Stock Plans in Portugal

Summary Table
(Updated as of August 2024)

In general, Portugal is a relatively straightforward country in which to offer stock compensation plans. Tax withholding is generally not required but the employer must report income earned in a particular tax year from stock compensation on the employee’s annual Modelo 19.

Be aware that restricted stock awards (but not units) are likely taxed at grant.

Companies offering an ESPP to employes in Portugal should be cautious of the limitations on payroll deductions.

A local corporate tax deduction is generally allowed under a properly implemented recharge arrangement. However, a recharge may result in a liability for social security taxes (which are uncapped) for both the employee and employer.

As an EU member state, Portugal adheres to the EU regulations and guidelines for securities law, data privacy and age discrimination laws. Companies should review these rules along with any local country variations with their advisors before offering stock plans to employees in Portugal, especially if they intend to rely on the employee share scheme exemption under the EU Prospectus Regulation, which requires pre- and post-offering notice filings.      

Overview of Stock Plans in Portugal