Employer guide
Portugal Payroll Guide 2026
Everything an international employer needs to run compliant payroll in Portugal: IRS withholding, Social Security, minimum wage, the 14-salary structure, deadlines and reporting.
Introduction
Payroll in Portugal is governed by the Labour Code (Código do Trabalho), the Contributory Code and the IRS Code. Employers must register each employee with Social Security before the first working day, withhold IRS from every salary payment, pay employer and employee Social Security contributions, and take out mandatory work accident insurance. Salaries are paid monthly in euro, with two extra payments a year — the holiday subsidy and the Christmas subsidy — and reported through the monthly remuneration declarations to Social Security and the tax authority. Late registrations, missing declarations or incorrect withholding carry fines and interest, which is why most foreign companies use a local payroll provider.
Section 1
IRS personal income tax
Tax residents (present 183 days or more in a 12-month period, or with a habitual residence in Portugal) are taxed on worldwide income at progressive rates. Non-residents are taxed at a flat 25% on Portuguese-sourced employment income.
| Annual taxable income (EUR) | Rate |
|---|---|
| Up to 8,059 | 13% |
| 8,060 – 12,160 | 16.5% |
| 12,161 – 17,233 | 22% |
| 17,234 – 22,306 | 25% |
| 22,307 – 28,400 | 32% |
| 28,401 – 41,629 | 35.5% |
| 41,630 – 44,987 | 43.5% |
| 44,988 – 83,696 | 45% |
| Above 83,696 | 48% |
Taxable income is gross pay less employee Social Security and the specific deduction of €4,350 per year. A solidarity surcharge of 2.5% applies above €80,000 and 5% above €250,000. Monthly withholding follows the official retention tables, which vary by marital status, number of dependants and whether one or both spouses earn income. Reduced regimes such as IRS Jovem for young workers and the IFICI incentive for qualified inbound professionals can substantially lower withholding.
- IRS withheld must be paid to the tax authority by the 20th of the following month
- The monthly remuneration declaration (DMR-AT) is filed by the 10th of the following month
- Annual employee income statements are issued by 20 January
- Employees file their annual IRS return between 1 April and 30 June
Section 3
Work accident insurance
Every employer must hold work accident insurance (seguro de acidentes de trabalho) with a private insurer for each employee. Premiums are typically around 1% of payroll for office roles and higher for manual or high-risk work. Cover must be in place from the first day of employment and the insured payroll updated whenever salaries change.
Section 4
Holiday and Christmas subsidies
Employees are entitled to 14 payments per year: 12 monthly salaries, a holiday subsidy equal to one month of pay, and a Christmas subsidy equal to one month of pay. The Christmas subsidy is paid by 15 December and the holiday subsidy before the main annual leave period; both may be paid in twelfths across the year if agreed. Both are subject to Social Security and IRS.
Section 5
Minimum wage and pay levels
| Region | Monthly minimum (EUR) | Payments per year |
|---|---|---|
| Mainland Portugal | 920 | 14 |
| Madeira | 966 | 14 |
| Azores | 966 | 14 |
The national minimum wage (retribuição mínima mensal garantida) is set annually by decree. Collective bargaining agreements applicable to your sector may set higher minimum pay scales, extra allowances or additional leave, and they override the general statutory minimum.
Section 6
Payroll deadlines
- Salaries: paid monthly, by the last working day of the month at the latest
- Social Security declaration (DMR-SS): filed by the 10th of the following month
- Social Security contributions: paid between the 10th and the 20th of the following month
- IRS withholding declaration (DMR-AT) and payment: by the 10th and 20th respectively
- Christmas subsidy: paid by 15 December
- Single Report (Relatório Único): filed annually between March and April
Section 7
Year-end obligations
After year end the employer reconciles all IRS withheld and reports each employee's annual income and deductions to the tax authority.
- Annual income statements issued to employees by 20 January
- Modelo 10 declaration filed with the tax authority by the end of February
- Relatório Único (Single Report) on employment and working conditions filed in spring
- Work accident insurance payroll figures reconciled with the insurer
Section 8
Payslip requirements
Employers must give each employee a payslip (recibo de vencimento) for every pay run, in Portuguese; bilingual payslips are common in international companies.
- Employee name, job category, Social Security number and pay period
- Base salary, seniority payments, allowances, bonuses and overtime
- Meal allowance, shown separately with the exempt and taxable portions
- Employee Social Security contribution and IRS withheld
- Net amount paid and the payment date
Section 9
Foreign employee payroll
- EU/EEA nationals may work without a permit; non-EU nationals need a residence or work visa before starting
- All employees, regardless of nationality, join the Portuguese Social Security general regime
- A1 certificates allow posted workers to remain in their home social security system for a limited period
- Residency status determines whether progressive rates or the flat 25% non-resident rate applies
- Qualified inbound professionals may apply for the IFICI regime with a 20% flat rate on employment income
- Every employee needs a Portuguese tax number (NIF) and a Social Security number (NISS) before the first payroll
Section 10
Why use a payroll provider in Portugal
A local payroll provider keeps registrations, contributions, withholding tables, declarations and payslips correct as rules change, without you building an in-house payroll team. You get one monthly report, one invoice and full audit-ready documentation.
Section 2
Social Security (Segurança Social)
Social Security covers pensions, sickness, parental leave, unemployment and survivor benefits. Employers contribute 23.75% of gross pay and employees 11%, with no contribution ceiling in the general regime.
Employees must be registered with Social Security no later than 24 hours before the employment start date. Contributions are declared through the DMR by the 10th and paid between the 10th and the 20th of the following month. Fixed-term contracts carry an additional 1.75 percentage points of employer contribution.