Ask HN: Working remotely in Portugal for an Irish company
8 comments
If you become tax resident in Portugal, ie live here more than 183 days per annum, you can pay zero tax for 10 years, if you source your income from UK company you have shares in via Dividends. Not sure if Ireland is the same, but probably is, assuming they have a double tax treaty with Portugal and no withholding tax on dividends.
I moved to Cascais nr Lisbon last summer because of Brexit.
Wonderful climate food beaches city, great infrastructure, , airport roads etc, cheap 200MBS Fibre, safe with v low crime rate, friendly English speaking locals. Loads of expats moving here because of this tax, property market is on fire.
A few negtives, no Amazon, shops expensive for Electrical goods Furniture type items. VAT 23%. Terrible dangerous incompetent drivers, many crapy little dangerous cars because car tax is insane, shame becuase they have great motorways.
Bureaucracy not as bad as expected quite easy to register with authorities, I paid our Estate Agent who found our house to help, she was brilliant, better than the lawyer. Services like law and accountancy v cheap here. €500k in property investment (home or several apartments) gets you a golden visa so insurance for us, if UK crahes out of EU without a deal. Also private medical insurance remarkably cheap full best cover including dental for famaly of 4 well under €200 per month. Electricity Gas v expensive though pool costs a lot to heat.
Would you have a link for more information on the €500k property investment visa?
It's the golden visa program. http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApo...
Spain, Greece, Malta and few other countries have similar programs.
Spain, Greece, Malta and few other countries have similar programs.
Thank you so much!
Your first step is to get registered with the Portuguese fiscal authority, social security and health system. You'll have to do that in person, but from then on interactions will all be online. Your best bet is to go to a "Loja do Cidadão" (citizen's shop), where all services are in one place. There's a Loja do Cidadão on major cities.
Then, you'll have a few options. If the remote company has no Portuguese subsidiary, you'll have to operate as an independent contractor (trabalhador independente) or as a one person company (sociedade unipessoal). It's basically the same, except as a company you must have an accountant. As an independent contractor you may have an accountant, or you may choose a simplified accounting model where you don't declare expenses, and your profit margin is estimated by the fiscal authority.
Income tax is progressive. You should be able to read the brackets here: https://economiafinancas.com/2017/escaloes-irs-2018/
You declare your income in May, and pay income tax in July/August.
Social security is a fixed rate: 29.6%. It is a mandatory retirement savings, and provides disability income should you require it. You pay social security quarterly or monthly.
Access to the national health service is not dependent on any tax or regular payment. You don't need health insurance.
As an independent contractor, you would pay VAT, but cross-border transactions are exempt, so your VAT is probably zero (check this with an accountant; EU's rules on cross border transactions are in flux).
References:
https://www.portaldocidadao.pt/
http://www.portaldasfinancas.gov.pt/
Then, you'll have a few options. If the remote company has no Portuguese subsidiary, you'll have to operate as an independent contractor (trabalhador independente) or as a one person company (sociedade unipessoal). It's basically the same, except as a company you must have an accountant. As an independent contractor you may have an accountant, or you may choose a simplified accounting model where you don't declare expenses, and your profit margin is estimated by the fiscal authority.
Income tax is progressive. You should be able to read the brackets here: https://economiafinancas.com/2017/escaloes-irs-2018/
You declare your income in May, and pay income tax in July/August.
Social security is a fixed rate: 29.6%. It is a mandatory retirement savings, and provides disability income should you require it. You pay social security quarterly or monthly.
Access to the national health service is not dependent on any tax or regular payment. You don't need health insurance.
As an independent contractor, you would pay VAT, but cross-border transactions are exempt, so your VAT is probably zero (check this with an accountant; EU's rules on cross border transactions are in flux).
References:
https://www.portaldocidadao.pt/
http://www.portaldasfinancas.gov.pt/
That's a pretty high social security rate. I am in a similar position to OP, but in Spain. My overall tax burden (including social security) is around 30% which is not bad at all. So, if you're flexible and just looking for something new, I definitely recommend looking at Spain.
