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Minimum wage in Portugal

Payroll in Portugal

Statutory benefits in Portugal

Other employee benefits in Portugal

Compliant, seamless payroll and benefits in Portugal and beyond

Payroll and benefits in Portugal

Employers that want to hire Portuguese workers need to understand the ins and outs of payroll in Portugal. This helps them to ensure their business is compliant with the relevant regulations and provides employees with the smooth and consistent payroll experience they expect.

In this section, we’ll take you through everything you need to know about payroll in Portugal, including the rules surrounding 13th and 14th salary payments, and the statutory benefits that Portuguese employers must provide to their workers.

Understanding payroll in Portugal

As in all countries, payroll in Portugal is subject to specific rules and requirements. For example, employers must provide employees with a payslip after each payroll period and keep payroll records for at least five years. Employers are also responsible for deducting and paying taxes and social charges on behalf of their employees.

Statutory and additional benefits

Employers in Portugal are required by law to provide their employees with certain benefits, like annual leave. Employers can also choose to provide additional benefits to reward their employees and improve talent attraction and retention.

Outsourcing payroll in Portugal

Businesses that want to hire workers without the hassle of running payroll can choose to work with a payroll provider in Portugal, such as an employer of record (EoR). EoR providers handle payroll (as well as other HR tasks like benefits administration and onboarding) on behalf of their clients.

Minimum wage in Portugal

In Portugal, the minimum wage is expressed as a gross monthly salary (before tax and social security). It is reviewed annually by the government and applies nationwide, with slight regional variations for the autonomous regions.

As of 1 January 2026, the statutory minimum wage framework is as follows.

National minimum wage (mainland Portugal)

EUR 900 per month (gross).
Paid over 14 instalments per year (12 regular monthly salaries + 13th and 14th month payments).

This means the annual gross minimum salary for mainland Portugal is:

EUR 12,600 per year (900 × 14).

Understanding the 13th and 14th month pay

Employees in Portugal are legally entitled to:

a 13th month salary (holiday allowance), usually paid in June.
a 14th month salary (Christmas allowance), usually paid in December.

Both bonuses are each equal to one full month’s salary. When the annual minimum salary is spread across 12 months for budgeting purposes, this equates to approximately:

EUR 750 per month (12-month equivalent).

Regional minimum wages in Portugal

Portugal maintains slightly higher minimum wages in its autonomous regions to reflect local economic conditions:

Azores: approx. EUR 945 per month (14 instalments)
Madeira: approx. EUR 940 per month (14 instalments)
Mainland Portugal: EUR 900 per month (14 instalments)

Minimum hourly wage in Portugal

Portugal does not set an official hourly minimum wage; however, an indicative rate can be calculated.

For a standard 40-hour workweek:

Monthly base (mainland): EUR 900
Approximate base hourly rate: EUR 5.60 per hour

When the 13th and 14th month salaries are included, the effective hourly value rises to approximately:

EUR 6.55 per hour (annualised).

Minimum wage in Portugal after tax

Minimum wage figures are gross. Employees must pay:

11% social security contributions.
Personal income tax (IRS), calculated on a progressive scale.

An employee earning the mainland minimum wage in 2026:

Annual gross: EUR 12,600.
Estimated annual net income: approx. EUR 9,300–9,600.
Estimated net monthly income: approx. EUR 775–800.

(Net amounts vary depending on personal tax situation and allowances.)

Payroll in Portugal

Employers should be aware of the particularities of payroll in Portugal before hiring employees. For example, it’s important to understand your obligations when it comes to withholding and paying employee taxes and social security contributions, plus how the 13th and 14th salary work in Portugal.

Employee taxes in Portugal

Employees in Portugal are subject to income tax on their wages. Income tax in Portugal is paid according to a progressive scale, with rates from 13.25% to 48%. High-income earners are also subject to an additional ‘solidarity rate’ of either 2.5% or 5%. Non-residents only pay income tax on income earned in Portugal, which is charged at a flat rate of 28%. Portuguese employers are responsible for withholding taxes from their employee’s wages and remitting them to the tax authorities.

Employer and employee social security contributions in Portugal

Both employers and employees in Portugal make social security contributions each month, which are based on the employee’s wages. This pays for things like unemployment, sick pay, maternity leave, and pensions. The employee’s contribution amounts to 11% of their gross pay, and the employer’s contribution is 23.75%. Employers must also contribute 1% of the employee’s gross salary to the Portuguese Wage Guarantee fund and pay 1.75% to cover insurance for occupation-related accidents.

