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Where Taxpayers and Advisers Meet

Tax implications on employer

somartinez
Posts:2
Joined:Sun Jan 24, 2021 4:49 pm
Tax implications on employer

Postby somartinez » Sun Jan 24, 2021 5:22 pm

Hi,

I am a Portuguese national working in the UK. Due to the pandemic I have spent more time in Portugal and now negotiating with the company if I can stay here permanently . They’ve raised the flag that they would have to register the company in Portugal and that would mean severe tax implication on their end and thus I’m trying to find a solution - first of all is that true?

One solution I've come across in the following:
If I’m employed by them and my salary gets processed by a service provider (who deals with the PT contributions etc.) do they really need to register themselves as an entity in Portugal?

Thanks!

int_tax
Posts:1
Joined:Wed Mar 24, 2021 5:39 pm

Re: Tax implications on employer

Postby int_tax » Wed Mar 24, 2021 6:17 pm

Hi

Naturally, I'm answering this question 2 months after you put it. But just in case things haven't moved, here is what your company could face after travel restrictions ease.

It completely depends on the line of work you're in.

But as a minimum:

- the employer might have to register for payroll taxes and pay the employer's social security contributions.

- They would also be required to re-negotiate a Portuguese employment contract - so that could mean additional legal fees.

- If they don't already have some operation in Portugal, then it's best that they hire a Portuguese payroll agent (service provider as you say) to deal with all the filing obligations. They would usually have an initial set up fee and an ongoing cost.

Employer Payroll Taxes are 23.75% Social Security in Portugal.

- Now it largely depends on your line of work (esp if it involves sales in Portuguese territory) and the local tax requirements. In Portugal, your employer may be liable for corporate tax- which is currently 21% of profits earned in Portugal.

- That said, as you are a Portuguese national, it may be easier if you already have the equivalent of a National Insurance number.

I was reading here> https://shieldgeo.com/payroll-and-tax-in-portugal/

that the employer could hire you via a PEO/GEO service. It means the service provider would contract with you as a Portuguese employee. And the employer would pay the necessary payroll taxes and stay compliant.

Best wishes!


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