Becoming a self-employed worker (Empresário em Nome Individual) in Portugal may be a good option if your activity requires flexibility or if you want to maintain autonomy in the management of your work. Live in Portugal and work as yoga teacher, freelance graphic designer or craftsman sounds good, but the status of self-employed worker is different in Portugal compared to the one proposed in other countries and the rules are different. Your dream of working as freelancer in Portugal might become a nightmare if you don’t follow and respect the rules of self-employed workers. What are the advantages of being a self-employed worker ? How to become a self-entrepreneur in Portugal ? Lisbob, the Expats Personal Assistant in Lisbon and Portugal, tells you everything you need to know about self-employing in Portugal.
Self-employed worker in Portugal: a simple status
Empresário em Nome Individual is the simplest legal form to launch your business. This is a self-employment status that focuses on small businesses or service providers with low investment and reduced risk.
In this type of business, the business name is the full or abbreviated name of the entrepreneur and may include (or not) an expression related to the activity performed. In the event that the entrepreneur has obtained the business by inheritance, may add to the name "successor of" or "heir of".
Benefits of being a self-entrepreneur in Portugal
Simplicity of creation : The formal opening and closing of this type of company is very simple and does not require any particular paperwork. Bob further explains how to open your business.
Possibility of exemption from VAT : If you are in the simplified tax system (explanations later) and do not exceed 10.000,00 euros of annual turnover, the self-employed person in Portugal can benefit from the exemption of the VAT VAT. For more details, see article 53 of the CIVA.
Right to unemployment benefit : The self-employed person who has contributed for at least 2 years can benefit from the unemployment allowance also known as "subsídio por cessação de atividade profissional". It should be noted that the end of the professional activity will have to occur unintentionally. For example : if there is a reduction in turnover requiring the closure of the company or economic reasons of force majeure that do not allow the activity to be sustainable, the auto-entrepreneur is therefore in the obligation to close his business. He has the right to unemployment benefits.
Without minimum capital : This is one of the most important benefits of this status. It is possible to become a self-entrepreneur in Portugal with a capital of 0 €. However you are empowered on your personal assets.
Using the assets of the company : Indeed this status makes that you are responsible for the losses of the company. In case of debt, fines or other liabilities, creditors are allowed to take your personal property as well as that of your spouses. Bob therefore invites you to be cautious and to assess the risks.
Full control over the activit y: It goes without saying that an independent worker has total power of decision over his activity. There is no shareholder or partner and as a result the auto-entrepreneur is free from any movement.
A low tax cost : The taxation of the individual entrepreneur is carried out in category B - Business and professional income, which is translated into practice by a single declaration.
Disadvantages of work as a freelancer in Portugal
The main disadvantage is that there is no separation of assets. The individual entrepreneur is liable, in an unlimited manner and on his personal property, debts incurred during the exercise of the activity.
This involves all the entrepreneur's wealth (related to the activity or personal property such as houses, vehicles or land) and his spouse, if he is married in a property-sharing scheme.
How to start a freelancer activity in Portugal
According to the tax authorities, you must follow the following steps:
-Statement of commencement of activity in a local office or via the Finance portal (www.portaldasfinancas.gov.pt). All you need once is to ask to open a self-employed activity. You will need to provide your TIN, RAW and ID. Depending on the type of activity you want to carry out the finance officer will choose a code.
- Fill out the RV1000-DGSS model of Social Security (you can get the document on www.seg-social.pt).
Note: The RV1000-DGSS model is mandatory for entrepreneurs whose gross revenue is 6 times higher than the social support index (IAS). Entrepreneurs who start their business for the first time are exempt for 12 months.
How much and how to pay social security contributions as a self-employed worker in Portugal?
Two solutions: If you already have a salary activity and therefore already contribute for social security you do not pay. On the other hand if your activity of auto-entrepreneur is your only profession then it will have to pay Taxa Contributiva which amounts to 29.6% for 2018.
Since 2019 the law changed and for a salary of 1.000 € gross per month you will have to pay around 178 €.