness on the international stage. Portugal, with its strategic geographical position and favorable business climate, has garnered the interest of businesses aiming to fortify their presence in Europe.

This article delves into the intricate legal and practical facets of the corporate relocation of employees to Portugal. It will focus on the examination of work visas and permits, as well as tax liabilities. Additionally, we will address the procedures for registering foreign entities, along with the requirements for residency and the potential for obtaining Portuguese citizenship.

The objective of this publication is to provide companies and their employees with thorough guidance on issues related to corporate relocation, grounded in the current Portuguese legal framework. This will enable readers to efficiently plan and execute international transfers, mitigate legal risks, and ensure the successful integration of staff into a new cultural and business milieu.

Legal aspects of transferring employees to Portugal

Executing a corporate transfer of employees to Portugal necessitates strict adherence to Portuguese immigration and labor regulations. The significance of legal preparedness and comprehension of the laws governing this process cannot be overstated, as they dictate the conditions for the entry and stay of foreign workers and delineate the responsibilities of employers.

Key laws and regulations governing corporate relocation to Portugal

The primary statute regulating the entry and residence of foreign workers in Portugal is the Law on the Entry, Residence, Exit, and Expulsion of Foreign Nationals. This legislation outlines the fundamental requirements for visas and residence permits, as well as conditions for deportation. Additionally, it governs the procedural aspects and criteria for issuing various categories of visas and residence permits, which are crucial for planning corporate transfers.

Labor legislation
Portuguese labor legislation is pivotal, as it establishes the rights and obligations of foreign employees and their employers. The law ensures that foreign workers, including those transferred as part of a corporate relocation to Portuguese territory, enjoy the same rights and obligations as local workers. This encompasses equality in remuneration, working conditions, healthcare, social insurance, and pension contributions.
Legislation on social protection
Laws pertaining to social protection for foreign workers are equally important. They mandate that employers enroll foreign employees in the Portuguese social security system, requiring the payment of social security contributions in the same manner as for local employees.
Legislation on business and investment
Business and investment laws are also significant for companies involved in corporate relocations, covering the regulation of business operations, the registration of foreign representative offices or branches, and the management of foreign investments.
Data privacy law
Given the extensive transfer of data between countries, Portugal rigorously adheres to EU GDPR. This is critical for companies that must ensure the protection of their employees' personal data during international transfers.

These laws and regulations create a complex yet structured legal framework that companies intending to undertake a corporate relocation of employees to Portugal must navigate.

Requirements for companies and employees to legalize work and residence in Portugal

The legalization of residence and employment in Portugal as part of a corporate relocation entails numerous legal obligations for both companies and their employees. These requirements, established by Portuguese law, ensure adherence to local labor, tax, and social standards. Understanding and fulfilling these responsibilities is essential to guaranteeing the legality and efficiency of the transfer process.

Requirements for companies

Registration of a company or its branch in Portugal
To commence operations in Portugal, foreign enterprises must register their new company, subsidiary, or branch. This involves submitting the necessary documentation to the Portuguese registration authority and adhering to all relevant local corporate regulations.
Social insurance
Companies are obligated to enroll all employees, including foreign nationals, in the social insurance system. This includes remitting the appropriate contributions that cover standard social security benefits and health insurance.
Registration with tax authorities
Enterprises must register with the Tax Authority and consistently report their activities and income as required by local tax laws.

Requirements for foreign workers in Portugal

Work permit
Foreign employees transferred to Portugal are required to secure a work permit. This often necessitates obtaining an appropriate visa, such as a D visa or a Blue Card for highly skilled professionals. The issuance of these documents is contingent upon confirmation of employment in Portugal.
Registration of a residence permit
For long-term residence and employment, foreign workers must obtain a residence permit. This process involves submitting an application to the SEF and providing all necessary documentation, including proof of employment and sufficient financial resources.
Tax registration
All employees working in Portugal must register with the national tax authorities and file tax returns in accordance with local legislation. Foreign workers may also be eligible for certain tax benefits during the initial phase of their stay.

By adhering to these requirements, YB CASE helps companies and employees avoid legal complications and ensures a smooth onboarding process.

Blue Card

The Blue Card is a residence and work permit designed for skilled professionals from non-EU countries. This program aims to attract and retain top talent in Europe by offering benefits such as employment opportunities, pathways to permanent residence, and simplified procedures for family reunification.

ICT visa

In Portugal, such a type of visa is granted to employees of multinational companies who are assigned to a Portuguese branch to perform their duties for a limited period. This visa category is intended for managers, qualified specialists, and trainees who are already employed by a company abroad and are sent to Portugal to execute specific projects.

  • An ICT visa is issued for the duration of the employment contract, up to a maximum of three years for management personnel and specialists, and up to one year for trainees.
  • The extension of the visa depends on the continuation of the contractual relationship between the employee and the company.
  • Employees residing in Portugal on an ICT visa have the right to apply for family reunification.

Long-term visa category D for a stay in Portugal

This visa is designed for long-term stays, allowing foreign professionals to legally work and reside in Portugal. It is particularly suitable for employees of multinational companies relocating to Portuguese locations for extended periods of time. Additionally, a category D visa can serve as a preliminary step towards obtaining permanent residence in Portugal.

