7 ms·

Ask HN: Working remotely in Portugal for an Irish company

55 points by donbeo 9y ago

Hi, the Irish company I am working for offered me to work remotely. 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?

mtmail 9y ago
Will you be an employee or a contractor?
- donbeo 9y ago
  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?
  - lukasm 9y ago
    Do you have to set up a company in Portugal? You maybe better of be registered as a contractor in Ireland.
    - donbeo 9y ago
      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
      - nunobrito 9y ago
        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.
  - mtmail 9y ago
    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.
    - deleted 9y ago
      [deleted]
    - roryrjb 9y ago
      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.
    - 9y ago
pouta 9y ago
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.
sergiosgc 9y ago
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/ 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/ https://www.portaldocidadao.pt/ http://www.portaldasfinancas.gov.pt/ http://www.portaldasfinancas.gov.pt/
- csomar 9y ago
  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.
  - fwdpropaganda 9y ago
    > 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.
easytiger 9y ago
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.
uxhack 9y ago
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.
- donbeo 9y ago
  Do you mean that in addition to the discounted taxation I should pay an extra for the Social Security?
  - sergiosgc 9y ago
    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).
fauigerzigerk 9y ago
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.
garyclarke27 9y ago
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.
- toomuchtodo 9y ago
  Would you have a link for more information on the €500k property investment visa?
  - fuj 9y ago
    http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApoio.aspx?fromIndex=0&id_Linha=6269 http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApo...
  - despacito 9y ago
    It's the golden visa program. http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApoio.aspx?fromIndex=0&id_Linha=6269 http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApo... Spain, Greece, Malta and few other countries have similar programs.
eadan 9y ago
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.

55 points by donbeo 9y ago

mtmail 9y ago

Will you be an employee or a contractor?

donbeo 9y ago
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?
- lukasm 9y ago
  Do you have to set up a company in Portugal? You maybe better of be registered as a contractor in Ireland.
  - donbeo 9y ago
    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
    - nunobrito 9y ago
      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.
- mtmail 9y ago
  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.
  - deleted 9y ago
    [deleted]
  - roryrjb 9y ago
    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.
  - 9y ago

pouta 9y ago

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.

sergiosgc 9y ago

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/ 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/ https://www.portaldocidadao.pt/ http://www.portaldasfinancas.gov.pt/ http://www.portaldasfinancas.gov.pt/

csomar 9y ago
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.
- fwdpropaganda 9y ago
  > 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.

easytiger 9y ago

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.

uxhack 9y ago

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.

donbeo 9y ago
Do you mean that in addition to the discounted taxation I should pay an extra for the Social Security?
- sergiosgc 9y ago
  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).

fauigerzigerk 9y ago

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.

garyclarke27 9y ago

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.

toomuchtodo 9y ago
Would you have a link for more information on the €500k property investment visa?
- fuj 9y ago
  http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApoio.aspx?fromIndex=0&id_Linha=6269 http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApo...
- despacito 9y ago
  It's the golden visa program. http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApoio.aspx?fromIndex=0&id_Linha=6269 http://www.sef.pt/portal/v10/en/aspx/apoiocliente/detalheApo... Spain, Greece, Malta and few other countries have similar programs.

eadan 9y ago

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.