# Teleworking in Portugal



## goreilly16 (Jun 20, 2014)

Hi all,

I am looking for some detail on my ability to live in Portugal and telework for a Canadian company for a 2 year period. I am an EU citizen currently living in Canada and working for a Canadian company. I would like to move to Portugal and continue to work for the same company via teleworking. I would remain a Canadian employee, paid in $CAD and paying taxes in Canada. Our company does have an office in Portugal but I will not be transferring, just coninuing to work for our Canadian office. I would continue to own my home (primary residence?) in Canada and would only be renting in Portugal. 

As an EU citizen I would expect no issue with being in Portugal for a 2 year period. And I'm not concerned about whatever personal taxation hurdles I have to jump. I'm only wondering about any implications to my Canadian office, specifically our Tax dept. They are not prepared to take on any effort to allow me make this move. My managment have approved the move but our Tax dept. has imposed a 3 month limitation, citing a risk that they might have to provide some reports/taxation documents to Portugal if I were to stay longer.

Can anyone shed any light on any implications to my Canadian company by me teleworking for them from Portugal?

Thanks,

Gary.


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## canoeman (Mar 3, 2011)

Your difficulty unless your seconded by your employers which personally would think is your ideal scenario is that you would have to register your Residence in Portugal by month 4.
Which makes you liable as a Portuguese Tax Resident.

Nothing to stop you working for a Canadian company but you would have to declare those earnings and any tax retained in Canada, you might well pay more tax in Portugal, but with dual tax treaty in place should be able to recover Canadian Tax or offset against Portuguese Tax.

Non Habitual Residence scheme might work for you but I think you should seek competent tax advice from a company versed in Canadian, Portuguese systems.

Afraid the other thing you also need to consider and explore is exactly how your employment would work in Portugal in relation to Social Security payments.

Don't know about Canada but UK as an example if in a similar situation i.e. live in Portugal work in/for UK company any UK National Insurance would NOT be credited to the Portuguese Social Security if any of your work/communication involved the internet.


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## goreilly16 (Jun 20, 2014)

Hi canoeman,

Thanks for the information. I'm sure there will be some residency issues for me to address. And even tax/social-security issues/payments. I'm not worried about any of that or filing tax returns in both countries. I'm prepared to do any and all of that for this move. However, my company tax/payroll/HR is not prepared to do anything other than that which they already do for me as an employee in Canada. 

So, my only concern is, will my Candian office have to do anything other than that which the already do for me as employee in Canada?

Gary.


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## canoeman (Mar 3, 2011)

I can't speak for a Canadian company but unless you opt NOT to have tax national insurance etc deducted at source* if that is a possibility for you*, then the norm is, that is what they must do.


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## goreilly16 (Jun 20, 2014)

I read on another thread that Portugal recently introduced a scheme to allow foreign nationals, working for foreign companies to live in Portugal for up to 10 years and only pay tax in their host country. This is viewed as a stimulus to attract workers that would live and spend their foreign salaries in Portugal and not take away employment from Portuguese nationals. Seems like a scheme to would be quite directed to Teleworking??

Is anyone aware of this scheme?

Gary.


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## canoeman (Mar 3, 2011)

Thats the Non Habitual Residence Scheme I mentioned above reasonably good explanation here http://www.pwc.pt/pt/fiscalidade/imagens/pwc_europe_best_kept_secret.pdf but it doesn't address your Social Security issue which *might* hinge around which EU country your a national off.


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## goreilly16 (Jun 20, 2014)

Thanks for that link. I will give that a good read. 

FYI, I'm an Irish national. But I also have Canadian citizenship.


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## canoeman (Mar 3, 2011)

I mentioned because if you're working and paying tax and social security in Portugal then you're covered for medical but if you're not working and paying Social Security then if a Portuguese National reguired health insurance in your "home" country then you would also reguire private medical cover in Portugal


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## TonyJ1 (May 20, 2014)

Portugal has a social security treaty with Canada and a separate one with Quebec. You would have to check the specific rules of the treaty, but social security treaties normally let you contribute to the home country for a limited period whilst employed in another country


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## TonyJ1 (May 20, 2014)

In respect of you teleworking and the Non Habitual Residency Scheme - unless you are included in the specific professions (for list of professions see for Anexo II in info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/irs/index_irs.htm - you can easily use a translator if you cannot figure the professions out), you will not be able to benefit from the 10 year tax holiday


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## canoeman (Mar 3, 2011)

TonyJ1 said:


> Portugal has a social security treaty with Canada and a separate one with Quebec. You would have to check the specific rules of the treaty, but social security treaties normally let you contribute to the home country for a limited period whilst employed in another country


Can you supply a link for that I wasn't aware that Portugal has any Social security treaties


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## anapedrosa (Mar 21, 2011)

I would second canoeman's suggestion to get professional advice (PWC have helped me and KPMG also have a practice with information). But I have been thinking about your initial question regarding your company's tax office.

