Informing the AT that you are going to start working is mandatory. Individual or collective persons wishing to carry out an activity must declare its start (Article 31 of the CIVA, Article 112 of the CIRS, and Article 118 of the CIRC), either verbally or by submitting the respective Statement to the Tax and Customs Authority (AT).
There is no need to submit this start of activity Statement in the case of VAT taxpayers who carry out a single taxable transaction under the terms of Article 2(1)(a) of the CIVA (isolated act), unless it exceeds the limit of €25,000, in accordance with Article 31(3) of the CIVA.
To initiate a freelance activity with the tax office, a Tax Identification Number (NIF) and access to the Portal das Finanças (AT website) are required. These credentials are essential as you will be regularly visiting the AT website for tax-related matters.
Freelancers, or self-employed workers, are individuals who perform professional activities without an employment contract or any legally equivalent agreement. They are not covered by the general social security regime for dependent workers.
The Simplified Regime and Accounting are the two taxation options imposed on income applicable to independent contractors. The two regimes are quite different, and the freelancer is obliged to keep the chosen regime for a three-year period, except in case of exceeding the limits imposed on the simplified regime (an annual gross income amount equivalent to or under 200 thousand euros).
The simplified regime is assigned by default when a professional starts a self-employed activity with the tax office, as an independent contractor. Under this regime, the taxable income of this category will be computed by applying coefficients to the gross income, disregarding the activity’s expenses.
Tax = [Tax rate] x [(coefficient x revenue) + max (0 ; 15% revenue – professional expenses)]
These coefficients are applied according to activity types:
15% -Sales of goods and products;
15% -Provisions of services in hospitality, restaurant and beverage services;
75% -Listed service-rendering activities (article 151.º of PIT code);
95% -Capital gains, rental income, royalties, know-how and other income;
30% -Non business-related subsidies;
10% -Business related subsidies and the remaining income of category B.
This means there is a fixed rate to be applied to the self-employment income received. Generally, for the typical provision of services, the tax is levied on 75% of a freelancer’s self-employment income.
Additionally, in the first and second years of self-employment, the freelancer is entitled to a 50% and 25% reduction on their taxable income.
The accounting regime is compulsory for anyone with an annual turnover of more than €200,000. However, any self-employed person can opt for this regime if they consider it to be more advantageous. This tax regime suits more complex and greater dimension activities when business expenses represent more than 25% of the income.
Considering the accounting tax regime, it would be possible to deduct most of the business-related expenses, such as IT equipment, stays, fuel, and others. Thus, allowing the accurate determination of the net income.
However, this regime implies the hiring of a certified accountant (CC), who shall be liable for the preparation and presentation of tax files and ongoing tax obligations’ compliance.
Freelancers in Portugal are subject to ongoing tax obligations from the moment they start their self-employed activity with the tax office. These obligations include regular tax filings and compliance with tax regulations, which can be consulted in the [Freelancer tax and social security obligations] section.
Relocate Now offers assistance in starting your self-employed activity with the Tax and Customs Authority (AT) by:
Performing due diligence on your current tax situation.
Ensure you have the required documentation.
Submitting the start of the self-employed activity statement on your behalf.
Our service typically takes 24 hours, and the start of freelance activity is immediate.
Our service fee for assisting you in registering your freelance activity is as follows:
Service Fee: €50 (Euros) + VAT.
This fee covers the comprehensive support provided by Relocate Now to ensure a smooth and compliant start to your self-employed journey in Portugal.
I’m already a freelancer and already invoice my clients by issuing customized invoices. Do I need to register my freelance activity with the Tax and Customs Authority in Portugal?
Registering your freelance activity with the Tax and Customs Authority is mandatory. It ensures compliance with tax regulations and allows you to legally operate as a self-employed individual in Portugal. You can keep issuing your own customized invoices to collect payment from your clients, however, these must be replicated into the Tax Authority’s system upon the start of your freelance activity, by issuing the respective [Recibos Verdes].
What documentation do I need to start my freelance activity in Portugal?
To initiate a freelance activity, you need a Tax Identification Number (NIF) and the access password to the Portal das Finanças. The password is sent to your address by regular mail after registration on the AT website. These credentials are essential for regular interactions with the Tax and Customs Authority.
What is the Simplified Regime for taxation, and when is it applied?
The Simplified Regime is assigned by default for new self-employed professionals. It involves applying different coefficients to gross income based on activity types, with fixed rates determining the tax on a percentage of a freelancer's income.
When is the Accounting regime compulsory, and who can opt for it?
The Accounting regime is compulsory for annual turnovers exceeding €200,000. However, any self-employed person can opt for this regime if they consider it more advantageous, especially for complex activities with significant business expenses.
If I surpass the €200.000 threshold in a given year under the Simplified Regime, will I be forced to change to Accounting?
No, you would only be forced to change from the simplified regime into accounting, which would be done automatically by the tax authorities, in case of having surpassed the 250.000,00 EUR cap in a single year of activity, or the 200.000,00 EUR cap in two consecutive years – this would be the rule for changing regimes.
Can I change my taxation regime once I've started my freelance activity?
The chosen taxation regime (Simplified or Accounting) must be maintained for a three-year period. However, changes are allowed if specific conditions, such as exceeding simplified regime limits, are met.
What ongoing tax obligations do freelancers have in Portugal?
Freelancers in Portugal have ongoing tax obligations, including regular tax filings and compliance listed in our [Freelancer tax and social security obligations] section. These obligations are in effect from the moment they start their self-employed activity with the tax office.
Can I register my freelance activity on my own without assistance?
Yes, individuals can register their freelance activity independently. However, utilizing services like Relocate Now can streamline the process, ensuring accuracy and compliance with tax regulations.
Note: These FAQs provide general information and guidance. Specific cases may vary, and individuals are advised to seek personalized advice from relevant authorities.
