Your employee moved to Portugal. Here is what the company owes.

Usually not, if the work is engineering, support or back-office. The 1994 US-Portugal treaty requires a fixed place of business or an agent with authority to conclude contracts in the enterprise’s name, and a home office doing non-sales work is neither. The treaty also contained a provision deeming a permanent establishment after nine months of an enterprise’s own personnel — article 5(4) — but paragraph 4 of the protocol confined it to the first five years the convention had effect, which ended with tax year 2000. It is still quoted constantly and it has been dead for twenty-six years. Sales roles are a different answer.

Because domestic Portuguese law and the treaty diverge, and the divergence is exactly the size of a sales job. Article 5.º(6)(b) CIRC adopted the post-BEPS wording that catches an agent who habitually plays the principal role leading to the conclusion of contracts, even without signing authority. Article 5(6) of the 1994 treaty still requires authority to conclude contracts in the enterprise’s name. For a US-resident employer the treaty prevails, under article 8.º(2) of the Portuguese Constitution and article 4.º(2) CIRC, and because the United States never signed the OECD Multilateral Instrument nothing has updated that text. So an employee who negotiates but does not sign is inside domestic law and outside the treaty.

Only if you sent them. Article 5(1)(a) of the 1988 totalization agreement applies where an employee covered in one state “is sent by that employer to work in the territory of the other” and the period abroad is not expected to exceed five years. An employee who asked to relocate, with your consent, was not sent. The SSA’s own guidance distinguishes three cases — sent for five years or fewer, sent for longer, and hired in the agreement country — and a self-relocated employee on US payroll appears in none of them. The textual answer is Portuguese coverage under article 4(1), but neither authority has published a position on this exact case and we flag it rather than assert it.

You pay twice. FICA continues for a US citizen or resident alien working abroad for an American employer under IRC § 3121(b), and it stops only against a certificate assigning coverage to the other country. Portugal charges independently: article 27.º(1) CRCSPSS makes whoever benefits from the work an employer, with no condition as to nationality, seat, establishment or residence, at 23.75% employer and 11% employee under article 53.º. Nothing in either instrument prevents both charges landing on the same salary. The certificate is requested by the employer — from the SSA for US coverage, or from the Centro Regional de Segurança Social on form P/USA 1 for Portuguese coverage — and it should be applied for before the work abroad begins.

The common answer is no, and the statute does not actually support it. Article 99.º(1) CIRS places the duty on «as entidades devedoras» of employment income with no condition as to residence, seat or permanent establishment — that condition appears elsewhere, in article 98.º CIRC and article 101.º(1) CIRS. So what a foreign employer really has is an enforcement gap rather than an exemption. In practice the employee settles the whole year in one instalment through the annual Modelo 3, since the provisional payments in article 102.º CIRS are category B only and optional in any case. A US entity also cannot avoid appointing a fiscal representative: article 130.º(1) CIRS requires one resident in Portugal, and the optional route in paragraph 2 is open to EU and EEA non-residents only.

To work habitually carried out from Portugal, yes, and the contract cannot opt out. Article 8(2) of the Rome I Regulation points at the law of the country in — or from — which the work is habitually carried out, and article 8(1) prevents the chosen law from cutting below that country’s non-derogable protection. Article 53.º of the Portuguese Constitution and article 339.º of the Labour Code void an at-will clause. Dismissal requires justa causa under article 351.º with the procedure in articles 352.º to 358.º, and severance under article 366.º is fourteen days of base pay per full year of service.

Three things that surprise US employers. A written agreement is mandatory — article 166.º says telework «depende sempre de acordo escrito» — and paragraph 4(b) makes the employee’s home the legal place of work for all legal purposes. Article 168.º obliges the employer to supply the equipment and, in paragraph 2, to compensate in full all provable additional expenses including increased energy and network costs, with no cap, payable immediately after the expense rather than monthly. And only 1.00 euro a day is excluded from income tax and the contribution base, or 1.50 euros under a collective instrument, so anything above that is taxable pay.

Not as a right, which matters when you write the policy. Article 199.º-A imposes a duty on the employer to abstain from contacting the worker during rest periods, except in situations of force majeure, and breaching it is a grave offence. But the statute never frames it as an entitlement of the worker, and the widely repeated phrase “right to disconnect” does not appear in it.

You can use the arrangement, but it has no name in Portuguese law — the term appears in no statute. It has to fit one of two existing regimes. Cedência ocasional under articles 288.º to 293.º is restricted by article 289.º(1)(b) to related companies or those with common organisational structures, which a commercial provider is not. Licensed temporary agency work requires an IEFP alvará, and article 173.º voids unlicensed contracts and deems the work provided to the client on a permanent basis. The IEFP register lists almost none of the familiar international providers, because the usual structure is a Portuguese subsidiary signing as the legal employer. Whether that is lawful here has never been decided: we found no position from the labour inspectorate, no circular and no case either way.

It is simpler for about eleven months and then it is not. Enrolment as a trabalhador independente takes effect only on the first day of the twelfth month after activity begins, so the first year carries no contributions. After that, article 140.º makes a client who takes more than half of the worker’s annual activity value an entidade contratante, liable at 7% where the share is between 50 and 80% and 10% above 80% — not the flat 10% commonly quoted. Whether that reaches a non-resident client is genuinely unresolved. Meanwhile article 12.º of the Labour Code presumes an employment contract on some of five indicia, and an ordinary full-time remote arrangement meets four of them.