Freelancing In Portugal
Freelancers in Portugal seem to have more rights than ever before. With protections such as parental leave and sickness benefits, the social security system ensures that you get care when you need it. There are also exceptions, such as B. Social security exemption for her first year and her VAT exemption if her annual income is less than €10,000. There are even more significant benefits for non-general residents who have not been Portuguese tax residents in the last five years. Some of the NHRs are taxed at a flat 20% rate on their income, exempt from paying taxes on their worldwide income. Check out this guide to see if you qualify.
However, as a freelancer in Portugal, it can be confusing, and you need to make sure it is correct, as social security contributions and tax payments are not covered by the company. Luckily, this guide for freelancers in Portugal covers everything that you need to know, from taxes to registering as an independent trabalhadar.
Working As A Freelancer In Portugal
You can continue to dream of her freelancer life in Portugal, or take the first important step towards realizing your dream. You will find that the process of becoming a freelancer in Portugal is relatively easy. Xolo’s excellent resources make it even easier. In fact, Xolo’s products eliminate all the problems associated with managing a business as a self-employed professional. This will improve your business activities and give you more time to enjoy life in Portugal.
The difference between starting a business in Portugal and working as a freelancer. When starting a business in Portugal, you can set up a sole proprietorship or register as a freelancer.
When you work for yourself, it usually costs nothing to start a business. A freelancer or self-employed person (trabalhador independent) has no fixed ties to a company. Instead, work with multiple clients.
Registering as a freelancer rather than as a company has several advantages. This includes reduced social security contributions and tax exemptions if your income is less than his €12,500 and for certain occupations such as artists and doctors. However, if you want to sell goods, you need to set up a company.
If you are in business, you may need to hire a full-time accountant to manage your logistics, which can be expensive. If you choose this route, you are considered an Empresário em Nome individual or ENI. This is the employee who is the sole owner of the business and can provide services and sell products.
According to the 2021 Census, there are currently 704,200 freelancers in Portugal, most of whom have a university degree. In addition, the Portuguese social security system registered a 25.3% increase in the self-employed in the same year.
Self-employment has advantages and disadvantages. One of the advantages is that you can work anywhere and choose your client. We also have a flexible schedule, so you can decide when it works for you. However, it has the following disadvantages. B. No steady income, no paid time off, or no rush to find customers. There are also deadlines for payment of Social Security and IRS taxes. For employees, it is usually handled by the company.
What Should I Know When Starting A Freelance Business In Portugal?
Who Can Work As A Freelancer In Portugal?
Wondering if you are eligible to be a freelancer in this beautiful European country? Jobs have a wide range of requirements, which is not the case in Portugal. In fact, as long as you are legally resident in the country with a valid visa or a permit, you are free to register as a freelancer. However, when registering as a freelancer in Portugal, you are required to submit certain documents to various government agencies. Once you have fulfilled all the requirements and the ducks are lined up, you are free to become a freelancer in Portugal. Using his IBAN from a SEPA country is possible, but it is much easier to pay taxes from a Portuguese account.
Unless you are an EU citizen, you must obtain proof of legal entry from the SEF, the Portuguese Immigration Service and a visa before registering with the tax authorities to work in Portugal.
Benefits Of Working As A Freelancer In Portugal
The COVID-19 pandemic has changed our daily lives in a big way. For example, many companies find that their employees can work well from home. Many of those forced to work from home due to lockdown restrictions are surprised by the many benefits of this way of working. For example, you can be anywhere in the world if you can do all your professional tasks online.
For this reason, many freelancers and work-from-home corporate employees are considering moving to a better location. Perhaps one of the most attractive countries where freelancers can find Adobe is Portugal. Moving to Portugal as a freelancer brings with it some critical benefits.
Portugal offers a great climate and the opportunity to live on the Atlantic coast. Investing in Portugal allows you to obtain a legal residence permit. Over time, a residence permit can be converted into full European citizenship. Freelancers, he has to pay a tax called Segurança Social of 21.4%. At the same time, she may only be taxed at 70% or 20% of her profits.
Without a visa, she can enter the EU member states if she has a legal residence permit in Portugal.
How To Register As A Freelancer In Portugal?
