Portugal – Tax Compliance and Payroll Deduction Policy

1. Purpose

The purpose of this policy is to establish clear guidelines for the administration of employee taxation, statutory payroll deductions, and employer obligations in accordance with Portuguese tax legislation.

Compliance with the Portuguese Labour Code and Income Tax Law (Código do IRS).
Accurate calculation and remittance of taxes and social security contributions.
Transparency and fairness in payroll-related tax deductions.
Consistency across all employee categories.

2. Scope and Applicability

This policy applies to all employees working under Vandey Consultancy Services Pvt. Ltd. Portugal operations, including:

Permanent full-time and part-time employees.
Fixed-term or project-based contract employees.
Remote and hybrid workers based in Portugal.
Interns or trainees receiving taxable stipends.

3. Introduction

Under Portuguese law, employees are subject to statutory tax and social security deductions. Employers are required to withhold and remit these amounts monthly to the relevant authorities.

4. Salary for Employees

Employees are entitled to 12 months of salary plus Christmas and Vacation bonuses, either paid monthly or in instalments.

5. Tax Obligations for Employees

IRS rates range from 14.5% to 48%.
Taxes are paid by the 20th of the following month.
Employees must provide NIF and family status.
Annual IRS returns must be filed between April 1 and June 30.

6. Employer Tax Responsibilities

Obligation	Description	Frequency
IRS Withholding	Withhold and remit income tax	Monthly
Social Security	23.75% employer / 11% employee	Monthly
Annual Reporting	Tax and salary declaration	Annual

7. Payroll Taxes and Deductions

Type	Responsibility	Rate
IRS	Employee	14.5% – 48%
Social Security	Employer / Employee	23.75% / 11%

8. Tax Residency and Double Taxation

Employees residing in Portugal for over 183 days are considered tax residents. Portugal has DTAs to prevent double taxation.

9. Reporting and Documentation

NIF and Social Security numbers are mandatory.
Changes in status must be reported promptly.
Payroll records must be retained.

10. Non-Compliance and Penalties

Late payments may incur fines.
Payroll corrections may be applied.

11. Review and Updates

This policy will be reviewed annually or upon legislative changes.

12. Reference

For reference purposes, the Portuguese version of this policy is available at:

Política de Conformidade Fiscal e Deduções Salariais – Versão Portuguesa