Because freelancers are not our employees and we don't pay taxes on payouts, they must declare any income received through Solar Staff by themselves.
To carry on tax accounting in Portugal for your Solar Staff income, you need to:
Obtain a taxpayer ID number
Choose a form of doing business
Tax residence
Portuguese residents are taxed on their worldwide income, while non-residents are liable to income tax only on Portuguese-source income, which includes not only the portion of income relating to the activity carried out in Portugal, but also remuneration that is borne by a Portuguese company or permanent establishment (PE).
An individual is deemed to be resident in Portugal for tax purposes if they meet either of the following conditions:
Spend more than 183 days, consecutive or not, in Portugal in any 12-month period starting or ending in the fiscal year concerned.
May spend less than 183 days in Portugal, but maintain a residence in Portugal during any day of the above-mentioned period.
Thus, as a rule, the taxpayer will become resident in Portugal as at the first day of stay in the Portuguese territory and non-tax resident as at the last day of stay in Portugal, with a few exceptions.
Taxpayer ID number
The taxpayer identification number (Número de Identificação Fiscal / NIF) is used as the main device to identify a person when signing contracts, opening bank accounts, purchasing goods or services, and so on. Residents of Portugal who have a citizen’s ID card already have a NIF. Anyone who has tax obligations in Portugal, be they a local, foreigner, resident, or non-resident, can obtain a NIF.
The social security identification number (Número de Identificação da Segurança Social / NISS) is assigned when registering with the social security system and allows you access to rights related to things like support and subsidies, as well as contribution obligations.
Freelancer in Portugal: Taxes and contributions
Tax liabilities in Portugal depend on the freelancer's status and/or fulfillment of certain conditions. Portugal has 2 tax statuses for Solar Staff users to choose from:
Trabalhador independente (self-employed worker)
Empresário em nome individual (individual entrepreneur)
Both individual entrepreneurs (empresário em nome individual) and self-employed workers (trabalhador independente) are considered self-employed for tax and social security purposes. The key difference is that the self-employed can provide services only, while individual entrepreneurs can also sell goods.
IMPORTANT! Solar Staff does not have the option to choose a tax status for freelancers based in Portugal, but you can fill in your tax ID in your account.
Read on for more details.
Trabalhador independente
Trabalhador independente (self-employed/independent worker) is suitable for those who carry out professional activities in the form of services. To receive income in this status, you need to submit the Beginning of Activity Declaration (Declaração de Início de Atividade), indicating the tax regime and type of activity (learn more). Upon rendering a service, the self-employed person must issue an invoice in the form of a green receipt (recibo verde).
Freelancers in this status have several regimes to choose from:
Regime Simplificado
Regime Simplificado is a simplified tax regime that serves as default for the self-employed (it is not mandatory, meaning you can also go for the regular regime contabilidade). The gross income cap for the regime is €200 thousand (learn more). The income is considered received at the actual arrival of funds. Under the simplified regime, you are liable to the following taxes and contributions:
Personal Income Tax (Imposto sobre o Rendimento de Pessoas Singulares, IRS), payable at the following rates (as at 2023):
Taxable income, € | Tax rate, % |
up to 7,479 | 14.5 |
7,479–11,284 | 21 |
11,284–15,992 | 26.5 |
15,992–20,700 | 28.5 |
20,700–26,355 | 35 |
26,355–38,632 | 37 |
38,632–50,483 | 43.5 |
50,483–78,834 | 45 |
from 78,834 | 48 |
There is also an additional solidarity tax (taxa adicional de solidariedade) established by Article 68-A of CIRS that is applicable at:
2.5%: For income ranging from from €80,000 to €250,000;
5%: For income starting from €250,000
With Regime Simplificado, determining the taxable base involves first applying a deduction in the form of a coefficient based on the type of activity. For example, only 75% of income arising from professional activity is taxed (coefficients for other types of activity are listed in Article 31 of the IRS Code (CIRS)). Also, some expenses are eligible for deduction (fixed deduction / social contributions). See sample calculation here.
Income tax return (declaração de Rendimentos, IRS) is submitted online in the period from April 1 to June 30 of the year succeeding the reporting one. Under the simplified regime, you need to fill out Appendix B (learn more). The tax is payable before August 31 of the year following the reporting one.
Useful links: CIRS; FAQ; ATGo, an iOS and Android app for issuing and viewing invoices and managing outstanding payments.
Value-added tax (Imposto sobre o Valor Acrescentado, IVA) is figured at the rates established by Article 18 of the IVA Code (CIVA):
Reduced rate of 6% for goods (5% in Madeira, 4% in the Azores).
Middle rate of 13% for goods and services from the list (12% in Madeira, 9% in the Azores).
Standard rate of 23% for all other taxable goods and services (22% in the autonomous region of Madeira, 16% in the autonomous region of the Azores).
If the income from the activity does not exceed €12,500 per year or the self-employed person provides the services listed in Article 9 of CIVA, then the self-employed person is exempted from the obligation to figure and pay VAT.
VAT return (declaração periodica do IVA) is submitted online quarterly, before the 15th of the second month following the end of the quarter (in February, May, August, and November). If filing monthly or in case of the annual turnover exceeding €650,000, the return must be submitted before the 10th day of the second month following the reporting one (learn more).
