Since last month I am officially a ‘trabalhador independente’ in Portugal.
If I had known how easy it was to arrange that, I would have done it much sooner.
What’s a ‘trabalhador independente’?
A trabalhador independente is a self-employed worker and owns an ‘Empresário em Nome Individual’ (sole proprietorship). I chose to use this business structure, for several reasons:
– the easiest and cheapest way to start
– no capital needed
– possibility to work without an accountant or meticulous accounting
Actually I like bookkeeping. I’ve always liked numbers, maths, etc. Bookkeeping can calm me down when I am angry like cooking can do for others.
But tax rules and regulations here in Portugal don’t calm me down at all. And therefore I decided to ask help to start my one-woman business, from a local accountant.
He has helped me to fill in the form to enter my new activity on the portal of Finanças and he has been helpful to find the right code, which describes my business activities best. The first year he can also show me how to make ‘recibos verdes’ (electronic invoices), declarations of VAT, income tax and social security contributions.
Two tax regimes for Portuguese freelancers
When you start your Empresário em Nome Individual you can choose between two regimes: regime simplificado and contabilidade organizada. Automatically you will be placed under the simple regime.
But if you expect to turn over > €200.000 a year, you are not allowed to be in the simple regime. And there are more things to consider; like the ratio between your turnover and expenses and the characteristics of your business activities. When you use contabilidade organizada regime, you are obliged to hand over your bookkeeping to the Finanças, checked by a certified accountant, every year.
After a lot of research and consultation with my accountant, I opted for regime simplificado.
The simple regime
The simple regime assumes a fixed percentage of your turnover as business expenses. This amount is deducted from your turnover to calculate your taxable income, on which you pay annual income tax and social security contributions.
The fixed percentages vary, but for most freelancers who are selling a service, the deduction percentage is 25%. This means you don’t have to make an annual balance sheet and save all your receipts.
Following the simple regime, you will only be VAT liable if your annual turnover exceeds €10.000 * starting from the following year. (If so, you do need to save all your receipts!)
* Since Feb 5, 2020 this limit is €12.500
How to start an Empresário em Nome Individual
This is what you need to inscribe your sole proprietorship at the Portuguese Tax Office
- NIF (Portuguese tax ID number)
- digital access to the portal das Finanças (or go to the local tax office)
- a bank account exclusively for your business activity
- information about your business: description of the activities
- starting date
- estimation of turnover in the first year
You can start on the portal of the Finanças. I did it together with my accountant at his office. I simply logged in with my NIF (tax ID number) and password.
He filled in the form, to make sure I was excluded from VAT liability.
Together we decided on the codes to describe my business activities. You are allowed to fill in secondary business activities. (more info about the codes read here)
Since I am exempt from the social security contribution in the first year, I chose my starting date as late as possible.
If you want to have a look at the form to start on the portal, go to:
Serviços > atividade > início de atividade > entregar declaração > Início de Actividade. And there you’ll see:
Entrega de Declaração de Início de Atividade.
A aplicação será aberta numa janela nova.
Hit the blue long button below it, and you enter the form.
After making the ‘inicío de atividade’
A few days later I received a message in the portal with the request to confirm my address. And a week later I received a letter with confirmation code. After this confirmation, it was official!
By the way, in Portugal you can only use your own name as a business name for your Empresário em Nome Individual. So, unfortunately, you won’t find a business called ‘Dona Rolha’. If you’re looking for a writer for your website or film script, though: just send me an email.
I will write more about my experiences as a trabalhador independente.
Read more, when available, about my personal experiences with:
- choosing the right code to describe your business activity
- making Recibos Verdes (declaration of your invoices)
- e-facturas on the portal das Finanças
- VAT declaration and liability
- IRS (income tax)
- Social Security contribution
More info from Portuguese Tax Office
On the website of the Portuguese tax office you will find more information about opening a business and other info about tax in English: