Do you dream of becoming a freelancer in Portugal? If so, read on to learn more about the best way to make this dream come true.
As you’ll see, it all begins with establishing your residence in Portugal and obtaining NHR status. From there, you’ll need to obtain the necessary permits and licenses that will allow you to enjoy the numerous benefits of being an independent worker in the country.
We’ll walk you through each step of this process, so let’s get started!
Get your Portuguese NIF number
Once you’ve moved to Portugal and have started working for yourself, your next step is getting an NIF number. The acronym stands for Número de Identificação Fiscal and it’s basically your Portuguese tax ID.
All residents are required by law to have one, including freelancers.
To get one, head over to Caixa Geral de Depósitos and request a NIF card (commonly referred to as Cartão do Cidadão; or CC) either at your local branch or at any CTT location throughout Portugal.
The bank or post office will ask you for your: carteira de identidade (ID card); and, passaporte (passport). If you don’t have an ID card yet, they may ask for any other form of official documentation. Once they have these documents, they will send your NIF request off to be processed by SEF and within four months, you should receive your NIF number via mail.
You can track its progress on SEF’s website.
Or a faster way is to use RHJ Accountants; we can do this online as a fiscal representative, within two working days. Take a look through our previous article on Fiscal Representatives to find out more.
Take Advantage of Tax Breaks
Though not every country has special tax breaks for freelancers, it’s something you should check into. For example, if you live in Portugal as a tax resident and make more than €750 per year, you are required to pay 21.4% (based on 70% of your gross income), as social security payments.
But being self-employed entitles you to some tax benefits; namely, a flat rate income tax if you have a high value activity (20%) through the non-habitual resident scheme.
You can also claim business expenses.
In Portugal, you can write off any cost associated with your freelance job that is over 2% of your total income from that source. These deductions might include computers, phone plans, travel costs and office supplies, among other items.
It’s important to keep meticulous records of all your business-related expenses so you can accurately document them on your tax returns every year.
In order to qualify for tax breaks, it’s important that you register your business with the local authorities and obtain an NIF; or number de identificacao fiscal. This document proves your business is legitimate.
Take advantage of all tax benefits if they’re available where you live; there’s nothing wrong with saving money! You’re already saving money by working for yourself so why not give yourself every opportunity to save more?
If you decide to move abroad and become an expat, having a flexible mindset is key. If you treat it as just another job, things will fall apart quickly.
You have to believe that your future lies elsewhere. Your mentality must be open and ready for change if you’re going to succeed as an expat entrepreneur in Portugal.
Make sure you have all of your bases covered before you go abroad
Put yourself in your customers shoes, and ask yourself how they will find out about your services. Will they know what you do; or is it better to invest in marketing and advertising even just for a short period of time? Remember; your business offering might make send to you, but in a new country – it could be a totally new concept. They may not understand what you do, so staying flexible and marketing yourself properly, or making important network connections is key.
If you are thinking about becoming an expat entrepreneur in Portugal, make sure that anyone can connect with you without difficulty; even if they’re not part of your target market.
Diversify Income Streams
Diversifying your income streams will be hugely important for you as a freelancer. This means making sure that you have more than one source of freelance income, so that if one client doesn’t work out, you can still pay your bills.
That way, if a job comes up and you don’t have time to take it on (or don’t want to), you can still say no without having your livelihood affected by it.
As far as things like investments go – invest with money that you won’t need in 6-months or less because stock prices fluctuate fast. And remember: when investing, two heads are better than one!
Take some advice
It’s important to take on the advice of a financial advisor or wealth management expert; they can inform you where is best to invest your money and how much you can make. To find out more about this, please get in touch with us. Our team of experts can explain to you the benefits.
Finally, don’t spend what you don’t have. There are many online freelancers who run into issues because they spend money that they don’t have. Even though being a freelancer seems like more of an opportunity to save money, it can still be easy to overspend on things; especially if you work from home and aren’t surrounded by colleagues who hold each other accountable for spending habits.
Learn Local Business Culture
In addition to familiarising yourself with Portuguese culture, you’ll want to educate yourself on local business customs and business culture. Although some international companies are venturing into Portugal, it’s still considered an emerging market for entrepreneurs.
Learn as much as you can about local laws, too; if you do eventually move to Portugal permanently, taxes may be higher than they are in your home country. RHJ Accountants can aid you in the most tax efficient way to move to Portugal, setup your NHR and NIF numbers and ensure you tick all the right boxes to protect yourself and your business.
Taking the time to learn about Portuguese business practices could mean you make connections and build relationships with those who can help your freelance endeavours grow — both inside and outside of Portugal.
Don’t forget about holidays
Additionally, keep up to date on national holidays and make note of any local holidays in Portugal. Many businesses close down during national holidays which could affect your work flow; be sure to find alternatives while they’re closed so you don’t have to lose valuable time or money. Check whether companies have extra days off — just because these aren’t national holidays doesn’t mean employees get them off, too! It is best practice to check business calendars before planning meetings or working remotely with colleagues.
At RHJ Accountants, we recognise more than ever that individuals and businesses from the UK and other countries may be globally mobile. We aim to make you aware of the tax-efficient opportunities, available tax relief and structure finances for life at home and abroad.
We have seen a massive increase in enquiries from UK companies looking to save on their corporate tax and reduce their Brexit export headaches. Reviewing an organisation’s operational strategy, we can assist in shifting operations to Portugal in a tax compliant and stress free way.
Our international team of specialists operate from offices in the UK and Portugal. We work together synergistically to provide tax efficient solutions to our clients to help them grow their business whilst keeping tax liabilities to a minimum.