Self-Employment In Portugal: The Most Important Information At a Glance

Portugal As a Location For Self-Employed People and Start-Ups

Portugal has a steadily growing start-up scene, especially in the IT and technology sectors. Particularly attractive for the self-employed is Portugal's NHR tax scheme, under which applicants pay a flat tax rate of only 20 per cent for the first ten years. The country is also very popular among freelancers - both those who have chosen Portugal as their permanent home and digital nomads.

But this boost is no coincidence: Portugal has been trying for years to attract qualified professionals to the country. This applies to employees as well as freelancers, the self-employed and entrepreneurs. Especially those who have citizenship within a country of the European Union (EU) or the European Economic Area (EEA) can easily and quickly apply for a tax number and use it to open a bank account or rent a flat, among other things. Anyone who wants to work or set up a business in Portugal as a self-employed person also needs the social security number NISS.

Founding in Portugal: Requirements

To start a business in Portugal, you first need a valid tax identification number (NIF) and a valid social security number (NISS). You will also need a Cartão de Cidadão (citizen card), which covers both tax identification and social security, a passport or residence permit.

The Portuguese Tax Number NIF

Those planning a longer stay in Portugal can also apply for a Número de Identificação Fiscal (NIF). This is a nine-digit Portuguese taxpayer number issued by the local tax authorities. The advantage of having a NIF: You can use it to open a bank account in Portugal, rent a flat, set up utilities such as electricity, water or internet, or buy a car, for example.

With the NIF tax number, you can among other things open a bank account, rent a flat or buy a car in Portugal. You also need the NIF (together with the NISS) if you want to set up a company in Portugal.

Apply For NIF As an EU/EEA Citizen

Applying for a NIF is free of charge for citizens from an EU or EEA country. You only need the following documents:

• A valid identity card or passport
• Proof of residence outside Portugal - this could be a telephone or utility bill (for example, internet, electricity, gas or water) or a bank statement in your name. It is important that the document is in your name and not older than three months.

You can apply for the NIF either at the local Finanças - the tax office or at a Loja do Cidadão, a citizens' shop. There is also the possibility to apply for the tax number online, but in this case you will need a tax advisor to process the application on your behalf via the e-Desk or e-Balcão.

Apply For NIF As a Non-EU Citizen

Citizens from outside the EU or EEA can obtain their NIF in person at the local tax office, but must pay a fee of around ten euros. Since July 2022, you no longer have to be accompanied by a tax representative when applying, but it will be easier and more convenient for you with professional help.

Portugal offers different visas to self-employed people and entrepreneurs from non-EU countries, depending on how long you want to stay in the country and how you want to run your business.

The Digital Nomad Visa

Those who do not come from the EU, the EEA or Switzerland can also apply for the "Portugal Digital Nomad Visa". There are two variants of this:

• Short Stay Visa: for a stay of up to one year.
• Permanent Residence Visa: for a stay of up to five years (those who have lived in Portugal continuously for five years can subsequently apply for a permanent residence permit).

The requirements for both variants are:

• Minimum age 18 years
• 3,040 euros minimum income per month
• 36,480 euros savings

In addition to the digital nomad visa, there are other visas that self-employed persons and entrepreneurs from non-EU countries can apply for:

Portugal D7 Visum

All those who have a passive income of at least 760 euros per month can apply for this visa. This could be income from dividends, income from interest, royalties, pension or rental income. The D7 visa is valid for four months - within this time you must visit Portugal and apply for a two-year residence permit.

Portugal Gold Visa

The Gold Visa is aimed at people who want to invest in funds, local companies, scientific research or cultural institutions. Investors have a choice of four investment options:

• 250,000 euros in cultural property
• 500,000 euros in scientific research projects
• 500,000 euros in local enterprises
• 500,000 euros in investment fund units with a term of at least five years. 60 percent of the value of the shares must be invested in local enterprises.

