How to be an entrepreneur in Portugal without starting a business? Possibility for residents and non-residents.
Portugal, with its rich history and vibrant culture, has become an attractive destination for entrepreneurs from all over the world, whether they live in Portugal or not. In addition to its strategic location in Europe and its growing economy, the country offers a flexible tax system and options for those wishing to start an entrepreneurial journey without the need to formalize a company.
Step by step.
1 – TIN
2 – Bank account
3 – Declaration of commencement of activity before the Tax Authority.
4 – Issuing green receipts/invoices.
This facilitating scenario, combined with the particularities that favor both residents and non-residents, makes Portugal a promising choice for those looking for new business opportunities.
1. The Trademark Registration Process
In Portugal, registering a trademark is a fundamental step in guaranteeing exclusivity and protecting your identity on the market. The process begins with the submission of an application to the National Institute of Industrial Property (INPI), which must detail all the characteristics of the trademark, including the name, logo and any distinctive elements.
After submission, the INPI carries out a careful analysis to ensure that the trademark is original and does not infringe pre-existing rights. During this period, third parties can also file oppositions if they consider the new trademark to be similar to one already registered.
Once all the stages of analysis and opposition have been passed, and the trademark complies with the established standards, it is finally registered. With the registration in hand, the owner now has exclusive rights over the trademark in Portuguese territory and can take legal action against possible infringements.
2. Taxation by Presumed Profit or Real Profit
In Portugal, the tax system offers different modalities for individual entrepreneurs, the most common being Lucro Presumido (Presumed Profit) and Lucro Real (Real Profit). Presumed Profit is a simplified form of taxation, where it is assumed that 25% of turnover is automatically considered an expense, thus making it easier to calculate taxes. Real Profit, on the other hand, requires organized and detailed accounting, similar to that of companies.
Lucro Real (Real Profit) is ideal for those who have stricter financial control and wish to deduct all the business’s actual expenses. This method allows for a more precise analysis of the financial situation, but requires more effort in terms of accounting organization. On the other hand, Presumed Profit is often chosen by entrepreneurs looking for simplicity and speed in tax management, although they may not take advantage of all the possible tax deductions.
It is crucial that entrepreneurs are aware of the differences between these modalities and choose the one that best suits their profile and needs. Both have their advantages and disadvantages, and the decision should be made on the basis of a careful analysis of the business and with the help of an accounting professional.
3. Organized Accounting: Obligation or Option?
In Portugal, organized accounting is a system that provides a detailed and structured view of a business’s finances. Depending on the volume of invoicing, it can be an obligation or simply an option for the entrepreneur.
- Mandatory: In some situations, due to a higher turnover, organized accounting becomes a legal requirement. It is therefore essential to have a bank account dedicated exclusively to the organization and administration of your professional activity.
- Optional: For businesses with smaller turnover, entrepreneurs can opt for organized or simplified accounting.
- Accounting advice: In organized accounting, it is essential to have accounting advice, while in simplified accounting it is recommended, but not obligatory.
4. Issuing Green Receipts and Invoicing
Issuing a green receipt is a common practice for self-employed workers in Portugal. This document is essential to prove the provision of services or the sale of products, and its proper issuance is key to ensuring compliance with the country’s tax regulations. It also helps professionals keep track of their transactions, making financial management easier.
However, with the advance of technology and the need to optimize processes, many entrepreneurs have opted for invoicing or invoice issuing systems approved by the tax authority. These systems offer greater convenience and often integrate with other management tools, eliminating the need to issue green receipts in parallel. However, if the system chosen is not approved, the entrepreneur will still have to issue the green receipts.
Regardless of which option you choose, it is crucial to be aware of the regulations and ensure that all procedures are carried out in accordance with current legislation. This avoids possible tax complications and ensures smooth business operations.
5. VAT-related benefits
Portugal’s tax system offers specific advantages for self-employed workers, particularly in relation to Value Added Tax (VAT). Until they reach an income of €13,500, self-employed workers are exempt from paying this tax. This exemption not only simplifies tax management by eliminating the need to collect and hand over this amount to the state, but also provides a competitive advantage.
Not charging VAT can be reflected in the final prices offered to customers, making them more attractive. In addition, this exemption also translates into a greater commercial margin for the self-employed worker, allowing them to maximize their profits. This flexibility in VAT is just one of the many ways in which the Portuguese tax system supports and encourages entrepreneurship.
6. Opening a business and estimating business
When starting a business as a self-employed person in Portugal, it is crucial to open the activity with the tax office and provide an estimate of turnover. This step is vital, especially if the opening takes place in the middle of the calendar year, as it will require a proportional calculation.
- Opening your business: You need to formalize it with the tax office. If you have a non-resident NIF, you will need a tax representative specifically for VAT issues.
- Business estimate: Fundamental for determining the tax base.
- Temporal considerations: If the opening takes place during the year, a proportional calculation is necessary.
7. The importance of legal and accounting advice
Entering the business world, even as a self-employed person in Portugal, brings with it a series of legal steps, obligations and tax details that, for many, can be unfamiliar ground. In this context, relying on legal and accounting advice is more than a recommendation, it’s a strategy to ensure that all processes comply with the law and are optimized for the benefit of the entrepreneur.
In addition to ensuring compliance with legal and tax obligations, an accounting professional offers valuable insights into the financial health of the business, identifying opportunities and risks. This expert eye can make the difference between sustainable success and potential problems in the future.
Finally, having a lawyer and an accountant or accounting team on your side is not just about numbers. It’s about having a partner who understands the challenges of the market, the legal and fiscal nuances of each activity and who can guide the entrepreneur through critical decisions. In short, it’s an investment in the peace of mind and security of your business.
Being an entrepreneur in Portugal, even without starting a business, involves a series of legal and fiscal nuances that require attention and knowledge. Navigating these waters may seem challenging, but with the right information and the guidance of specialized professionals, it is possible to optimize processes, take advantage of tax benefits and operate with peace of mind.
The key is to be well-informed and rely on reliable accounting and legal advice, capable of guiding you through the best practices and decisions. In an increasingly competitive market, every detail counts, and complying with the rules while taking advantage of the benefits available can be the key to sustainable success.