The tax is to be paid quarterly before the 20th day of the second month following the quarter, or monthly before the 15th day of the second month following the month when the respective transactions took place.
Useful links: CIVA; FAQ; consultations for VAT payers.
Obligatory contributions (obrigações contributivas) are social security (Segurança Social) payments calculated by the Social Security Service based on self-employed income at a rate of 21.4% (learn more). Registration is automatic, with the tax authorities notifying the Social Security Service of the beginning of activity and furnishing it with all the necessary data on the self-employed person. All you need to do is fill out and send in the Mod. RV1000-DGSS form so as to be included in the social security system for the self-employed (even if you're eligible for exemption).
Reporting (declaração trimestral dos valores correspondentes à atividade exercida) is to be carried out on a quarterly basis before the last day of January, April, July, and October, and the declaration needs to state the income received for the previous 3 months. The amount payable for the next 3 months is determined based on the income indicated in the declaration. The payments are calculated using different coefficients depending on the type of activity:
70% on the total value of services rendered
20% on income related to the production and sale of goods
20% on proceedings from the provision of hospitality and similar services, as well as catering and beverages
The taxpayer is to file a quarterly report through Direct Social Security (click here to get access). They also need to fill out Appendix SS to the IRS reporting. The quarterly reports are submitted online.
The payment window is between the 10th and 20th of each month.
Useful links: More on contributions.
Regime contabilidade
Regime contabilidade (organized accounting system, the regular regime) is applied when income exceeds €200 thousand (or on an opt-in basis) and requires book-keeping, which entails hiring an accountant (Técnico Oficial de Contas, TOC).
The differences from Regime Simplificado are as follows:
Taxpayers can deduct documented expenses that are fully or partly related to professional activities (learn more).
IRS reporting needs to be filed with a filled-out Appendix C, the declaration is submitted by the accountant.
Income is considered received at the moment of actual provision of services / performance of work.
You cannot opt out of the regime by yourself, only a certified accountant can do this.
Contributions (obrigações contributivas) are calculated based on taxable income for the previous calendar year.
Useful links: FAQ; Full IRS guide.
Regime Fiscal do Residente Não Habitual
Regime Fiscal do Residente Não Habitual (RNH, tax regime for non-habitual residents*) is a special status created to attract income to the country, offering tax benefits over 10 years:
The maximum IRS tax on income from professional activities is 20% (the list of high value-added activities is set out in Order No. 230/2019).
There is no double taxation of income received outside the country.
* A non-habitual resident is a citizen (foreigner or Portuguese resident living outside the country) who wants to live in Portugal, but has not been its resident for the last 5 years.
To apply for the status of a non-habitual resident, you need to meet the following requirements:
Be a resident of Portugal in the year in which you wish to apply RNH as a non-habitual resident.
Not be a resident of a Portuguese territory for the 5 years preceding the year in which you wish to apply RNH.
The RNH application must be submitted to the tax office after having registered as a resident of Portugal before the end of March of the year following the year of the residency registration. The reporting and tax obligations are the same as for Regime Simplificado and Regime Contabilidade (you need to fill out Appendix L in the declaration).
Empresário em Nome Individual
Empresário em Nome Individual (ENI, individual entrepreneur / IE) will work for those who engage in professional activities in the form of the provision of services and the sale of goods. Individual entrepreneurs are also considered independent (self-employed) workers and obliged to issue green receipts (recibo verde).
To receive income in this status, you need to submit the Beginning of Activity Declaration (Declaração de Início de Atividade), indicating the tax regime and type of activity (learn more).
Almost everything in this status is the same as for trabalhador independente, but there are certain features that differ:
IEs have the ability to open a corporate bank account.
IEs have a commercial name, which consists of the owner's citizen name and may include an indication of the activity (for example, Lana Pireira – Agente Imobiliária).
IE is one person who bears responsibility with their personal property and for their professional activities (unlike a company, there is no share capital).
Individual entrepreneurs are liable to pay the following taxes and contributions:
Personal income tax (Imposto sobre o Rendimento de Pessoas Singulares, IRS) with the option to choose between a simplified regime or an organized accounting regime, similar to trabalhador independente.
Value-added tax (Imposto sobre o Valor Acrescentado, IVA), which is only payable if the individual entrepreneur is not entitled to benefits (exemption from VAT is possible under the simplified tax regime, which has an annual turnover cap of €10,000).
Obligatory contributions (Obrigações Contributivas) are to be paid by the individual entrepreneur in accordance with the guidelines for self-employed workers, but with the following differences:
New individual entrepreneurs are eligible for a 12-month exemption from contributions to the social security fund (but they are still to file a quarterly declaration).
The contributions are levied at 25.2% (3.8% more than that of trabalhador independente).
Useful links: FAQ, differences between IEs and the self-employed.
Additional info
Portugal has double taxation agreements (DTAs) with a number of countries.
In Portugal, you can file your reporting as a family (with information on the income of all the family members).
FAQ on taxes and tax authority functions.
Penalties: Missed reporting deadlines – from €200 to €2,500, late payment of taxes – from 10% to 100% of the amount of unpaid tax, but not more than €55 thousand.
Income received via Solar Staff is declared based on certificates and invoices, and in accordance with the Offer Agreement.
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].