Apply For the Social Security Number (NISS)

When you register with the social security system, you receive a social security number (NISS), which you can use to claim rights such as allowances and grants and to meet contribution obligations. You also need the NISS to be able to start a business in Portugal. The social security number is easy to apply for online via the Portuguese social security portal (seg-social.pt). The website is available in English and Portuguese. To apply for the NISS, you need the following documents:

• The completed application form of the social security portal
• A valid identification document (identity card or passport)
• A valid work visa - not required for EU, EEA or Swiss citizens

Starting a Business In Portugal

In addition to the relevant proofs (NIF, NISS, Cartão de Cidadão, passport or residence permit), you must choose a name for your company in advance, as well as the company form (for example, sole proprietorship, public limited company, etc.) and an official accounting technique. You then have the following options for incorporation:

• Empresa na Hora – founding on site: You have to visit one of the Empresa na Hora helpdesks (an overview of the locations can be found here). For a fee of 360 euros, you can set up your business here.
• Empresa Online – Online incorporation: This Portuguese government service allows you to start a business online. The process usually takes a few days and costs a fee of around 360 euros.

Freelancers In Portugal

Portugal is very popular among freelancers and self-employed people working remotely abroad and offers many opportunities for coworking and meetups, especially in the capital Lisbon. If you start your own business as a freelancer in Portugal, you are considered a solo-entrepreneur there. To be able to offer your services in the country, the same requirements therefore apply as for setting up a sole proprietorship.

WIf you work remotely in Portugal as a digital nomad, you have the same status as a tourist who spends a long time in the country. However, if you want to rent a flat and apply for appropriate utilities (internet, water, electricity), you should apply for a NIF.

Save Taxes Thanks To the NHR Tax Scheme

Since 2009, Portugal has had the so-called NHR status (Non-Habitual-Resident). The NHR status is a special tax scheme that applies for a period of ten years and offers a significant tax reduction for self-employed persons in certain professions. The tax rate for local income is reduced to 20 per cent - for certain foreign income the tax is even waived completely.

But be careful: Whether you can declare your income tax-free depends on the double tax treaties with the respective country. For example, if you have clients from Germany or Austria, you cannot deduct tax from your income. For clients from Great Britain and some other countries, however, it is possible. In case of doubt, you should always seek advice from a tax advisor.

Foreign Capital Companies

The NHR status is also very interesting for persons who own foreign capital companies and regularly receive dividends from them. If these companies are located in a country with which Portugal has concluded a double taxation agreement, up to 0 per cent tax is possible. For example, if you hold a stake in a German GmbH, you can reduce the withholding tax from 25 per cent to 15 per cent.

Requirements For NHR Status

In principle, the following conditions apply to the NHR tax scheme:

• You must be at least 18 years old
• Your main residence must be in Portugal
• You must not have had unlimited tax liability in Portugal in the last five years
• You must have a NIF tax number
• You must be engaged in an activity with high added value

Professions For Which NHR Status Is Applicable

The aim of the NHR status is to attract highly qualified professionals to Portugal. Accordingly, the Portuguese government has established a list of professions for which the reduced tax rate is applicable. The list is regularly revised and includes, for example, the following professions:

• Architects
• Engineers
• Artists working in theatre or ballet, or in film, television or radio
• Musicians and singers
• Tax consultants
• Designers
• Directors or managers
• Investors
• Programmers
• Software Consultant
• Accountants
• Doctors
• Authors, journalists and linguists

NHR and Digital Nomadism

For self-employed people who benefit from the low taxes but still want to work remotely in other countries, the NHR tax scheme is also worthwhile. However, you must then of course found your business in Portugal and either

• reside in Portugal for at least 183 days a year, continuously or intermittently,
• or, in the case of a shorter duration of stay, have a house as your permanent residence in Portugal, which you intend to occupy and keep.

Conclusion On Portugal As a Business Location

Portugal offers many incentives for self-employed people to start a business. Important portals with information about starting a business are now available in Portuguese and English - and some are even available in other languages. In addition, the NHR tax scheme has been repeatedly adapted and revised since 2009 in order to attract as many founders as possible to the country. However, the process of setting up a business is not quite as simple and quick as it is, for example, with the e-residency programme in Estonia. Anyone who is thinking of starting a business in Portugal should at least get support from a tax advisor.