Hiring developers in Portugal: do I need a local entity?

US-based startup (Delaware C-Corp). We want to hire 2-3 full-time developers in Lisbon. They want to be proper employees with benefits, not contractors.

Options I've heard about:

1. Set up a Portuguese subsidiary (sounds expensive/complex)
2. Use an Employer of Record like Deel or Remote
3. Just hire them as contractors and hope for the best

What's the actual right way to do this?

UPDATE: Went with Remote.com. Onboarding the first developer next week. Total cost is about $599/month + Portuguese employer costs (social security, etc.) which come out to roughly 23% on top of gross salary.

Turns out the equity piece isn't that complicated — Remote has a stock options administration add-on and they handle the Portuguese tax withholding.

Thanks everyone for the guidance.