Subtypes of visa category D

Subcategory

Target

Primary Requirements

D1

Employment

Employment contract or job offer from a Portuguese company, proof of qualifications

D2

Entrepreneurship and independent professional activity

Business plan, availability of capital to start a business, or proof of professional activity

D3

Research or teaching in higher education institutions

Contract or invitation from a scientific institution or university

D4

Studying in higher education institutions

Confirmation of enrollment in a Portuguese university or other educational institution

D5

Family reunification

Documents confirming family ties with a Portuguese citizen or a foreigner with a residence permit

D6

Treatment and rehabilitation

Medical reports and proof of the financial ability to cover treatment expenses

D7

Long-term stay of pensioners or individuals with passive income

Sufficient stable income, such as a pension or annuity; proof of financial capability to live in Portugal without working

Stages of obtaining

Step 1: Submission of documentation

Applicants must gather and submit the required paperwork to the Portuguese consulate or embassy in their home country. Key documents include:

For D type
  • Visa application form: a fully completed and signed application form.
  • Foreign passport: must be valid for at least three months beyond the planned date of departure.
  • Employment contract: proof of an employment contract with a company based in Portugal.
  • Evidence of education: certificates and licenses verifying the applicant’s professional qualifications.
  • Proof of financial solvency: documentation demonstrating the applicant's ability to support themselves financially during their stay.
  • Medical insurance: an insurance policy covering the entire period of stay in Portugal.
For ICT type
  • Certificate of position and status in the company.
  • Details of the employment contract with the Portuguese branch, including contract duration and working conditions.
  • Description of professional responsibilities and purposes of relocation.
  • Confirmation of qualifications and experience relevant to the position.
  • Proof of housing in Portugal and health insurance for the entire period of stay.

Step 2: Waiting for a decision

Consular services will review the submitted documents. This process can take from several weeks to several months, depending on the specific case and the consulate's workload. If necessary, the consulate may request additional documents or schedule an interview with the applicant.

Step 3: Issuance

Once the application is approved, the candidate is issued permits, allowing them to enter and temporarily reside in Portugal. This visa is initially granted for one year, with the possibility of extension through local migration services.

Upon arrival in Portugal, visa holders must register with the SEF to formalize their stay and, if needed, apply for a residence permit. Registration should be completed within the first few weeks of entry.

Conditions for issuing a Blue Card:
  • Higher education: applicants must possess a higher education diploma recognized in the country where they plan to work.
  • Professional experience: for professionals without a higher education degree, qualification recognition is possible based on a minimum of five years of high-level professional experience.
  • Employment contract or job offer: Applicants must have a job offer or contract with a salary exceeding 1.5 times the average salary for their profession in Portugal.

Tax system

Type

Rates

IRS/PIT

Progressive rates:

Up to €7,479: 14.5%

€7,480 - €11,284: 23%

€11,285 - €19,696: 28.5%

€19,697 - €25,076: 35%

€25,077 - €39,192: 37%

€39,193 - €78,834: 45%

Above €78,835: 48%

NHR regime: flat rate of 20% on certain nation-source incomes and exemptions on foreign-source income for qualifying individuals.

IRC/CIT

Standard rate: 21%

Reduced rates for SMEs: 17% on first €25K of taxable profit

Local surtax: Up to 1.5% of taxable profit

State surtax: 3% on profits €1.5M - €7.5M

5% on profits €7.5M - €35M

9% on profits over €35M

IVA/VAT

Standard rate: 23%

Reduced rates: 13% and 6% for specific goods/services such as foodstuffs, books, and healthcare services.

Property

IMI rates: 0.3% - 0.45% for urban properties, 0.8% for rural properties

IMT rates: 2% - 8%, depending on property value/type

AIMI

0.7%, 1%, or 1.5% on properties valued over €600K for individuals and companies

Social security

Employer's rate: 23.75% of gross wages

Employee's rate: 11%

DTAs

Allow for tax credits or exemptions to avoid double taxation on the same income.

Planning the relocation process: timelines and key steps

  • Needs assessment Determine the number and qualifications of employees who need to be relocated, their roles in the Portuguese office, and the expected duration of their stay.
  • Development of timelinesEstablish realistic schedules for each phase of the process, from visa applications to final relocation and employee onboarding.
  • Relocation checklistCreate a comprehensive task list that includes all key activities such as obtaining visas, securing housing, registering with health and social security, and notifying employees of the upcoming move.

Registration of a foreign legal entity or branch in Portugal

  • Choosing the form of legal presence Decide whether it will be a representative office, a branch, or a new legal entity. Each option has specific requirements and registration procedures.
  • Registration proceduresComplete the necessary forms and prepare documents, including the company's articles of association, an extract from the commercial register, or a certificate of company registration in the home country.
  • Legal supportEngage qualified legal professionals to assist with registration and compliance with Portuguese law.

Preparation of documentation for employees

  • Organize and submit all required documents in advance to obtain the necessary work visas or permits for employees and their families.
  • Ensure that employees are registered with the Portuguese social security system to access healthcare and other social services.
  • Assist employees with registering with the tax authorities and understanding their tax obligations in Portugal.

YB CASE support

YB CASE is a law firm specializing in providing comprehensive services for corporate relocation. The company has extensive experience in supporting international companies with the relocation of their employees to Portugal, offering a wide range of services, including legal assistance, as well as administrative and fiscal support.

We provide the following services:
  • Assistance in registering foreign companies and branchesYB CASE assists in preparing all the necessary paperwork for the official registration of an organization or its branch in Portugal, ensuring compliance with local rules and regulations.
  • Assistance in obtaining visas and work permitsThe company provides consulting services and support in obtaining work visas, Blue Cards and ICT visas, and assists in resolving issues related to the fiscal residence of employees.
  • Tax consulting YB CASE offers tax optimization strategies to take advantage of the tax benefits and incentives provided by Portuguese law.

YB CASE offers ongoing support at all stages of relocation, from preliminary planning to full adaptation of employees to the new location. By using YB CASE services, companies can significantly simplify the relocation process, minimize potential risks and speed up the integration of their employees into the new working and social environment. YB CASE provides a high level of professionalism and a personalized approach, making them a reliable partner in any matter related to international relocation.

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