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Responsibilities of an independent worker or freelancer in Portugal.

In Portugal, individuals have two main options for reporting their financial data to tax authorities: simplified/non-organized accounting and organized accounting. This decision significantly influences the calculation of freelancer income at the end of the year.

freelancer

If you're self-employed, a freelancer, or an individual contractor in Portugal, you can choose between two accounting regimes. However, any type of company, including anonymous or joint stock, must use an organized accounting regime.


Once your gross annual income surpasses €200,000, both freelancers and sole proprietorships must adopt organized accounting.


If you initially opt for the simplified plan, your turnover must not exceed €200,000 over two consecutive years or increase by more than 25% within one year. Failure to comply may result in fines, and you'll be required to switch accounting systems.


Organized Accounting:


- Income tax calculation considers only the annual gross income.

- Business expenses are deductible.

- A certified accountant (TOC) must be hired.

- Annual preparation, presentation, and classification of accounts are required.


Simplified Accounting:


- Tax calculation involves only a percentage of the income.

- Work expenses cannot be deducted.

- There are fewer tax obligations and associated expenses with this plan.


Today, let's delve into Non-Organized Accounting.


VAT (IVA): Freelancer


- 1st Quarter: April 1st to May 15th

- 2nd Quarter: July 1st to August 15th

- 3rd Quarter: October 1st to November 15th

- 4th Quarter: January 1st to February 15th

- Submission of all documentation from the previous month occurs between the 3rd and 12th of each month.


Social Security:


- Independent worker payments are due by the 20th of each month (minimum 20 euros).

- A waiver of 12 months is applicable when reporting for the first time as an independent worker.

- Social Security maps must be submitted by the 20th of each month.

- Employee contracts must be admitted on Social Security between 1 to 7 days before the contract begins.

- Termination of employee contracts should be completed by the 10th of the following month.


Deadline for IRS:


- April 1st to June 30th.


Respect the following income tax ratios for the simplified plan, applicable to different types of activities:


- 15%: Sales of goods

- 15%: Hotel, restaurant, and beverage services

- 75%: Provision of services for activities listed in the activity table of section 151 of the IRS Code

- 95%: Capital gains

- 95%: Construction revenue

- 95%: Temporary cessation or use of intellectual or industrial property

- 95%: Income from capital from commercial and professional income-generating activities

- 30%: Grants or subsidies not intended for agriculture

- 95%: Farm subsidies

- 95%: Other category B income


For each activity, the tax administration considers a percentage of income subject to taxation, with the remainder being business expenses considered.

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