Payroll cycle in Portugal

The typical payroll cycle in Portugal is monthly. Employees are usually paid before the last day of the month. Employers must then declare the taxes they have withheld to the tax authority by the 10th of the following month and pay by the 20th. At the end of the year, employers in Portugal have to file a tax declaration detailing how much they withheld and paid during the previous calendar year.

13th and 14th salary in Portugal

In Portugal, employees are entitled to two annual bonuses which are each equivalent to a month’s pay. This essentially means that an employee’s annual salary is divided into 14 instalments instead of 12. These bonuses are generally paid in June and December, to coincide with employees’ holidays.

Other payroll requirements in Portugal

Employers in Portugal must provide employees with a payslip after each pay period, which details their gross pay, the deductions that have been made, and their net pay. This can be either digital or in paper format.

Statutory benefits in Portugal

Employees in Portugal are covered by a strong social security system, which provides protection in the case of disability, unemployment, and illness. Employers and employees both pay into this system through monthly payroll contributions. There are also certain employer-provided benefits that employers in Portugal are legally obliged to grant their employees.

Social security benefits in Portugal

The social security system in Portugal provides many of the benefits to employees that might otherwise be provided directly by employers. It’s paid for by monthly contributions from both employees and employers.
Social security covers things like:

State pension: Employees in Portugal can access the state pension once they reach the retirement age, which is currently 66 years and four months. This is a monthly payment designed to replace income from work for retirees.
Unemployment benefits: These are provided to workers in Portugal who are temporarily out of work and looking for a new position. The amount employees can get depends on their previous salary.
Sick leave: Employees in Portugal can get sick leave for up to 1095 days. After the first three days, they can receive sick pay from social security.
Disability benefits: When someone is unable to work due to a disability in Portugal, they can access the disability pension (Pensão de invalidez). This may be paid on a temporary or permanent basis.

Employer-provided statutory benefits in Portugal

Employers in Portugal are also required to provide their employees with certain other benefits, as defined by the Labour Code and other legislation. For example, employers must provide their employees with at least the following:

Annual leave: Employees are entitled to at least 22 working days of fully paid holiday leave each year.
Maternity, paternity, and parental leave: Employees are entitled to paid leave when they or their partner has a baby, or when they adopt a child. Parents can choose to share their total leave entitlement between them.
Workers compensation insurance: Employers in Portugal must carry workers compensation insurance, which covers employees in the case of injuries or accidents at work.
Meal allowance: In the public sector, employers in Portugal must pay their employees a daily meal allowance of EUR 6 per working day. This isn’t obligatory in the private sector, though some employers choose to provide a meal allowance.
Statutory holidays: In addition to their annual leave entitlement, employees in Portugal have the right to paid time off on public holidays, or compensatory time off. There are 13 public holidays per year.
Employee training: Portuguese employees have the right to at least 40 hours of learning to enhance their professional skills each year. For employees on fixed-term contracts, this amount is reduced proportionately to the length of their agreement.

Other employee benefits in Portugal

Employers in Portugal can choose to grant their employees additional benefits, even though they’re not required by law. This can help Portuguese employers to attract and retain talent by making their offer more attractive to potential employees.

Popular employee benefits in Portugal

Here are some popular employee benefits in Portugal that you might consider offering to your mployees:

Meal allowances: Providing employees with a daily meal voucher or allowance is a common employee benefit in Portugal. If an employer provides this benefit through a tax-exempt card or voucher, they are tax-exempt up to EUR 8.32 per day.
Health, dental, and vision insurance: Employees in Portugal can access healthcare through the public system. However, some employers choose to offer private healthcare as an employee benefit in Portugal. This can help employees to access faster wait times and a guaranteed quality of care.
Additional PTO: Offering paid time off in addition to the statutory 22 days of leave can be a valuable benefit to employees in Portugal. Many employers choose to grant their employees 25 days of leave.
Transportation allowance or company cars: Offering employees company cars and transportation allowances are fairly common employee benefits in Portugal. These can be valuable in helping employees to manage the cost of commuting to work.
Life insurance: Employers in Portugal can also choose to take out life insurance for their employees as an additional employee benefit. This can help to support the employee’s family in the event of their death. Employers can choose to pay all or part of the premiums for supplemental life insurance coverage.
Childcare vouchers: Childcare vouchers are a popular employee benefit for working parents in Portugal. Providing this option helps employees to balance their work and home life more effectively, without having to pay a lot for childcare.

