remoteI am from Portugal (resident in Portugal ). I would like to know if a company based in Germany can employ people from Portugal for remote work in their country. (Both Portugal and Germany are in Europe.)
Broadly, can a company based in one Europe state member, employ people in another Europe state member?
If yes, where are tax and social/health insurance paid - in the country where the employee is based, or where the company is based?
Thanks
Short answer is - it depends.
As a natural person, taxes on your income and social security must be paid in place of residence for tax purposes. As you indicated in your question, place of residence for tax purposes for you is Portugal.
For the German company, incorporated and operating in Germany, tax residence is Germany. Therefore, the German company can not directly pay taxes for you in Portugal, as it simply does not exist in Portugal for the tax purposes - it does not have fiscal identification number (identificação fiscal) and is not incorporated, nor has a branch in Portugal.
That, however, does not prevent the German company for employing you as natural person.
If you live in one EU country and work there for a company based in another EU country you will normally, under most tax treaties, be subject to tax only in your country of residence. However, to the specific case of Portugal and Germany, you might want to check with Portuguese tax office and have the German company do the same.
The easiest option, however, is to become self-employed (autônomo) in Portugal and work for the German company on contract basis. You will need to file and pay your own taxes, but it will probably be infinitely more easier than navigating the labyrinth of cross border employment laws and double-taxation treaties.
In Europe we have the Schengen countries, which includes both Portugal and Germany. There is also free movement of goods and persons. That means you can easily employ them on your payroll, with the terms of your country.
I’m not sure if working abroad complicates things… best thing to do is to simply make a phone call with your local tax inst to get the details.
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