I definitely recommend looking at Spain
I'm in Catalonia, Spain (for a few more weeks) and do not recommend. I don't know what you are making, but I am also an Autonomo, and I'm being royally fucked on social insurance and taxes. My tax and SI bill for this year will be around 60%, and fuck that. And yes, I have tried different accountants. Essentially, the tax department decided that a lot of my expenses are not allowable, and because I have bank accounts in other EU countries as well as Spain, they decided that I am "probably hiding something" (their words). I can go and spend a lot of money on lawyers, or I can just pack up and leave.
Combined with the bullshit Catalan independence movement and accompanying social and economic instability, generally unfriendly Catalans, terrible quality of food (essentially salt, with a hint of whatever it claims to be on the package), and the "we will bill you whatever the fuck we want, good luck clawing your money back" utilities (literally opened a 400 EUR bill from the phone company 10 minutes ago), I am totally done with this place.
I have lived in many countries, and all places have challenges and ups and downs. This place, however, is the pits.
I'm in Catalonia, Spain (for a few more weeks) and do not recommend. I don't know what you are making, but I am also an Autonomo, and I'm being royally fucked on social insurance and taxes. My tax and SI bill for this year will be around 60%, and fuck that. And yes, I have tried different accountants. Essentially, the tax department decided that a lot of my expenses are not allowable, and because I have bank accounts in other EU countries as well as Spain, they decided that I am "probably hiding something" (their words). I can go and spend a lot of money on lawyers, or I can just pack up and leave.
Combined with the bullshit Catalan independence movement and accompanying social and economic instability, generally unfriendly Catalans, terrible quality of food (essentially salt, with a hint of whatever it claims to be on the package), and the "we will bill you whatever the fuck we want, good luck clawing your money back" utilities (literally opened a 400 EUR bill from the phone company 10 minutes ago), I am totally done with this place.
I have lived in many countries, and all places have challenges and ups and downs. This place, however, is the pits.
Head to Rwanda.
The equivalent social security rate in spain is 29.8%: http://www.seg-social.es/Internet_1/Trabajadores/CotizacionR...
Spain does the same thing as Portugal, for company workers, where they "hide" part of the social security payment from payment receipts. Companies pay 23.6% and the worker 4.7%. Only the latter appears in the salary receipt, the other is a company expense.
Spain does the same thing as Portugal, for company workers, where they "hide" part of the social security payment from payment receipts. Companies pay 23.6% and the worker 4.7%. Only the latter appears in the salary receipt, the other is a company expense.
The above was for being self employed
As was my quote of 29.8% (trabajadores autónomos). I posted the link for this exact section.
I'm not going to claim to understand everything on that page (spanish taxes are complicated!), but nearly all autónomos pay the minimal amount payable, which is 275 euros/month. You can contribute more if you want to get more state pension, don't I don't believe many do.
Edit - it's 29.3% of the base mínima de autónomos - which is about 920 euros a month. Now, I honestly have no idea what that actually means, but it means you pay about 270 euros regardless of what you earn (it's a stupid system that benefits the well-off).
Edit - it's 29.3% of the base mínima de autónomos - which is about 920 euros a month. Now, I honestly have no idea what that actually means, but it means you pay about 270 euros regardless of what you earn (it's a stupid system that benefits the well-off).
This is slightly different as he is looking to apply for non-habitiual status. This is quite a bit more complex and I would not do it without good professional advice. The major accounting firms have set up a production line, and I really would talk to them. These are PWC, Deloitte, etc. I took some very bad advice when I moved to Portugal, and it took years to sort out. Be very careful in who you take advice from. If you file one bit of paper in the wrong order it can take years to solve.
The social security bit is very important to highlight. Especially if he can't recover the payments once he leaves the company. He is putting over 50% of his pay check to the Portuguese authorities.
To the OP: Did you visit Portugal? Why do you want to move there?
It is not a third-world dump hole but it is a not a first world class country either.
To the OP: Did you visit Portugal? Why do you want to move there?
It is not a third-world dump hole but it is a not a first world class country either.
> The social security bit is very important to highlight. Especially if he can't recover the payments once he leaves the company. He is putting over 50% of his pay check to the Portuguese authorities.
Within the EU you can transfer social security between countries. If he doesn't he will be entitled to retirement income when reaching retirement age. In no condition would he forfeit these payments.
> It is not a third-world dump hole but it is a not a first world class country either.
