Freelance in Portugal: 4 steps to becoming an auto-entrepreneur

Freelance status, also known as auto-entrepreneur, independent worker or sometimes micro-entrepreneur, is becoming increasingly popular. In Portugal, too, this status is becoming increasingly popular. Freelancers in Portugal are commonly referred to as “recibo verde” (in reference to the type of invoices they issue, which we’ll talk about in the article).

So, when you arrive in Portugal, you’ll have plenty of opportunities to work. You can work for a company, set up your own business or become a freelancer. For those who would like to opt for the latter option, I invite you in this article to discover the steps you need to take to create your freelance status in Portugal.

Notes: please note that I haven’t gone into all the details, particularly with regard to the choice of taxation. On the other hand, for those who don’t want to become a freelancer in Portugal but would like to know more about working in a company or setting up a business, I invite you to read the article “Working in Portugal”.

4 steps to becoming a freelancer in Portugal

Step 1: obtaining your contribinte number

Before taking any steps to create your freelance status in Portugal, you’ll need to have your contribinte number. This is the tax number in Portugal, also known as the “NIF”. It’s essential for all your dealings in Portugal: employment contracts, renting or buying a home, opening a bank account, buying a car, taking out subscriptions, etc.

To obtain this essential number, you need to go to the “Finanças: Autoridade Tributária e aduaneira” (taxcenter) or the “Loja do cidadão”(citizen’s center), with proof of identity and address.

Step 2: Create your profile on the Finance website

Once you’ve obtained your NIF, don’t forget to create your online profile on the Finance website(portal das finanças). You’ll need it very, very, very… often for your general business needs, and also to become a freelancer in Portugal!

It’s easy to create an online profile! All you have to do is go to the financewebsite (portal das finanças) and then go to the page where you’ll be able to create your account (login and password). I’ll give you the direct link here, so you don’t have to search for it(I’m nice, aren’t I?). Once you’re on this page, all you have to do is enter your NIF (taxpayer identification number), your e-mail address, your telephone number and your address.

Creation of logins for access to the finance site.

step 3: Opening a Portuguese bank account

If you don’t already have a Portuguese bank account, you’ll need to open one. As in France, there is a wide choice of banks in Portugal. The best-known “traditional” banks in Portugal include:

• Caixa Geral de Depósitos
• BPI
• Santander
• Millenium BCP
• Novo Banco
• Etc.

The documents required by the bank to open an account are generally the following: the NIF(mentioned in step 1 of this article), proof of identity, proof of address and proof of income.

Banks in Portugal.

Step 4: declaring the start of your business

This is it! Once you’ve got your NIF, your online access to the finance site and your bank account, you can finally start the process of declaring your start-up as a freelancer in Portugal! This declaration can be made either :

• on the ” portal das finanças ” (finance website). Go to: Todos os serviços -> Inicio de actividade -> Entregar declaração -> Entrega de declaração de início de actividade -> início de actividade. To make things easier, I’ve included the direct link here (for this link to work, you’ll need to log in first (explained in step 2 of this article)).
• at a tax office (Finanças:Autoridade Tributária aduaneira) To make the declaration to the tax office, fill in the form called “declaração de inscrição no registo/inicio de actividade”, here‘s the link to the form.

On the form for declaring the start of freelance activity in Portugal, you’ll need to enter several items of information, including:

• your start date,
• the CIRS/CAE code of your activity(like the APE/NAF codes in France). To find out which code to choose, you can apply to INE(Instituto Nacional de Estatistica), which will give you the code associated with your activity. Click here to apply.
• the RIB of your Portuguese bank account,
• the type of operations you will be carrying out,
• estimated income for the year of your activity,
• Etc.

Note: Empresário em Nome Individual is the most suitable legal form for freelance activity in Portugal.

On the Portal Das finanças home page, go to: Todos os serviços -> Inicio de actividade -> Entregar declaração.

Taxes, social security, invoices: what you need to know.

1. Social security contributions

In principle, when you set up your freelance activity in Portugal (step 4 of this article), the Finance Department automatically communicates this information to the social security system, which will then automatically register you and inform you. If this information is not communicated, you will need to register with the social security system for self-employed workers by filling in the Social Security form RV1000-DGSS. You can find the direct link to this form here.

With regard to social security contributions (“taxa contributiva”), please note the following:

• the first year you have a minimum contribution of €20 per month to pay(this has recently changed. Before January 2019, you had no contributions to pay in the first year),
• the contribution is 21.4% (2019 data),
• the amount taxed is based on the last quarter and corresponds to 70% of the value for services or 20% of income for the sale of goods,
• the declaration must be made every three months (before the last day of April, July, October and January),
• payment is due between the 10th and 20th of the month. You can either pay at a “Segurança Social” counter or directly at a Multibanco (bank cash dispensers used for withdrawing money and also for paying taxes, bills, etc.). Simply enter the reference number provided by Social Security and make the payment,
• those who don’t have a regular income from their freelance activity pay a minimum contribution of 20 euros/month. This enables them to continue to have access to social security benefits.

Since July 2018, freelancers in Portugal have been eligible for unemployment benefit (“subsídio por cessação de atividade profissional”):

• if the cessation of self-employed activity is linked to economic underperformance and a proven drop in sales,
• if a single employer is the source of 50% of income,
• if the auto-entrepreneur has already paid Portuguese social security contributions for at least 1 year.

Segurança Social.

2. Tax returns

The annual income tax return(IRS) is also filed on the famous finance website(portal das finanças) in April/May. There are two options for taxing self-employed income:

• The simplified regime: proposed by default if the value of estimated income is less than or equal to €200,000/year, . Please note that you are exempt from IVA(Portuguese VAT) if you opt for the simplified tax regime and if your annual turnover is less than €10,000,
• The system with organized accounting: if the annual sales forecast when you set up your business are over €200,000/year.

3. Issuing your “recibo verde

As a freelancer in Portugal, every time you carry out a transaction with one of your customers you’ll need to issue a “recibo verde” (green receipt). This is an “invoice” showing the products and/or services invoiced to your customers. This “recibo verde” is done online on the famous finance website(portal das finanças) that I’ve been talking about in this article. Here are the steps for issuing your “recibo verde”:

1. go to the finance site(portal das finanças),
2. log in with your login details(which we talked about in step 2 of this article),
3. go to: Todos os Serviços -> Recibos Verdes -> Emitir -> Fatura(or click directly here, provided you’ve entered your login details beforehand).

Did you know? The first “recibo verde” appeared at the end of the 1970s, initially for the self-employed. They were called “recibo verde”(green receipt) simply because the “paper” on which they were printed was green.

The “recibo verde” paper.

In conclusion

You’re now ready to become a freelancer in Portugal! In principle, the formalities are quick and straightforward. If you don’t yet speak Portuguese, I strongly advise you to be accompanied by someone who does. Also, if you’re not sure how to fill in certain details when creating your freelance status in Portugal, I’d advise you to ask a professional. This could help you avoid making mistakes and being penalized in the future (especially when it comes to choosing the tax system, which will depend on your activity and expected turnover). Finally, for your search for freelance assignments, several sites specialize in putting freelancers in touch with companies, such as Workana, Fixando, Upwork, Guru and others.

Ready to become a freelancer in Portugal?

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