I suspect that your employers would continue to deduct Canadian taxes and that you would be the one to deal with CRA and the PT tax authorities. In your case I would also apply to CRA for an exemption of EI payments, as you will surely not be able to collect from PT if you were to lose your job. This would help offset any additional health insurance. If you get the exemption, your tax office is obliged to apply that to the deductions calc. I would also look into CPP, I don't believe you can continue to accumulate when you live out of country, so if that is the case, apply for the exemption.

You don't say which province, but I would check provincial health care rules. I would be very surprised if you could continue to pay Canadian health care unless you are in one of the usual work abroad categories (e.g. military, foreign affairs), which I doubt from your e-mail.

Other things to know, you can keep RRSP and TFSA, earnings continue to be sheltered, but you can not continue to contribute to these when you are not in Canada.


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## TonyJ1 (May 20, 2014)

canoeman said:


> Can you supply a link for that I wasn't aware that Portugal has any Social security treaties


See www4.seg-social.pt/coordenacao-internacional-de-legislacoes%3Fp_p_id%3D56_INSTANCE_a...


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## anapedrosa (Mar 21, 2011)

I am not sure if this is the Canadian version, but if this is the case it does not appear to relate to health care which is a provincial jurisdiction. 

Canada Treaty Information - View Treaty - E102185


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## canoeman (Mar 3, 2011)

Thanks I now see that Portugal does have S/S treaties in place but not actually been able to find or open the one with Canada but not sure this will be of any help to O/P as the guides refer specifically to Portuguese working abroad or foreign workers seconded to work in Portugal, as in O/P question it's a personal choice


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## TonyJ1 (May 20, 2014)

anapedrosa said:


> I would second canoeman's suggestion to get professional advice (PWC have helped me and KPMG also have a practice with information). But I have been thinking about your initial question regarding your company's tax office.
> 
> I suspect that your employers would continue to deduct Canadian taxes and that you would be the one to deal with CRA and the PT tax authorities. In your case I would also apply to CRA for an exemption of EI payments, as you will surely not be able to collect from PT if you were to lose your job. This would help offset any additional health insurance. If you get the exemption, your tax office is obliged to apply that to the deductions calc. I would also look into CPP, I don't believe you can continue to accumulate when you live out of country, so if that is the case, apply for the exemption.
> 
> ...


y

Most countries have a system of directives issued by the revenue service to employers. Clear up with CRA - you may be able to receive salary gross from Canada and then either you pay tax in Portugal or not if you able to get exemption under the Non Habitual Residence Scheme (if you are included in one of the exempt occupations)


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## anapedrosa (Mar 21, 2011)

TonyJ1 said:


> y
> 
> Most countries have a system of directives issued by the revenue service to employers. Clear up with CRA - you may be able to receive salary gross from Canada and then either you pay tax in Portugal or not if you able to get exemption under the Non Habitual Residence Scheme (if you are included in one of the exempt occupations)



Tony your reply doesn't fit with my experience of the way the payroll taxes work in Canada. Taxes are deducted at source according to the province of employment. 

Non-resident workers 

The withholding taxes are based on the employer's location.For example, if I work in Ontario but live in Quebec, I am taxed the Ontario rate, then when I complete my annual tax return the taxes are recalculated based on my residence and I either owe money or get a refund. Convoluted yes, but that's the way it works. 

Also, any reductions in tax rate are based on a form that the employee completes to describe their tax situation (e.g. dependent children, etc.). Exemptions can be granted for EI (employment insurance) if it can be shown that you have no reasonable expectation of collecting. This requires a special request to CRA.


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## canoeman (Mar 3, 2011)

Not dissimilar to Portugal work in Ontario live in Portugal same scenario


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## TonyJ1 (May 20, 2014)

anapedrosa said:


> Tony your reply doesn't fit with my experience of the way the payroll taxes work in Canada. Taxes are deducted at source according to the province of employment.
> 
> Non-resident workers
> 
> ...


If you read the quote , I did say that you need a ruling from the Canadian tax authorities. However, if you live in Portugal, you will be able to supply the Canadian tax authorities with a fiscal residence certificate as to your residence in Portugal, and in terms of the Portugal Canada Double Tax Treaty, and hence have a directive to be issued to the employer for a reduced rate of withholding taxes. Otherwise you can still get a refund as in terms of the double tax treaty you would be considered resident in Portugal (if you fulfill the conditions to be classified as a Portuguses resident in terms of the treaty)


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## anapedrosa (Mar 21, 2011)

Tony,
I reread what you wrote and see what you are suggesting. It would be worth checking with CRA. 

