Duties of a Self-Employed or a Freelancer in Portugal

In Portugal, there are two primary approaches for reporting your financial figures to the tax authorities: simplified/non-organised accounting and organized accounting. This choice holds significant weight in determining your self-entrepreneurial earnings at year-end.

You have the right to choose between one of the two accounting regimes if you are:

1- Self-Employed Workers or Freelancers

2- Individual Contractors

Note: any company, whether anonymous, joint stock or otherwise, is required to use the organized accounting regime.

When your gross annual income exceeds 200,000 euros, organized accounting becomes compulsory for both self-employed and sole proprietorships.

If you start your business with the simplified plan then your turnover should not exceed the limit of € 200,000 over two consecutive years, or exceed this amount by more than 25% over one year. If this happens, the system must be changed, otherwise you will be subject to fines.

Organized accounting

- For the calculation of the income tax, only the annual gross income is taken into account;
- You can deduct business expenses;
- It is necessary to hire an official accountant (TOC);
- Every year, it is necessary to prepare, present and classify the accounts of the exercise.

Simplified accounting

- For the calculation of the tax, only a percentage of the income is taken into account;
- It is not possible to deduct work expenses;
- There are fewer tax obligations and expenses associated with this plan.

Today we talk about Non Organised Accountancy

VAT (IVA)

  • 1st Quarter - April 1st to May 15th
  • 2nd Quarter - July 1st to August 15th
  • 3rd Quarter - October 1st to November 15th
  • 4th Quarter - January 1st to February 15th

Submission of all documentation

from the previous month. Between, the 3rd and 12th of each month

Social Security

  • Indepedent Worker payment until day 20 of each month (minimum 20 euros).
  • Waiver of 12 months wehn reported first time business declaration as indepedent worker.
  • Social Security mapa until 20th of each month.
  • Admissions of employee contracts, on Social Security must be between 1 to 7 days before the begining of the contract.
  • Terminiation of employee contracts until the 10th of the following month.

 

Dead line for IRS

April 1st until June 30th.

Respect the following income tax ratios for the simplified plan, to be applied to the different types of activity:

- 15% - Sales of goods;
- 15% - Hotel, restaurant and drinks services;
- 75% - Provision of services for the activities listed in the activity table of section 151 of the IRS Code;
- 95% - Capital gains;
- 95% - Construction revenue;
- 95% - temporary cessation or use of intellectual or industrial property;
- 95% - Income from capital from commercial and professional income generating activities;
- 30% - Grants or subsidies not intended for agriculture;
- 95% - Farm subsidies;
- 95% - Other category B income

Thus, for each of these activities, the customs tax administration considers, for example, that only 75% of their income should be taxed, the remaining business expenses considered.