The decision was surprisingly easy for Salazar - he would honor the Anglo-Portuguese Alliance by refusing to sign the Anti-Comintern Pact, which was the document allying Germany, Japan, and Italy.
On June 29, 1940, Spain and Portugal signed an additional protocol known as a Treaty of Friendship and Non-Aggression. This document declared to the world that these two nations were going to stay out of the war, which didn't please Adolf Hitler.
In fact, a plan known as Operation Isabella was going to be executed in 1942, after the collapse of the Soviet Union. The plan involved invading Portugal and Spain and using them as air bases to strike Britain. Thankfully for Portugal, the plan was never executed.
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