If you want to become a freelancer in Portugal, fulfil all the legal requirements and register with the required institutions. Let’s see how to become a freelancer in Portugal and register as a freelancer.
First, make sure you can legally live and work in Portugal. Please see our Portuguese visa guide if you are not an EU citizen. Next, you will need to get a free NIF tax identification number and open a bank account. This can be done remotely, but it will cost you some money as you will have to pay an agent with a power of attorney. Once you have received the NIF, go to the tax authority website known as Portal das Financas. Requires a password to log in.
Call 300.502.502 to make an appointment or visit your local social security office to obtain your Social Security Number (NISS). You need to present your residence card, NIF, and identification card to obtain it. Getting a social security number can take several months.
You can then register as a freelancer online or at your local tax office. If you want to do this online at Portal das Financas, search for ‘Start Activity’, ‘Benefits > Activities > Start Activity’, and ‘Send Certificate’. This includes services provided by most freelancers under section 151 CIRS, date of commencement of the activity, estimated earnings from January to December (if VAT exempt) and IBAN. Increase.
Next, you have to choose an accounting system; whether that’s simplified or organized.
A simplified Regiment is the default regiment you get from the tax authorities if you don’t need an accountant. She can only have this Regiment if her annual income is less than €200,000. This regimen allows you to tax 75% of your gross income and offset the remaining 25% against your expense receipts.
The idea of becoming your own boss may sound impressive. Imagine combining this with the opportunity to live and work in Portugal. Cannot. There are some essential steps that you would need to take to go ahead and register as a freelancer in Portugal and launch your business.
Documents Required To Register As A Freelancer In Portugal
To register as a freelancer in Portugal, you need to collect the necessary documents for the necessary permits and identification numbers.
In order to go have a legal basis to reside in Portugal and work as a freelancer/self-employed person in the country, a foreigner must do several things, including Must:
To obtain a tourist visa to Portugal for legal entry.
- Obtain a tax identification number (NIF in Portugal) and a social security number (SS).
- Open a bank account. This is an important task that will seriously affect your life in Portugal. Request a free consultation on opening a foreign bank account with an international wealth expert such as traditional banks, neobanks (digital banks) and payment systems.
- Register as a sole proprietorship (Atividade) with the authorities of the municipality where you want to live. This is necessary for tax reasons.
- Rent an apartment or hotel room. When applying for legal residence in Portugal, you must be a Portuguese resident and be able to provide documents confirming your residence.
- Numero de Identificacao Fiscal (NIF): This is the tax identification number assigned by the tax authority. Applying for this number is free. However, you must bring your passport to the tax office. In addition, as a foreigner, you will need to prove that you have a tax accountant.
- The IBAN or the International Bank Account Number is used for new commercial bank account numbers. The account must be held in a Portuguese bank. Each bank may actually have slightly different requirements for opening a new account. Documents required for a new account in Portugal may also include a passport and proof of residency.
- Residence Certificate: This certificate gives you the right to live and work in Portugal. Available through Junta de Freguesia. This office requires the presentation of a NIF or rental agreement and passport.
- NISS: This is the social security number for activities in Portugal. You must first make an appointment with your local social security office to obtain this number. A resident card, passport, and NIF are required. It may take several months to process the paperwork and receive your NISS. She may not need to use NISS for her first 12 months of work as a freelancer. However, this process takes time, so starting as soon as possible is essential.
Please note that foreign freelancers wishing to obtain a NIF in Portugal must use the services of a local agent/lawyer. Foreigners (those from non-EU countries) cannot apply for NIF alone to reside legally in Portugal. He has two ways of doing this. The first method requires no investment but takes a long time. The second method is more straightforward but requires significant investment in Portugal. Let’s discuss both ways to obtain legal residency in Portugal.
Once you have all your documents ready, you will be officially ready to start your new business as a freelancer. However, there are some additional steps that may be required to set up your business in Portugal. For example, you can create a business plan, create a marketing plan, and coordinate your accounting system.
How To Make An Invoice As A Freelancer In Portugal
As a freelancer, making an invoice for all sales is important. If your income is right below the whole minimum threshold, you may not need to submit your billing statement, but it is essential to do so. This is because early in the tax year, it may not be known whether the threshold will be exceeded. The last thing you want to do is find out your income is over the threshold if you haven’t made the required claims.
