Is payroll in Portugal only paid through transfer or is cash okay?

Employment Law Forum
1

Hi, I have a question about payroll in Portugal. Does it have to be paid through bank transfer, or is cash legal if all taxes are paid? Trying to make sure I follow the rules. Any advice?

2

In Portugal, most people use bank transfers because it’s easier for tax compliance. Cash isn’t illegal, but it’s not recommended.

3

Zeek said:
In Portugal, most people use bank transfers because it’s easier for tax compliance. Cash isn’t illegal, but it’s not recommended.

Why isn’t cash recommended if taxes are being paid? Just curious.

4

Zeek said:
In Portugal, most people use bank transfers because it’s easier for tax compliance. Cash isn’t illegal, but it’s not recommended.

Because cash doesn’t leave a paper trail. Bank transfers are better for documentation and easier to report to authorities.

5

You also need to withhold taxes and report them monthly, regardless of how you pay employees.

6

Macon said:
You also need to withhold taxes and report them monthly, regardless of how you pay employees.

Good to know. Do you mean monthly tax filings for both the income tax and social security?

7

Macon said:
You also need to withhold taxes and report them monthly, regardless of how you pay employees.

Exactly. You have to file both income tax and social security declarations every month, even if you pay in cash.

8

Honestly, cash payments can be risky. If there’s ever an audit, it’s harder to prove everything was done right.

9

AVERY said:
Honestly, cash payments can be risky. If there’s ever an audit, it’s harder to prove everything was done right.

Makes sense. Sounds like bank transfers are the safer route overall.

10

Another thing: employees usually prefer bank transfers because it’s more convenient and secure for them.

11

Amar said:
Another thing: employees usually prefer bank transfers because it’s more convenient and secure for them.

Yeah, that’s true. I guess it’s easier for everyone involved.

12

If you do use cash, make sure you have detailed records. It’s a hassle, but it’s necessary to stay compliant.

13

Alton said:
If you do use cash, make sure you have detailed records. It’s a hassle, but it’s necessary to stay compliant.

Noted! Thanks for the heads-up.