Compliant, seamless payroll and benefits in Portugal and beyond

Getting payroll and benefits right is not just a legal issue. Every country also has its own customs, norms and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.

Thankfully, we know what we’re doing. When you work with CXC to engage workers in Portugal, we’ll handle everything from tax withholding to employee bonuses on your behalf.

Want to find out more?

Read about EoR services

FAQ's

What are the steps to run payroll in Portugal?

Running payroll in Portugal involves registering employees with Social Security, calculating gross pay and deductions, paying employees and issuing payslips, then reporting and paying the required tax and social security amounts each month.

The employer must report an employee’s admission to registration with the Instituto da Segurança Social (ISS) no later than when the employee starts work. In limited, duly justified circumstances involving very short-term contracts or shift work, the notification may be made within 24 hours after work begins. Each payroll cycle then involves calculating gross salary and any allowances, withholding personal income tax (IRS), deducting the employee’s social security contribution and calculating the employer contribution. Employees generally contribute 11% to Social Security, while the standard employer contribution is 23.75%.

Once payroll is calculated, the employer pays the employee and provides a payslip showing the required salary and deduction information.

Employers must also complete their monthly payroll reporting to the Portuguese Tax and Customs Authority (AT) and Social Security and pay withheld income tax and social security contributions by the applicable deadlines.

Do you need a local entity to run payroll in Portugal?

No. A foreign company can hire and pay employees in Portugal without setting up its own local entity by using an Employer of Record (EOR), which becomes the local legal employer and runs payroll on its behalf. An EOR is not a separately defined category under Portuguese law. The arrangement must comply with Portuguese employment rules and, where it constitutes temporary agency work, the provider must hold the required authorisation.

The EOR handles the employer registrations needed in Portugal and manages payroll calculations, income tax withholding, social security contributions, payslips and the required payroll reporting and payments to the Portuguese authorities.

A company that wants to employ workers and run Portuguese payroll directly in its own name needs the appropriate local employer and tax registrations, access to the relevant government systems and mandatory work accident insurance. A payroll provider can process payroll for an existing employer, but it does not replace the legal employer or remove the need for the company to have the required registrations.

For companies without their own Portuguese employment setup, an EOR provides a way to employ and pay workers locally while the company manages their day-to-day work.

What registrations are required to set up payroll in Portugal?

To set up payroll in Portugal, an employer needs to register with the Portuguese Tax and Customs Authority (AT) and the Social Security Institute (ISS), register each employee with Social Security and arrange mandatory work accident insurance.

The employer must complete its tax registration with the AT and employer registration with the ISS, including access to Segurança Social Direta for managing social security obligations. Each employee must also be registered with Social Security no later than when they start work, and have the identification details required for Portuguese payroll, including a Portuguese tax identification number (NIF) and social security identification number (NISS).

Mandatory work accident insurance must also be in place when employment begins.

Once these requirements are completed, the employer can run payroll, withhold income tax and employee contributions, calculate employer contributions and complete the required monthly reporting and payments to the Portuguese authorities.

What payroll taxes must employers pay in Portugal?

Employers in Portugal generally pay 23.75% of an employee’s gross salary in Social Security contributions, while also withholding the employee’s 11% Social Security contribution and applicable personal income tax (IRS) through payroll.

The employer is responsible for calculating these amounts correctly and reporting and paying them to the relevant Portuguese authorities each month. The amount of IRS withheld from an employee’s salary varies according to the applicable withholding tables and the employee’s individual circumstances.

Employers must also arrange mandatory work accident insurance, although this is an employment cost rather than a payroll tax. The premium is not set at a single statutory percentage and varies according to factors such as the employee’s role and level of occupational risk.

Portugal’s payroll costs can therefore include both employer-paid contributions and amounts withheld from employee pay, which need to be calculated and reported separately through payroll.

When should companies outsource payroll in Portugal?

Companies may consider outsourcing payroll in Portugal when they do not have local payroll expertise, are expanding their workforce, need support with Portuguese tax and Social Security requirements, or want to reduce the payroll administration handled by their internal HR and finance teams.

It can be particularly useful for international companies managing payroll across several countries, where each location has different filing deadlines, contribution rates and employment requirements. In Portugal, payroll also needs to account for local requirements such as Social Security contributions, IRS withholding, holiday and Christmas allowances, payslips and monthly reporting.

