What taxes apply to telecommuting from Portugal to other countries?

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The rule is that income must be paid in the country of residence, and there are agreements in place to avoid double taxation. Social security contributions are also due.

Anyone staying in Portugal for more than 183 days a year, consecutive or interpolated, and who is therefore considered a tax resident, must pay tax on their income here, even if it is earned abroad. To avoid situations of double taxation, Portugal has a network of agreements with other countries that allow the individual not to be taxed in the country of origin of the income and in the country of residence.

For example, as dependent workers, digital nomads who set up on a remote work visa must receive their gross salary from the company and then submit their tax return and applicable tax to the tax authorities. If they are self-employed, they must, like all independent professionals, open a business, issue receipts and comply with tax obligations,” continues the specialist.

As a general rule, these people, provided their profession is included in the list provided by law for this purpose, opt for the regime of non-habitual residents (RNH), created to attract people exercising high value-added professions, and which enables them to benefit from an IRS rate of 20% over ten years.

What about short-term stays? The rule remains the same: being in Portugal, they must pay taxes there, but implementation can prove more complicated. If they are not tax residents, income tax will be due at 25%, the rate applicable to non-residents. How can they be sure they’re in order? Employers can monitor the whereabouts of their workers and take responsibility for compliance. For the “self-employed”, it’s more difficult, and I admit that there are no controls.

What about social security? Remote workers must have their employer’s agreement to work abroad, and it’s the employer who will have to take responsibility for paying social security. They will have to register for social security in Portugal and pay monthly contributions, which sometimes gives rise to fears that they will be considered as having a permanent establishment in Portugal, which entails a whole series of other tax obligations. This is an obstacle to business flexibility, says the tax expert, who has assisted in several such cases. This is why it is always necessary to analyze the specific situation, particularly in the light of European social security regulations and agreements.

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