First the OP would have to record departure from country with CRA (CRA will issue a ruling of non-residence), then once in Portugal apply for residence, then apply to CRA. So 6 months to a year later have a ruling. 

Since the OP is talking about coming for only two years, it may be easier to continue filing Canadian tax returns, which is also an option. Depending on their situation, this could have other benefits and avoid conflict with an employer tax dept that has indicated they will not help. If the intent is only a two year departure, I would weigh complexity against financial returns.

I would still seek the advice of a professional (in addition to calls to CRA international).


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## canoeman (Mar 3, 2011)

When filing IRS returns in Portugal any worldwide income is declared gross in Euros and any tax deducted, for the Portuguese Tax year, if you can prove the tax deducted at source and Finanacas *will* accept *that proof* then they *might* allow it to be offset against any Portuguese liability, if not and a dual treaty in place then you have to reclaim the other countries deduction from them.

Portuguese returns are filed March to May depending on type of income tax paid by end August so you need to have some savings if you can't organize prior to a move.

OP must get online access to his Tax number as IRS can only be made as an example
Portuguese Tax Year Jan to Dec 2014 IRS return made March to May 2015, if he wants to make life easier he either makes his 2 year visit to dovetail Portuguese Tax year
or
arrive no earlier than June 1st year and leaves no later than June 3rd year *so only being a Portuguese Tax Resident for 1 year * the issue though is requirement to Register Residency after 3 and before 4 months


Canadian S/S, unemployment I have no knowledge of but it's a totally separate issue in Portugal and operates through 2 separate agencies who share information


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## TonyJ1 (May 20, 2014)

anapedrosa said:


> Tony,
> I reread what you wrote and see what you are suggesting. It would be worth checking with CRA.
> 
> First the OP would have to record departure from country with CRA (CRA will issue a ruling of non-residence), then once in Portugal apply for residence, then apply to CRA. So 6 months to a year later have a ruling.
> ...


He has no choice in not submitting tax returns. If his permanent home is in Portugal or if he spends more than 183 days in the tax year (same as calender year), then he is liable to submit portuguese ta x returns. I know that a lot of people in similar situations ignore the problem and they do get away with it, whilst other do not and et nasty surprises.


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## anapedrosa (Mar 21, 2011)

I am not suggesting that he not file in PT, only that he or she also has the option to continue filing in Canada. Depending on the individual situation, that can be beneficial, but should be evaluated.


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## TonyJ1 (May 20, 2014)

anapedrosa said:


> I am not suggesting that he not file in PT, only that he or she also has the option to continue filing in Canada. Depending on the individual situation, that can be beneficial, but should be evaluated.


Obviously the most beneficial situation is being exempt from taxes in Canada and in Portugal


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## canoeman (Mar 3, 2011)

But impossible to achieve


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## goreilly16 (Jun 20, 2014)

anapedrosa said:


> I would second canoeman's suggestion to get professional advice (PWC have helped me and KPMG also have a practice with information). But I have been thinking about your initial question regarding your company's tax office.
> 
> I suspect that your employers would continue to deduct Canadian taxes and that you would be the one to deal with CRA and the PT tax authorities. In your case I would also apply to CRA for an exemption of EI payments, as you will surely not be able to collect from PT if you were to lose your job. This would help offset any additional health insurance. If you get the exemption, your tax office is obliged to apply that to the deductions calc. I would also look into CPP, I don't believe you can continue to accumulate when you live out of country, so if that is the case, apply for the exemption.
> 
> ...


Hi anapedrosa, you mentioned pwc helped you. did you deal with someone in particular? did you just email a general mailbox to start? I'm not sure of forum rules as to what you may be allowed post????? I would definitely like to contact pwc to find out any implications to my company.


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## anapedrosa (Mar 21, 2011)

goreilly16 said:


> Hi anapedrosa, you mentioned pwc helped you. did you deal with someone in particular? did you just email a general mailbox to start? I'm not sure of forum rules as to what you may be allowed post????? I would definitely like to contact pwc to find out any implications to my company.


Hi, I am of home right now but I will PM you the PWC contact info when I return. He was referred to me by someone on this forum and we couldn't be happier with his service. His English is far better than my Portuguese so that is a bonus.

In your case he may refer you to a Canadian counterpart for the Canadian rules.


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