LEGAL INSIGHTS

Addressing social security implications resulting from cross-border work has been a significant challenge for companies, employees and contractors alike, particularly within the context of a global digital economy.

In this regard, concerning cross-border work performed between the US and Portugal, it should be noted that an international social security agreement is currently in force, which is crucial for determining where the respective social security liability lies.

As a rule, individuals who are employed in one of the countries (Portugal or the US) are subject to the legislation of the country where they work, even if the company or entity that employs them is headquartered or domiciled in the other country.

As for self-employed professionals (e.g. contractors), in principle, they are subject to the legislation of the country where they reside, even if they also carry out this activity in the other country (Portugal or the US).

Under Portuguese law, employees are liable to a 11% flat rate and the employer is liable to a 23.75% rate, handing 34.75% in total to Social Security. As a rule, the nominal social security rate for self-employed professionals is 21,4% over 70% of the income. In any case, the liability for social security contributions can be strategically planned depending on the specifics of each situation.

There is also a set of special rules applying for specific situations (e.g. for officers or crew members of a ship or aircraft or workers in the service of diplomatic missions, consular posts or other state organizations).

For more information and assistance with tax, social security and labor law matters, please contact us through geral@sbpslegal.com.