Step by Step: How to Hire in Portugal Without Opening a Company

With its stunning landscapes and thriving business environment, Portugal has become an appealing destination – not only for employees but also for employers. If that’s your case, and you’re considering opening a company in Portugal, take a moment to think first – depending on the size of your business and the people you’ll employ in the country, that may not be your best option.

You need to be prepared to open a company in Portugal, as it’s time-consuming and involves a lot (and we mean a lot) of bureaucracy. Plus, it requires a larger time and financial investment at the beginning.

And that’s when we steal the show: This guide will give you all the information you need to employ in Portugal without opening a company – from the requirements to the taxation system, plus the possibility of teaming up with an Employer of Record (EOR).

Open a Company in Portugal: The Costs and Obligations

Expanding overseas is quite a challenge. But we’re here to make it easier.

If you plan to employ in Portugal, there’s a thing or two you should know. It’s time-consuming, requires a lot of patience, and may cost more than you need to pay right now. But before we unveil the optimal solution for your business, we bet you have some questions.

Can I Open a Company in Portugal as a Foreigner?

Yes, absolutely.

To do so, you'll need to define the setup first. Are you doing it alone or in partnership? Who’s the manager? What’s the share capital? These are only some of the questions you’ll need to answer. Then, you’ll need a Portuguese tax number (known as “NIF”) plus the documents that assess your ability to open a company in Portugal.

Long story short: you need a Portuguese NIF, a social pact describing the company's setup, a company name, and a certificate of admissibility.

So, yes. It’s pretty hard to know where to ask what. Consider looking for professional help when you’re ready.

What’s the Minimum Amount to Start a Business in Portugal?

While there isn't a fixed minimum investment to open a company in Portugal, you should have enough to cover your startup costs – including registration fees, office space, and initial operational expenses. Then, it all comes down to the company’s setup.

Unless you start with a Partnership or a Cooperative (free, though not advisable for employing people), the investment varies for setting up the business structure only. Then, to register the company, you’ll need € 360.

And don’t forget about taxes.

How Much Tax Does a Company Pay in Portugal?

Hiring and employing workers in another country is challenging, especially regarding taxes and legal bureaucracies – Portugal is no exception.

The country offers competitive tax rates for businesses. Corporate income tax rates typically range from 17% to 21%, depending on where you establish your business – on the mainland or the islands. Then, depending on your profits, you’ll have to pay additional percentages.

And there are more taxes you’ll need to pay: VAT and TSU (Taxa Social Única) among others.

Do I Need an Accountant in Portugal?

From the minute you open a company in Portugal, you must work with a certified accountant. It’s mandatory. But you don’t have to hire one. If you want, you can work with a freelance professional, for example. In fact, the most common thing to do is to work with a certified accounting office ready to help in any situation.

Regardless of how you decide to work with each other, the accountant needs to exist.

Plus, such professionals can help you navigate the complex tax system, ensure compliance with Portuguese regulations, and optimize your tax strategy.

Now that you understand the main questions about opening a business in Portugal, it’s time to consider another (hassle-free) option.

Why an EOR Might Be What You Need Right Now

Have you employed a Portuguese resident already? No? That’s what we thought. We have good news for you: You do not need to open an office, buy computers, and desks, set up an internet connection, and God knows what more.

Meet the Employer of Record (EOR), the best solution for your business right now.

This may be what you need because it eliminates the hassle of setting up a formal entity. In a few words, an EOR can handle the hard stuff for you: manage payroll, taxes, and compliance – allowing you to focus on your core operations.

It requires less investment than opening a company in Portugal, and it’s the best setup to employ 1 to 5 people. But you might be confused about how it all works.

To make it easier, picture yourself as the business that hires workers, and us as the EOR.

The Relationship Between Client, Employee, and EOR in 5 Steps

Once you expand your business to Portugal with the help of a local EOR, it’s time to follow essential steps. It may seem confusing at first, but trust us, it’s super easy to understand and to work with.

Step 1: Recruiting

If you decide to partner with us as your local Employer of Record in Portugal, the recruitment phase can be done in 2 ways: either you are fully responsible for sourcing and interviewing candidates, or BRIDGE IN does it for you. Your choice.

If you decide to hand everything to us, you must provide the information you value most in each candidate.

You need to define the jobs you’re opening (is it one or more?), the everyday tasks, what you value most, and the salary. Overall, who’s your ideal employee?

From there, we’ll handle the rest, gather the best candidates, and schedule final interviews with you.

Step 2: Offer and Contract

This is a crucial phase. It’s when we speed up the process so you don’t need to worry about legal and tax issues.

So, once you pick the right candidate, it’s time to talk to your future employee. You need to consider the salary you’ll offer, never forgetting about taxes and allowances – for meals, holidays, and Christmas.

And you need to think about tax efficiency. That’s where we jump in.

You can pay your employee in different ways – through regular bank transfers, plus meal and benefits cards for tax exemption – for both parties.

We can help you write the contract too. Some mandatory terms include holidays, everyday tasks, way of working and communicating, and work schedule (to name a few).

By relying on a local partner, you speed up the process while maintaining everything legal, compliant, and tax-efficient.

Step 3: You Pay the EOR Every Month

We’ll discuss a monthly (or yearly) fee that you’ll pay along with the employee’s salary to keep everything compliant. Over the years, we discovered this is the most efficient way to reach step 4.

Step 4: The EOR Pays the Employee

This is when the magic happens.

Once you pay us the employee’s salary and the fee, we retain the latter and pay the worker on your behalf. By doing this, the process goes on as smoothly and fast as possible – for everyone involved.

Step 5: It All Works Without You Remembering About the EOR

You organize your day-to-day directly with the employee.

As the EOR, all we do is handle the legal, compliance, and fiscal matters. You won’t even notice we exist in between to make the process easier (we promise).

Wrapping it up, Portugal's business-friendly environment and strategic location make it an ideal destination for foreign entrepreneurs. Whether you open a company directly or use an EOR setup (which benefits you in the beginning), Portugal offers a range of opportunities for business growth and success.

Later on, if you decide to employ over 5 residents in Portugal, we can also help you incorporate a subsidiary.