Some freelancers create their own invoices, and others use templates. Regardless of the billing method, the documentation must contain some essential details in order to meet VAT requirements. This information includes the names and addresses of buyers and sellers, tax identification numbers, descriptions of goods or services, total cost of purchases, transaction dates, etc.
Portuguese Taxation For Freelancers
Income Tax For Freelancers In Portugal
If you earn income in Portugal, you must file a personal tax return and/or pay taxes on that income. Portugal has a progressive tax rate structure. People in the lowest income bracket pay 14.5% of their income in taxes. At the top of the spectrum, top earners pay 48%. You must also pay a solidarity surcharge if you earn more than €80,000 a year. This tax rate ranges from 2.5% to 5%.
The VAT Rate For Freelancers In Portugal
A freelancer who offers goods or services to sell in Portugal must be registered to pay VAT or VAT. The standard tax rate for many business activities is 23%. However, some business activities are subject to reduced tax rates. These rates are considered 6% and 13%, depending on activity.
If your commercial income or turnover exceeds €12,500, you must register for VAT. However, if you operate as self-employed, this limit is €25,000. Even if the threshold limit is not reached, a separate invoice must be made stating the annual income so that he can prove his VAT exemption for the year. There are no minimum standards for non-residents and resident aliens. All of these freelancers are subject to her VAT. Anyone doing business in Portugal should keep up to date with the local tax system. Those whose annual income is less than €12,500 are exempt from VAT.
Freelancer Under Non-Ordinary Resident (NHR) Scheme
With some confusion, freelancers are eligible for the Non-Ordinary Resident (NHR) Scheme if they meet the requirements. The NHR general tax regime was introduced in 2009 and is directly available to all new tax residents of Portugal who have not been tax residents of Portugal in the last five years. Some of her NHRs are taxed at a flat 20% rate on their income, exempt from paying taxes on their worldwide income.
A person working in Portugal (freelance or in regular employment) under the NHR tax system only pays her 20% flat rate of personal income tax (IRS). To be considered “high quality”, the work must relate to activities of a scientific, artistic or technical nature. Considering that the general tax rate is 37% for income above €25,076 and 45% for income above €39,968, this is an astronomical tax advantage.
You also do not have to pay tax on royalties, dividends, interest, capital gains, rental income from property outside Portugal and income from employment in other countries. These will be paid in your country if your country has a double tax treaty (DTA) with that country. These benefits only last for ten years.
Social Security As A Freelancer In Portugal
You must also pay Social Security to ensure that you receive an old-age pension. Social Security in Portugal is a proper system that protects the fundamental rights of citizens and ensures equal opportunity by providing supportive measures such as unemployment benefits, parental leave and other financial assistance.
However, social security is exempt for the first 12 months of working as a freelancer in Portugal. To request a Social Security Number (NISS), call 300.502.502 to make an appointment or visit your local Social Security office. To obtain it, you need to present your residence card, NIF, and identification card. Getting a social security number can take several months.
A freelancer in the simplified system (the most prevalent system) pays Social Security 21.4% of 75% of her income. You must pay yourself by the 10th to the 20th of the following month. Portuguese social security is a system that guarantees the fundamental rights of citizens. The payment of social security contributions is compulsory and guarantees benefits such as unemployment benefits, old-age pensions, sickness benefits and childcare benefits.
How To Legally Immigrate To Portugal And Work There As A Freelancer
If you are a freelancer (possibly with clients from different countries) and want to immigrate to Portugal and work there, you should know there are no particular restrictions for foreigners. Portuguese law freelancer. That is, you cannot walk into the country and declare that you want to go and live and work there. While you same time, there are several ways to obtain legal residency in Portugal, including B. Investments, family reunions, employment contracts, etc.
Freeways For Freelancers To Get Legal Residence In Portugal
Apply directly for legal residency in Portugal, or You can apply from the official website of the country’s immigration office, sapa. Sef. pt Note «Manifestaçon de Interest» in the application. If you are applying through the website, you will need to scan and upload the following documents (original copies of these documents must be brought with you during your in-person interview with the government official):
- Passport.
