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Employers are responsible for deducting employees' contributions from their gross wage and transferring it monthly to the Social Security Administration.
Employers contribute 23.75% of the employee's gross income to social security (22.3% for nonprofit companies).
Labor Accident Insurance - 1.75% of the employee's gross income.
Contributions to the Working Compensation Fund (Fundo de Compensação do Trabalho) and the Working Compensation Warranty Fund (Fundo de Garantia de Compensação do Trabalho) are mandatory in order to protect employees in case of company insolvency or if the employer has difficulties paying salaries.
Portuguese residents pay tax on their worldwide income, while non-residents are subject only to tax on their income generated in the country. To be considered a resident, the individual must spend more than 183 days a year in Portugal or have an abode in Portugal which they use as their permanent residence in any day of the year.
The Portuguese income tax rates are generally progressive and vary according to the employee's situation involving marital status, number of children or dependent people and spouse's income.
Non-residents usually pay a 28% flat tax rate.
| GROSS INCOME | PROGRESSIVE TAX 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% |
| More than €83,696 | 48% |
Taxpayers with an aggregated taxable income from EUR 80,000 to EUR 250,000 pay a 2.5% solidarity tax.
The general tax rate for employee’s social security contributions is 11%, which is deducted from their gross earnings.
Social Security benefits include sick leave, birth and adoption, disability, retirement, unemployment, death and work-related accidents or illness. It only applies to Portuguese nationals, qualifying European Union nationals, and those legally resident in Portugal as well as their spouses and dependents.
All individuals covered by social security also have healthcare benefits. Social security benefits are administered by the Social Security Institute (Instituto da Solidariedade e da Segurança Social), while healthcare benefits are mandated by the Ministry of Health (Ministério de Saúde)
Created to incentivise high-value industries to operate in Portugal, non-habitual residents pay a flat 20% income tax rate for ten years on salaries earned in Portugal (other benefits apply on foreign income). Eligible employees must not have been a resident of Portugal in the previous five years and should perform high-added value functions (generally scientific, artistic or technical).
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