Do I need a local entity to hire employees in Portugal?

Yes, however, with EuroDev’s PEO/EOR services, you can hire and manage employees without setting up any legal entity.

What employer costs should I expect?

Employers pay 26.5% on top of gross salary for social security, accident insurance, and wage guarantee fund, plus mandatory benefits like 13th and 14th-month salaries.

How are employee taxes handled?

Employees pay 11% social security and progressive income tax rates from 13% to 48%, with surcharges for high earners. EuroDev ensures accurate deductions and compliance.

How does EuroDev ensure compliance?

EuroDev handles payroll, tax contributions, and statutory benefits in full compliance with Portuguese labour laws, providing transparent reporting and documentation.

Can EuroDev support hiring in other European countries?

Yes. EuroDev offers HR outsourcing across all European markets.

How Much Does It Cost to Hire in Portugal in 2025?

Created at: 3 March 2026 - Last updated: 15 June 2026

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Hiring in Portugal involves more than just the gross salary. Employers must account for payroll contributions, mandatory bonuses, and statutory benefits, which together significantly impact the total cost of employment.

Below, you’ll find a clear breakdown of employer taxes, employee deductions, and required benefits in Portugal in 2025, helping you plan hiring costs with confidence.

Key Hiring Costs in Portugal (2025)

Employer payroll contribution: ~26.5% on top of gross salary
Employee social security: 11%
Income tax: Progressive, up to 48%
Mandatory bonuses: 13th + 14th salary
Annual leave: 20–22 days

What Taxes Do Employers Pay in Portugal?

Employee Taxes and Deductions

Mandatory Benefits in Portugal

Final Thoughts

How EuroDev Can Help

What Taxes Do Employers Pay When Hiring in Portugal?

Employer Taxes

In Portugal, employers pay a total payroll contribution of 26.63% on top of the employee’s gross salary.

This includes:

Social security contributions: 23.75%
Labour Accident Insurance: 1.88%
Wage Guarantee Fund: 1.00%

These contributions are mandatory and calculated based on the gross salary.

Need help calculating your total hiring cost?

Our HR specialists can break down the full cost based on your role, salary, and hiring structure.

Employee Taxes and Deductions

Although deducted from salaries, employers are responsible for calculating and managing these taxes.

Employee Taxes	Rate(%)	Relevant Annual Pay
Employee Social Security	11%	All amounts
Employee Income Tax	13%	Up to 8,059 €
	18%	8,059 € - 12,160 €
	23%	12,160 € - 17,233 €
	26%	17,233 € - 22,306 €
	32.75%	22,306 € - 28,400 €
	37%	28,400 € - 41,629 €
	43.5%	41,629 € - 44,897 €
	45%	44,897 € - 83,696 €
	48%	Above 83,696 €

Table 1. This deductible amount falls under the total gross salary the company gives to the employee; however, the other employer social security contributions are calculated before the gross salary.

Additionally, in Portugal, there is an additional solidarity charge:

For amounts above 80,000 €, the amount is 2.5%
For amounts above 250,000 €, the surcharge increases to 5%

Mandatory Benefits and Employer Obligations

Employers in Portugal must also provide several statutory benefits that increase the total cost of employment.

Cost Type	Employer Costs	Notes
Additional Salaries	Mandatory 13th and 14th month salaries	Mandatory
Public Holidays	20 days	Fixed
Personal Holidays Allowance	20 working days (<1 year of service) 22 working days (>1 year of service)	Based on tenure
Sick Leave Protection	55% (<30 days) 60% (>31 days and <90 days) 70% (>91 days and <365 days) 75% (>365 days)	The first 3 days are unpaid.
Paternity and Maternity Leaves	Paternity Leave: <28 working days Maternity Leave: <120 working days	Those leaves are granted for the birth of a child under Portuguese law.
Training Hours	Minimum of 40 hours per year
Worker Accident Insurance	1.75% of annual gross salary	Included in the 26.5% payroll contribution

Table 2. The benefits in this table are compulsory for employers in Portugal to provide, but under certain conditions; they may change. This table is limited to the most important benefits.

These obligations are essential to consider when estimating the real cost of hiring employees in Portugal.

If you would like to know more about the maternity leave rules in Portugal and across other European countries, check this blog: Maternity Leave Rules in Europe.

Final Thoughts

Portugal remains an attractive destination for hiring due to its skilled workforce and relatively competitive employment costs. However, the total cost of employment goes well beyond salary.

Employers must account for:

A ~26.5% payroll contribution
Mandatory bonus salaries
Paid leave and social protections

At the same time, employees are subject to social security contributions and progressive income tax, which employers must manage on their behalf.

As a result, hiring in Portugal requires careful planning to ensure compliance and cost efficiency.

How EuroDev Helps You Hire in Portugal and Across Europe

Expanding into Portugal, or anywhere in Europe, doesn’t require setting up a local entity.

EuroDev supports international companies through:

Employer of Record (EOR)
PEO services
Payroll and compliance management
Local HR support

With over 29 years of experience, we help you hire quickly, stay compliant, and reduce administrative complexity.

Talk to our team to simplify your European expansion.

Disclaimer: While we strive to provide accurate and timely information, please note that HR policies and regulations can change frequently. It is recommended that you seek guidance from our consultants to ensure that the data presented here is current and accurate.

FAQ's

: Yes, however, with EuroDev’s PEO/EOR services, you can hire and manage employees without setting up any legal entity.
: Employers pay 26.5% on top of gross salary for social security, accident insurance, and wage guarantee fund, plus mandatory benefits like 13th and 14th-month salaries.
: Employees pay 11% social security and progressive income tax rates from 13% to 48%, with surcharges for high earners. EuroDev ensures accurate deductions and compliance.
: EuroDev handles payroll, tax contributions, and statutory benefits in full compliance with Portuguese labour laws, providing transparent reporting and documentation.
: Yes. EuroDev offers HR outsourcing across all European markets.

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About the Author

Sven Brands - HR Outsourcing International Account Manager at EuroDev

Sven specializes in helping international companies expand into Europe by navigating local employment laws, payroll structures, and HR compliance. He has extensive experience supporting cross-border hiring strategies across multiple European markets.