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Self-employed or Freelancer in Portugal

In Portugal, you have two main options for disclosing your financial information to the tax authorities: simplified/non-organized accounting and organized accounting. This decision plays a crucial role in calculating your earnings as a freelancer at the end of the year.


If you fall into one of the following categories in Portugal, you have the freedom to choose between two accounting regimes:


1. Self-Employed Workers or Freelancers

2. Individual Contractors


It's important to note that any type of company, whether anonymous, joint stock or otherwise, is mandated to utilize the organized accounting regime.


When your gross annual income surpasses 200,000 euros, organized accounting becomes mandatory for both self-employed individuals and sole proprietorships.


If you initially opt for the simplified plan, your turnover must not exceed €200,000 over two consecutive years or surpass this amount by more than 25% within one year. Failing to comply will result in mandatory system change and potential fines.


Here's a breakdown of the two accounting regimes:


Organized Accounting:


- Income tax calculation is based solely on annual gross income.

- Business expenses can be deducted.

- Hiring an official accountant (TOC) is mandatory.

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


Simplified Accounting:


- Tax calculation considers only a percentage of income.

- Work expenses cannot be deducted.

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


Today, we delve into Non-Organized Accountancy, shedding light on key deadlines and procedures for VAT, Social Security, and IRS in Portugal:


Non-Organized Accounting


VAT (IVA):


- 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 is required from the previous month, between the 3rd and 12th of each month.


Social Security:

- Independent Worker payment due by the 20th of each month (minimum 20 euros).

- A waiver of 12 months is granted when reporting first-time business declaration as an independent worker.

- Social Security mapa submission until the 20th of each month.

- Employee contract admissions on Social Security must occur between 1 to 7 days before the contract begins.

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


IRS Deadline:

- April 1st until June 30th.

Respect the following income tax ratios for the simplified plan:

- 15%: Sales of goods;

- 15%: Hotel, restaurant, and drinks services;

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

- 95%: Capital gains, Construction revenue, temporary cessation or use of intellectual or industrial property, 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.


These ratios determine the portion of income subject to taxation, with the remainder considered as business expenses.


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