One of the best health services in Europe, one of the lowest crime rates in the world, lots of english-speaking nationals, and gorgeous weather. You won't find the hubbub of very large cities such as NY, Paris, or London, but then again you might not miss the hubbub. It's definitely first-world.
Within the EU you can transfer social security between countries. If he doesn't he will be entitled to retirement income when reaching retirement age. In no condition would he forfeit these payments.
> It is not a third-world dump hole but it is a not a first world class country either.
One of the best health services in Europe, one of the lowest crime rates in the world, lots of english-speaking nationals, and gorgeous weather. You won't find the hubbub of very large cities such as NY, Paris, or London, but then again you might not miss the hubbub. It's definitely first-world.
> It is not a third-world dump hole but it is a not a first world class country either.
I'd be interested in hearing what it is that you find in first-world countries that you don't find in Lisbon. Genuine question.
I'd be interested in hearing what it is that you find in first-world countries that you don't find in Lisbon. Genuine question.
You are probably referring to the non-habitual residence scheme.
As far as I know, the 20% tax rate only applies to domestically sourced income. Income from Ireland would be exempt from taxation in Portugal if it is taxed in Ireland.
I'm not sure if and how this scheme affects your social security contributions and eligibility for health care and pensions.
If you don't speak Portuguese well enough to really dig into this yourself, I would suggest you get professional advice.
As far as I know, the 20% tax rate only applies to domestically sourced income. Income from Ireland would be exempt from taxation in Portugal if it is taxed in Ireland.
I'm not sure if and how this scheme affects your social security contributions and eligibility for health care and pensions.
If you don't speak Portuguese well enough to really dig into this yourself, I would suggest you get professional advice.
This is a serendipitous discovery! I'm also a data scientist working for an Irish company in the process of moving to Portugal. My email address is in my HN profile if you want to talk.
Both are in the EU/EEC. You could simply move to Portugal, change nothing about how you are remunerated, keep an irish Euro bank account and everything should work fine surely.
The Portugese non-habituall-residence status has a reduced tax rate, or no tax rate if the tax on the income had been paid elsewhere in a non-tax haven.
You can apply for it if you have been non-resident in Portugal for more than 5 years, and lasts for 10 years.
It does not apply to Social Security which in Portugal is very high.
It is very critical to structure everything in the right way otherwise you may end paying more tax and Social security than you would in Ireland!
Getting the right advice is critical. I got the wrong advice and it took it years to solve.
You can apply for it if you have been non-resident in Portugal for more than 5 years, and lasts for 10 years.
It does not apply to Social Security which in Portugal is very high.
It is very critical to structure everything in the right way otherwise you may end paying more tax and Social security than you would in Ireland!
Getting the right advice is critical. I got the wrong advice and it took it years to solve.
Do you mean that in addition to the discounted taxation I should pay an extra for the Social Security?
Yes. NHR status affects your income tax, but not social security. It is pretty much designed to attract retirees from other EU countries (and those are almost non-affected by social security).
Drop me an email at moura até oko dot ai. I am from Portugal and I am available to answer any questions you have.
I've recently been in a similar situation with a company from Belgium.
I've recently been in a similar situation with a company from Belgium.
Will you be an employee or a contractor?
I do not know. We have not defined the formal contract yet. I guess we can decide how to do that. At the moment I am an employee.
What would be the difference?
What would be the difference?
Do you have to set up a company in Portugal? You maybe better of be registered as a contractor in Ireland.
I am open to all the options. I only do not know which one is the most convenient. In some countries you need to pay taxes in the place where you are working
Just to share some thoughts, I'm a Portuguese expat in Germany that is also moving back as company owner.
I got tired of the high taxes charged to small companies around here. Last year alone we got royally charged over 65% of the income for no good reason in DE. With a stable customer base, it has been good (less taxes, less hassle) to work from PT.
My tip is that you also look on other cities besides Lisbon.
On our case we moved into Coimbra. It is directly on the middle way between Porto and Lisbon, between 2~3 hours away from both airports using public transportation (trains/bus have Wifi). Airplanes tickets are costing ~30 GBP for a back and forth trip between PT and Frankfurt through RyanAir.
Housing prices in Coimbra are amazing, I'm renting a full house with 5 bedrooms for ~240 GBP/month. This is an academic city similar to Edinburgh, about 2000 years old with roman buildings still around. All that to say that we get the good stuff without that metropolis pricing of a big city.