The right type of provider will depend on how the company employs its workers. A business that already has the required employer setup in Portugal can outsource payroll processing to a payroll provider. If the company does not have its own Portuguese entity or local employment setup, an Employer of Record can employ the workers locally and manage payroll as part of the employment arrangement.

How much does payroll administration cost in Portugal?

Payroll administration in Portugal typically costs around €30 to €75 per employee per payroll run, although fees vary based on the provider, number of employees and services included. Some payroll providers charge separately for additional services such as employee registration, year-end reporting, payroll changes or offboarding, while others include these services within a broader monthly fee. Companies should therefore check what is included when comparing payroll administration costs rather than comparing the headline processing fee alone.

For companies using an Employer of Record (EOR), payroll administration is usually included within the wider EOR management fee rather than purchased as a standalone service.

Payroll administration fees should also be separated from the cost of employing the worker. Gross salary, employer Social Security contributions, work accident insurance, holiday and Christmas allowances and any additional employee benefits remain employment costs rather than payroll processing fees.

What employee benefits must employers provide in Portugal?

Employers in Portugal must provide employees with paid annual leave, paid public holidays, holiday and Christmas allowances, Social Security coverage and mandatory work accident insurance, along with other statutory leave and employment benefits for which the employee is eligible.

Employees are generally entitled to at least 22 working days of paid annual leave each year, as well as paid public holidays recognised under Portuguese law. Portugal also provides a holiday allowance and Christmas allowance, each generally equivalent to one month of base salary, which is why annual remuneration is commonly described as being paid across 14 salary payments.

Social Security provides employees with access to statutory protections such as sickness, parental and unemployment benefits, with employers generally contributing 23.75% of gross salary under the standard regime. A meal allowance is not generally mandatory for private-sector employees, although it is commonly provided in Portugal and may be required under an applicable collective bargaining agreement. Employers may also offer additional benefits such as private health insurance or supplementary pensions.

What are the minimum wage and salary expectations in Portugal?

The minimum wage in mainland Portugal is 920 EUR a month for 2026. It is paid across 14 payments rather than 12. The annual floor is therefore higher than the monthly figure suggests. The rate is published by the Direção-Geral do Emprego e das Relações de Trabalho (DGERT). Higher regional minimum wages apply in the Azores and Madeira.

Against that floor, national average gross pay was 1,694 EUR a month in 2025, up 5.6% on the year. The average base salary component was 1,277 EUR, up 5.2%. Both figures are Instituto Nacional de Estatística (INE) data for the full year.

The gap between those two figures matters before benchmarking an offer. The difference sits in allowances, overtime, bonuses and the meal allowance rather than in base salary. Lisbon and Porto command premiums over the national picture and budgeting a further 5% to 10% of gross salary for benefits is realistic in both markets.

How does the 13th and 14th month salary work in Portuguese payroll?

Employees in Portugal generally receive two additional statutory salary payments each year: a holiday allowance, often referred to as the 14th month salary, and a Christmas allowance, commonly referred to as the 13th month salary. Each is generally equivalent to one month of base salary.

The Christmas allowance is normally paid by 15 December, while the holiday allowance is generally paid before the employee takes their annual leave. Where annual leave is taken in separate periods, the holiday allowance can be paid proportionally.

The timing can also be arranged differently where permitted, including paying part of these allowances throughout the year with the employee’s agreement.

Employees who join or leave during the year generally receive the allowances proportionally based on the period worked. Holiday allowance in the employee’s first year also follows their annual leave entitlement, which is generally calculated at two working days for each month of employment, up to 20 days.

Why should companies choose CXC for payroll and benefits management in Portugal?

Companies choose CXC because we combine local payroll and benefits expertise in Portugal with 30+ years of workforce management experience and support across 100+ countries.

CXC manages payroll calculations, income tax withholding, Social Security contributions, payslips and statutory reporting, alongside Portuguese requirements such as holiday and Christmas allowances, leave and employee benefits. We also keep payroll processes up to date when local rates, thresholds or requirements change.

Companies with their own Portuguese entity can use CXC for payroll support, while businesses without a local entity can employ and pay workers through our Employer of Record service.

This gives your HR and payroll teams access to local support without having to manage every

Portuguese payroll requirement internally.

For companies operating across several markets, CXC can also support payroll across multiple countries through one workforce partner.

Speak to our team to learn more about payroll and benefits management in Portugal with CXC.

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