- Confirmation of legal entry into Portugal – visas, air tickets, etc.
- Confirmation of a monthly income of at least 665 euros (this is the minimum monthly income required to legalize your stay in Portugal).
- Police clearance certificate from your home country or country where you have been staying for more than one year.
- Address Confirmation.
- Tax authority registration certificate
- Articles of Incorporation of a Sole Proprietorship.
- Confirmation of payment of government taxes and fines (such as illegal overstay fines, if applicable).
Enough. However, in practice, you may have to wait a considerable amount of time before receiving an invitation for an interview with an official of the Portuguese Immigration Service (SEF). Sometimes you have to wait months, and sometimes you must wait two years.
Banking And Insurance For Freelancers In Portugal
As a freelancer in Portugal, you do not need to open a separate business account. But it’s nice to have one because it allows you to clearly document your income and expenses. It is possible to have an EU bank account, but you will need to open a Portuguese bank account for annual taxes and returns.
Employment insurance (Seguro de acidentes de Trabalho) is compulsory for the self-employed. Even if you work for a company and freelance on the side, you still need it. Portugal also offers residents free healthcare through social security contributions.
Finding A Workspace Or An Office For A Freelancer In Portugal
While it is possible to work from home, many freelancers in Portugal go to coworking spaces or rent an office for their company. Coworking spaces can be found all over the country, including in big cities like Lisbon and Porto. Many offer additional activities that allow you to connect with other freelancers and build a local community.
Remote Portugal – Provides information on remote work in Portugal, including a list of coworking spots nationwide.
Get Croissant – Help you book coworking spaces in Lisbon.
Finding Work As A Freelancer In Portugal
Finding work in Portugal can be difficult if you don’t already have a network of contacts. However, there are many websites and resources you can use to find clients. Create a profile on places like Fiverr and Upwork to find projects around the world.
More On Finding Jobs In Portugal
With so many companies using LinkedIn to find new employees, it’s also worth updating your LinkedIn and relocating to Portugal. Additionally, you should invest in a personal website and build a portfolio that showcases your talents. Lisbon is home to one of Europe’s largest digital nomad communities, where he meets regularly.
Portuguese freelancers are entitled to unemployment benefits if they have paid social insurance contributions for at least two years of her. Maternity leave is also subsidized. The calculation takes into account previous social security contributions. So the higher your contribution, the more you earn. If you plan to give birth in Portugal, it is recommended to increase your contribution at least one year in advance in order to receive more benefits.
Receiving Startup Grants And Advice
In Portugal, there are several types of financial support for startups. To help entrepreneurs, the government has created a list of assistance programs and initiatives. In addition to funding, many of these programs also offer marketing and business development advice.
Useful Resources
Portal das Finanças – The website of the Portuguese National Tax Agency where you can register as a freelancer, issue invoices and file taxes.
Seguranca Social Directa – Social Security website where you can declare your income and apply for benefits and pensions.
EC Europe – The European Commission lists visa requirements for working as a self-employed person in Portugal.
SEF – Information on how to apply for a self-employed residence permit at the Portuguese Immigration Service.
IAPMEI – Information on how to apply for a startup visa in Portugal
OCC – Social Security Calculator created by the Official Chamber of Accountants of Portugal.
Conclusion
Starting a freelance business in Portugal is relatively easy, but the steps can be time-consuming. If you’re willing to put in the time and effort, you’ll reap many life-changing benefits. For example, not only can you live in a beautiful environment with a great culture and great people, but you can also be your own boss.
This has several advantages. For example, you can pick and choose a customer. You are free to work for your most challenging clients, so you don’t have to spend time servicing demanding clients. This dramatically reduces the stress level in the selected area. It also has the ability to manage all aspects of the business. For example, if you come up with a great marketing trick, you can implement it without having to get approval from others.
Income can also be more lucrative. As a general rule, self-employed people earn more than their employees doing the same job. You can also set your own tariffs and change them as you like. You can also decide how many hours you work for your salary. Whether you want to work 30 hours a week or 50 hours, you can easily set your own schedule and enjoy a better work-life balance for him.