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Guide to freelancing in Portugal
Become a so-called trabalhador independente
Before you start, take into account:
- You won't have to pay for social security for your first year.
- There's VAT exemption for those making less than €10,000 a year.
- NHRs are taxed at a flat rate of 20% on their income and are exempt from paying taxes on global income.
- First, you have to be able to legally reside and work in Portugal. If you've reached this point, Baseflow has probably handled this for you already.
- You need to have a NIF and a bank account. Baseflow handles this for you too.
- You must be able to log in to the tax authority’s website, known as Portal das Financas. You'll be able to get your credentials from on the Baseflow app.
- You'll need a social security number (NISS). Baseflow handles this, but it can take a few months to obtain your social security number, depending on the government office.
- You can then register as a freelancer, either online or at a tax office near you. If you do this online in the Portal das Financas, search for “beginning of activity”, “Services > Activity > Beginning of Activity”, and then “deliver the certificate”. This will include the service you provide which for most freelancers falls under Article 151 of the CIRS, the date of the beginning of your activity, the amount you estimate you will earn between January to December (for VAT exemption), and your IBAN.
- You will then also need to choose your accounting regiment: simplified or organized.
- The simplified regiment is the default one you get from the tax authority where you do not need an accountant. You can only have this regiment if you make less than €200,000 a year. This regiment allows you to pay taxes on 75% of your overall income and the remaining 25% is offset with expense receipts. We recommend this option.
- Under the organized regiment, you are obligated to have an accountant. In this regime, all your expenses count, not just 25%, and your accountant takes care of social security and tax payment. This regiment is like a freelancer being an actual company in a way with added costs such as accounting and you will need complex tax files. Baseflow does not yet offer this service, but we're looking forward to integrate it in the future.
- You have now officially “opened activity”, a process that allows you to bill and send invoices to your clients through recibos verdes which we will address later. This will inform the tax authority about your income.