|Both independent contractors and hiring companies face complex cross border rules if they are located in different countries. Because of this we have created our ‘Contractor Solutions’ series with actual circumstances brought to us by our international clients.
The first article was a solution for a French company hiring a contractor in the Netherlands. This new article deals specifically with solutions for a contractor wanting to work remotely for a company located in the Netherlands, while living in Portugal.
We have compiled all these questions so Campbell Curtis, our Solutions Expert, can address them. We hope you find what you need here!
And if you don’t, drop us a comment below in the Contact Us form so we’d get back to you!
Questions we cover
Independent Contracting in Portugal
We had a worker from the Netherlands who was looking to provide services to her existing employer in the Netherlands. She wanted to live in Portugal while working remotely, and needed a solution that worked for both her and the company.
| “I am writing to you with questions about a possible method to work abroad as an independent contractor.
My current company in the Netherlands offered me an option to work for them independently from Portugal. They want me to send an invoice monthly but insist that I cannot become a freelancer, even though I am an EU citizen.
They say I have to either form an LLC or use an umbrella company. I would like to ask you if becoming a Portugal contractor is something you could help me with?”
Thank you for your interest and we are ready to help you set this up through our contractor solutions in Portugal.
We have assisted thousands of professionals in your exact situation, and know how to deal with anything that might arise. Let’s get started!
Freelancing vs Umbrella Company
I assume that you have been an employee in the Netherlands, and your company doesn’t want the hassle of trying to employ you in Portugal. It is probably easier for you to work as an independent contractor through an umbrella company, as they suggested.
This is a new situation for both you and the company, so it’s natural that they want some type of formal structure to the arrangement. Simply freelancing in Portugal might seem too loose from their point of view.
When you work remotely, they do lose some control and want to be able to verify your presence in Portugal. Because of your history, they are used to treating you like an employee, so this is understandable.
The umbrella company is a third party to your relationship, ensuring accountability on both sides. Forming an LLC is not necessary and adds an extra step of compliance and registration.
The umbrella company is the simplest and most secure way for both you and your client in the Netherlands. You don’t have to use a DIY freelancing approach, and they don’t have to take on any additional risk.
What about Portugal work visa?
Many international contractors talk about all the new digital nomad visas for freelancers. Because you are an EU citizen from the Netherlands, that means that you can’t use the digital nomad visa in Portugal. The DNV is really designed for non-EU citizens to give them immigration access.
And you also don’t need a work permit, which is a big hurdle for a non-EU citizen working as a contractor in Portugal.
There are actually fewer requirements to work through an umbrella company than a DNV, and you don’t have to do everything yourself. We become your in-country partner in Portugal, and will walk you through every step personally.
Taxes and Compliance
Everyone is concerned about taxes and being in compliance, but this won’t be an issue when you use an umbrella company in Portugal.
The reason is that you are essentially an employee of the umbrella company in Portugal. They will calculate and withhold taxes, facilitate payments, and you can concentrate on your work.
This can be a huge relief as Portuguese taxes are complicated depending on how long you stay in the country and source of income. We handle all the tax calculations for you, with all deductions from your monthly payslip.
Once the company agrees to use our service, you just send us all the relevant details and you can start work almost immediately. We look forward to facilitating your new work adventure.
Self Employment in Portugal
|“Can you tell me what the rules are regarding self-employment in Portugal? How does it work with an umbrella company?“
To become registered as self-employed in Portugal there is a whole list of requirements and evidence of your business activity. This is the beauty of the umbrella company solution as you are not technically self-employed, so none of this will apply.
Any registrations that you need we can help you with, and it is our job to take care of most of this for you. As an EU citizen, you will need a residency permit to live and work in Portugal.
The easiest way to think about it is that you are working for a Portuguese entity (the umbrella company). But your work product and time are devoted to the Netherlands company (your client).
If in the future you want to transition to a true self-employed contractor that is possible if your company agrees. We would help you with the transition and make sure it was seamless for both you and the company.
Contractor Solutions in Portugal for Your Business Needs
If you are an international contractor or a company sourcing talent in Portugal, we have the optimal contractor solution for you. Contractor management with an umbrella company has equal benefits for companies and contractors alike.
You might be a contractor who wants to work remotely, as just described. This is becoming more common all the time as virtual workplaces expand. Current employees are looking for remote freedoms, and with contractor solutions it is easier than ever.
Or you may be a company looking to access global talent, wherever a worker resides. At first it could seem daunting to hire a contractor in a foreign country, even if they are the right fit. Using an umbrella company eliminates compliance risk and simplifies cross border payment for you.
We have some clients that use our services across multiple countries to hire entire remote teams of contractors. But it works just as well to hire one foreign worker who is the ideal candidate for your team.
Our contractor solutions give you an easy pathway to hire anyone, anywhere, with full compliance and support with a local umbrella company.
Other benefits of umbrella companies include:
- Manages all client payments, contractor tax withholding and any social contributions
- Issues the contractor a payslip each month, to a local or foreign account
- Sponsors work permits
- Helps set up the contract with the company and contractor
- Moderates any disputes between the company and contractor
- Advises on access to totalization and double taxation treaties
Popular Questions by Our Contractors
It’s a really simple process of giving all your contract and payment information to the umbrella company, and having your client confirm it. After that, the umbrella company receives monthly payment from your client based on your invoice. We calculate tax withholding and then forward net payment to your account.
Yes, if the company permits it, you can work as a freelancer as an EU citizen.
An LLC or other business structure is not required for EU citizens using contractor solutions Portugal via an umbrella company.
If you are currently employed, then you can continue working in your role for your current company. It doesn’t matter where in the world that company is located, and you can easily choose to live in Portugal.
Keep in mind that the company might want to negotiate a new contract or pay rate based on your remote role.
Of course you can, especially since you are already working remotely. So there should not be any issue with the US company. Through an umbrella company in Portugal we can set up your payments and tax withholding, as well as sponsor a work permit if you are not a EU citizen.
If you want to permanently migrate to Portugal, there are various paths to permanent residency which we can help identify. It’s often easier than you might imagine.