Remote Working in Portugal - Income tax?

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johnnynordmende

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I work in the tech industry and am employed by an Irish company in Dublin.
I have the option of working completely remotely and am considering moving to Portugal.

My question is regarding the income tax payable and to who;

If I follow the document for the Portuguese NHR correctly (https://www.portugal-golden-visa.pt/portugal-non-habitual-residency-tax-regime-nhr), It states foreign income is not taxed.

So if I am registered in Portugal as a tax resident, getting paid by an Irish company (PAYE) then my payable tax is 0%

Is this correct?

Johnny
 
When you say you have the option of working entirely remotely, has your employer explicitly stated that this is up to and including working full-time offshore?
 
johnnynordmende said:
I work in the tech industry and am employed by an Irish company in Dublin.
I have the option of working completely remotely and am considering moving to Portugal.

My question is regarding the income tax payable and to who;

If I follow the document for the Portuguese NHR correctly (https://www.portugal-golden-visa.pt/portugal-non-habitual-residency-tax-regime-nhr), It states foreign income is not taxed.

So if I am registered in Portugal as a tax resident, getting paid by an Irish company (PAYE) then my payable tax is 0%

Is this correct?

Johnny
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Unless your organisation has a branch in Portugal you will need to make your own tax returns. Check if there is a double taxation agreement in place.

How are public holidays dealt with. How does the employment legislation differ between countries?

My advice is to investigate this throughly and get everything in writing. Doing this is a minefield if not done correctly and everyone is aware of exactly how this arrangement will work.
 
The Horseman said:
Unless your organisation has a branch in Portugal you will need to make your own tax returns.
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Are you sure this is fully true? Won't there also be a responsibility on the employer to register and operates some sort of PAYE-type tax on the OPs earnings there?
 
The Horseman said:
Unless your organisation has a branch in Portugal you will need to make your own tax returns. Check if there is a double taxation agreement in place.

How are public holidays dealt with. How does the employment legislation differ between countries?

My advice is to investigate this throughly and get everything in writing. Doing this is a minefield if not done correctly and everyone is aware of exactly how this arrangement will work.
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Portugal and Ireland have a double taxation treaty:

Holidays follow Irelands model

I will enquire further about our company having an entity in Portugal and update
 
T McGibney said:
Are you sure this is fully true? Won't there also be a responsibility on the employer to register and operates some sort of PAYE-type tax on the OPs earnings there?
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I asked that question in my post earlier.

If the business does not have a payroll function in Portugal then for all intensive purposes the employee is a contractor in Portugal tax purposes.

As such either the employee makes seperate prsi contributions in Portugal or avails of Ireland's prsi benefits. Maybe there is a double taxation type agreement for prsi benefits although I am not aware of same but that does not mean they don't exist.
 
The treaty indicates that Irish tax is likely payable on the PAYE income. Also, the link suggests a 20% Portuguese tax regime which is higher than the 0% indicated.
 
johnnynordmende said:
So if I am registered in Portugal as a tax resident, getting paid by an Irish company (PAYE) then my payable tax is 0%

Is this correct?
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No. The income is for work carried out in Portugal. At best you'd qualify for 20% tax rate for a maximum of 10 years. You'd also most likely have social insurance in Portugal at 10%.

It's a bit of a nightmare generally for employers to employ staff working abroad, so confirm this is an option.

You'll find lots of resources online on 'digital nomad' tax incentives in Portugal.
 
The Horseman said:
If the business does not have a payroll function in Portugal then for all intensive purposes the employee is a contractor in Portugal tax purposes.
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Is it not more likely that if it doesn't currently have a payroll registration in Portugal it will have to obtain and operate one once it has an employee based in Portugal and doing their work from a Portuguese base? (That's on the assumption that the Portuguese rules in this regard mirror the corresponding Irish ones.)
 
When you say move to Portugal, you mean permanentky or just for a period of time.
If you are there <180 days or so, tbis I belive changes matters
 
T McGibney said:
Is it not more likely that if it doesn't currently have a payroll registration in Portugal it will have to obtain and operate one once it has an employee based in Portugal and doing their work from a Portuguese base? (That's on the assumption that the Portuguese rules in this regard mirror the corresponding Irish ones.)
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It can if it wishes however the cost maybe prohibitive (depends on the value the employer places on the employee). Assuming as you say the Portuguese mirror the Irish arrangements.

Based on the content of the initial post this detail was not given to the poster and one would assume an organisation would not suggest working from another country without being aware of its tax/prsi/employee working offsite insurance implications.
 
johnnynordmende said:
If I follow the document for the Portuguese NHR correctly (https://www.portugal-golden-visa.pt/portugal-non-habitual-residency-tax-regime-nhr), It states foreign income is not taxed.
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Under the Portugese NHR scheme, first you have to become an ordinary resident of Portugal and then apply for Non-Habitual-Residency status; if that is granted all the various elements of the scheme kick in.

In any case the work you do while you live in Portugal will not be treated as foreign income, it will be subject to Portuguese income tax in the normal way or under the NHR scheme if that has been granted.
 
The Horseman said:
It can if it wishes however the cost maybe prohibitive (depends on the value the employer places on the employee). Assuming as you say the Portuguese mirror the Irish arrangements.
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The choice isn't theirs though. It's an actual obligation, not recommended practice.
The Horseman said:
Based on the content of the initial post this detail was not given to the poster and one would assume an organisation would not suggest working from another country without being aware of its tax/prsi/employee working offsite insurance implications.
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The initial post doesn't indicate that any such suggestion was made.
 
T McGibney said:
The choice isn't theirs though. It's an actual obligation, not recommended practice.
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If your ascertain is correct then all of this thread is moot. So either it was a throwaway comment by the employer, it is not a permanent arrangement, they already have a presence or will have a payroll function or will not and if it is a permanent arrangement then the employee will need to act accordingly.
 
The Horseman said:
If your ascertain is correct then all of this thread is moot. So either it was a throwaway comment by the employer, it is not a permanent arrangement, they already have a presence or will have a payroll function or will not and if it is a permanent arrangement then the employee will need to act accordingly.
Click to expand...

I suspect you've totally misread the opening post.

johnnynordmende said:
I work in the tech industry and am employed by an Irish company in Dublin.
I have the option of working completely remotely and am considering moving to Portugal.
Click to expand...
 
T McGibney said:
I suspect you've totally misread the opening post.
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An employer allowing someone to work remotely and allowing them to relocate to abroad are two completely separate things.

My employer allows me to work remotely as much or as little as I like. I can spend as much time abroad as I like in an unofficial capacity. However if I wanted to officially relocate abroad I would have to become a contractor.
 
interested21 said:
An employer allowing someone to work remotely and allowing them to relocate to abroad are two completely separate things.

My employer allows me to work remotely as much or as little as I like. I can spend as much time abroad as I like in an unofficial capacity. However if I wanted to officially relocate abroad I would have to become a contractor.
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And you may find your salary change too. When WFH came out first, I remember talking to a Nigerian girl who's role was 100% WFH. We spoke about her options of working from Nigeria instead of Ireland. She said the cut in pay would be massive as they would pay local rates and not Irish rates.

Employers are not going to take on the hassle of running payrolls in other countries because a handful of employees are working remotely outside of Ireland and will have to comply with employment law and holidays in that country. They may not want to take on contractors either, especially as there is a limited time that someone can be deemed a contractor if working exclusively for one company.
 
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