Just don't drive a car around here, I have the impression that turning blinkers are not default equipment on these cars.
I got tired of the high taxes charged to small companies around here. Last year alone we got royally charged over 65% of the income for no good reason in DE. With a stable customer base, it has been good (less taxes, less hassle) to work from PT.
My tip is that you also look on other cities besides Lisbon.
On our case we moved into Coimbra. It is directly on the middle way between Porto and Lisbon, between 2~3 hours away from both airports using public transportation (trains/bus have Wifi). Airplanes tickets are costing ~30 GBP for a back and forth trip between PT and Frankfurt through RyanAir.
Housing prices in Coimbra are amazing, I'm renting a full house with 5 bedrooms for ~240 GBP/month. This is an academic city similar to Edinburgh, about 2000 years old with roman buildings still around. All that to say that we get the good stuff without that metropolis pricing of a big city.
Just don't drive a car around here, I have the impression that turning blinkers are not default equipment on these cars.
Quite a difference. When you work in Portugal you need to pay the local income taxes, but your company needs to pay the relevant local taxes as well (for example half of your health insurance, depends on country). In order to do that they need to be registered in Portugal (without a tax id you can't pay taxes) which means opening a subsidiary. As you can see it asks a lot from the company and they might not be willing to do that for one employee.
With European tax law, when you live and work in Portugal, still for any day you work for your Irish employer in their Irish office you have to pay income tax in Ireland (double taxation agreements between the countries). If it's less than 5% of the work days per year it doesn't matter. If you have to go to Ireland for whole weeks for meetings or training you might have to pay taxes in both countries. Well file taxes in both countries for the percentage of working days. Again the double taxation agreements between the countries guarantee that you don't pay taxes twice (or if so you can claim the extra amount back).
As contractor it's easier. You live and work in Portugal and pay local taxes. Of course you need to register as sole trader or single-person company (whatever the equivalent in Portugal is). Any trip to Ireland is simply a business trip. It's both a cost and (ideally) you invoice that to your client (the Irish company). Your salary needs to rise because now as a sole trader you have additional cost (other insurances, slightly different taxes, you have to pay for a computer yourself, you no longer have sick days and no longer get paid for days not working e.g. holiday).
A third option is to find a Portuguese company (e.g. small agency) where you become employee and they send invoices for the Irish company.
The company will likely try to get you to work as a contractor because it's an easier setup. For you it's better to stay an employee, ideally get reimbursed for any trips to Ireland, but you have to deal with filing taxes in both countries.
With European tax law, when you live and work in Portugal, still for any day you work for your Irish employer in their Irish office you have to pay income tax in Ireland (double taxation agreements between the countries). If it's less than 5% of the work days per year it doesn't matter. If you have to go to Ireland for whole weeks for meetings or training you might have to pay taxes in both countries. Well file taxes in both countries for the percentage of working days. Again the double taxation agreements between the countries guarantee that you don't pay taxes twice (or if so you can claim the extra amount back).
As contractor it's easier. You live and work in Portugal and pay local taxes. Of course you need to register as sole trader or single-person company (whatever the equivalent in Portugal is). Any trip to Ireland is simply a business trip. It's both a cost and (ideally) you invoice that to your client (the Irish company). Your salary needs to rise because now as a sole trader you have additional cost (other insurances, slightly different taxes, you have to pay for a computer yourself, you no longer have sick days and no longer get paid for days not working e.g. holiday).
A third option is to find a Portuguese company (e.g. small agency) where you become employee and they send invoices for the Irish company.
The company will likely try to get you to work as a contractor because it's an easier setup. For you it's better to stay an employee, ideally get reimbursed for any trips to Ireland, but you have to deal with filing taxes in both countries.
All very true. I'm in a similar position, living and working in Portugal for a UK company. Basically because it asks a lot of the company I am a contractor, registered in Portugal, paying taxes, social security, etc. But because of the greater burden on me and not on the company I negotiated a higher rate.
My main reason to consider portugal was a favourable taxation with (NHR system) would I be able to benefit from it under any circumstances ?
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I have heard that in Portugal it is possible to have a very good tax rate 20% with the NHR system.
I am a software engineer (Data Scientist).
How does the system work? Would I pay 20% on my gross salary?