Requirements for the self-employed
Before you start…
Before you are permitted to start your independent business activity in Portugal, you must first register. This is done either through the completion of an Início de Actividade form at your local Finanças office.
You will also need to register at the local Social Security office. However, this is only required in the first month of the second year of your activity.
Running your business
You are required to keep books to track your income and expenses. Modelos 8 and 9 – Livro de Registo de Serviços Prestados and Livro de Registo das Despesas Gerais e das Operações Ligadas a Bens de Investimento – are used for this purpose and are available at stationery shops.
Alternatively, you can use a computer program designed for this function or another system of your own choosing, as long as you notify Finanças of your procedures in advance. These books will help you file periodic IVA declarations as well as Anexo B of your IRS income tax return. Remember that these submissions must be done over the internet.
If providing services, you will need to give your clients recibos verdes, or ‘green receipts’. For this, you will need Modelo 6 that can be purchased at your local Finanças office.
Closing your business
In order to avoid any unnecessary taxation, you must notify Finanças when you cease your business activity via the completion of a Cessão de Actividade form within 30 days. For Social Security, fill out the Boletim de Alterações de Elementos form.
Income tax (IRS)
Income tax returns are to be submitted between March 16 and April 30 following each fiscal year (January – December). In addition to Modelo 3, self-employed individuals should complete Anexo B (income from independent work). This annex is for declaring both income, as recorded in one’s books, and necessary expenses for conducting business.
If you do more than ¤50,000 annually with any given client or supplier, you will need to complete a summary chart form (Mapas Recapitulativos).
Valued added tax (IVA)
Periodic declarations of IVA, or Value Added Tax, are also required. If you gross less than ¤9,975.96 annually, you are exempt from IVA. Otherwise, you must declare on a quarterly or monthly basis, depending on the volume of your turnover (see Part Five in this series of forthcoming articles).
Beginning in the second year of business activity, you must register and make monthly declarations and payments to Social Security. There are 11 brackets for contributions, based on multiples of the national minimum wage. There is a special level for those earning below the national minimum wage. Mandatory contributions are 25.4 per cent of earnings and broader coverage is 32 per cent (see Part Four in this series of forthcoming articles).
• Dennis Swing Greene is senior partner and international fiscal consultant for EUROFINESCO S.A., with offices in the Algarve and in Lisbon. Appointments may be scheduled in Guia (Albufeira) at 289 561 333 or in Lisbon (Chiado) at 213 424 210.