• Leonel
    Leonel graduated with a degree in Accounting (1993) and Economics (1994) and has worked in accounting and finance since then. As well as basic accounting, his considerable experience extends to Financial Analysis & Planning, group reporting, budgeting, profit centre modelling, forecasting, cash management, business development support, auditing, tax & legal compliance, supplier negotiations, KPI control, and business strategy. Leonel speaks English fluently and has Cambridge University Certificates in English (1995) and Advanced English (1996).
    Testimonials for Leonel
    • Jacqueline Barron
      Jacqueline Barron, England

      I am more than happy with the service that Leonel provided to me. He was responsive, helpful and prompt and I am very grateful to him for his help. I would definitely use his accountancy service again. Thanks Leonel!


      Jan 08, 2019

Starting a Business in Portugal

Many people are taking advantage of the very generous tax incentives still available to non-residents who decide to relocate to Portugal. Coupled with the modern trend for small businesses to be extremely mobile, able to relocate to anywhere around the globe almost at a moments notice, there has been something of a mushroom affect, particular around major cities such as Lisbon and Porto.

English-speakers would be well advised to to hire a professional to manage their business accounting and tax affairs. This person will normally handle registration of the business with the relevant government agencies and then manage ongoing fiscal obligations.

Below is some initial information that you can use to orientate yourself to the requirements that you will be most concerned with when starting a business in Portugal:

Tax Returns

Autonomos (sole-traders) in Spain must make quarterly and annual income tax and VAT (known as IVA in Spain) returns. This will require the maintenance of records of all bills and invoices, with VAT receipts and payments noted separately.

An accountant will then use this information to fill-in the relevant tax and VAT forms before submitting them to the local offices of Hacienda (tax office).

As well as the quarterly income tax and VAT returns, an annual return must be made in respect of both – in the case of VAT at the beginning of the year, before January 31st and in the case of income tax, at the end of June.

For those who are self-employed (as opposed to those who own limited companies) this is the same as the annual personal income tax return that most individuals in Spain must make. If your personal financial circumstances are complex e.g. multiple properties, stocks, shares and other investments then your accountant may charge additionally for assisting you with this annual tax return.

Tax Deductions

Those costs and bills that give rise to legitimate tax deductions against income in Spain – as opposed to those which do not – is a subject worthy of a fairly lengthy book. However, as a broad rule, those bills that are necessarily incurred in the operation of a business may typically be deducted.

So, the rental of offices, any employee related costs as well as the purchase and operation of office equipment (assuming that they are related to the operation of the business) may legitimately be deducted from any income before the payment of taxes.

More complex questions can sometimes arise where a telephone or vehicle are used partially for work and partially for personal use. Normally the percentage of the cost relating to work can be deducted but great care must be taken as in some cases the use of a vehicle may not be considered as a suitable deduction.

Social Security Obligations

This will cost the typical autonomo or sole-trader around €250 per month. This will entitle a self-employed person to receive health care from the Portuguese national health service as well as a pension upon reaching the statutory pensionable age.

Depending on the amount paid, a sole-trader may also receive unemployment benefits should their business become unsustainable. However, this is a complex issue and eligibility will depend on how the business became unsustainable. The amount and quantity of unemployment payments will depend on the number and amount of social security contributions that have been made.

If you are under 30 years of age or have been long term unemployed or are a woman over the prescribed age you may be entitled to a reduction in the monthly payments. This needs to be checked in each particular case.

The payment falls due regardless of whether or how much you are earning from your business. It is paid monthly and so it is not sensible to register on the last day of the month as you will be liable for that months social security contributions even though you are only registered for a single day.

Invoicing

Most people that move to Spain have previously only ever worked as employees which means they have never had experience of having to invoice a client before.

For those that have never issued them before, an invoice is an important document for fiscal purposes and is it may be used in investigations carried out by the revenue officials of Hacienda there are certain legal minimum requirements regarding the information that the invoice must contain:

The invoice must be identified as such and clearly contain the word ‘Factura’ (Invoice in Portuguese) without any additions. It must contain the date of emission and the date of carrying-out the activity if different from the date of emission.

The invoices must be numbered consecutively but the starting place or space between each number is irrelevant (001, 002, 003 or 1000, 1005, 1010).

Your fiscal details must be included – NIE number (or CIF if a company), registered address of the business.

Details of the Client – NIE or CIF and registered address. This is unnecessary if the client is not a business or other professional but an end consumer.

Discounts – if any, should be identified.

Base Amount charged – the net amount charged plus the IVA (VAT) including the rate charged.

Total Amount Charged – the previous quantities added together.

Any currency may be used but there must be a conversion into Euros. The invoice may be emitted in any form and there is no requirement for it to be stamped.

So as an example, if you are charging €1000 for a service, you would in fact invoice 1000€ + 18% IVA (VAT) – 15% IRPF (income tax) and therefore expect to receive €1030 (€1000 + €180 – €150 = €1030).

This means that you are effectively paying your tax as you go. At the end of each quarter your tax bill is calculated and any retentions you have already made are deducted from your final tax bill.

You will need also to keep any VAT you charge apart as you are responsible for paying this to the government at the end of each quarter. VAT received is balanced against any VAT paid on products and services required for the running of the business and any positive balance is payable.

Impact of Brexit

More and more enquiries are requesting information on the impact of Brexit, and unfortunately there is little in the way of guidance, however we have posted a brief summary of the current situation regarding Brexit and business in Spain and hope to be able to provide more guidance as time goes on.

Pay Local Rates for Quality Local Services

Advocate Abroad is a network of English-speaking professional service providers that have been selected on the basis that they not only have the required experience to provide excellent fiscal support – in English of course – but also because they represent real value for money.

While the service providers at Advocate Abroad all speak excellent English they are typically working with local clients, (rather than exclusively with English-speaking customers) and therefore need to be truly competitive in order to succeed.

This means that when you use a Advocate Abroad accountant or lawyer you will quickly notice that you are paying local rates rather than the premium rates charged to ‘foreigners’ who usually aren’t aware that they are paying premium rates.

Self-Employed Set-Up & Tax Service in Portugal

Your are focused on your business in Portugal which is why you need your tax and accounting matters to be as straightforward, cost-effective and hassle-free as possible.

Our English-speaking accountants will take care of all registration and day-to-day issues relating to Portuguese tax, social security and accounting matters. Which leaves you with all the time you need to dedicate to your business.

Regulated Experts

Our consultants are registered and regulated by the Professional Accountants Body of Portugal and speak fluent English. Therefore, you can be sure that you will obtain timely answers to any queries you may have, in a language that you understand!

Office Locations Across Portugal

As well as offices in Lisbon, accounting and associated services to English-speaking clients are provided via the Advocate Abroad network of offices in Portugal (red markers on main map below). Each of the lawyers on the map of Portugal below are registered and regulated by the Law Society of Portugal and so we are able to offer a truly nationwide service to English-speakers wherever they wish to set-up their business in Portugal.

Service Features

Our English-speaking consultants will answer your questions about how Portuguese law affects your business and then make sure you comply with Portuguese legal requirements relating to legally constituting a business. This will normally require at least some of the following services:

  • Registration with the AT (Autoridade Tributária e Aduaneira – Tax Authority) and the Social Security System
  • Recommendation on the most appropriate fiscal arrangement to ensure taxation levels are optimised
  • Resolution of tax enquiries related to your professional activity
  • Completion and presentation of all required tax returns
  • Maintenance of all legally required records (income, expenses, invoicing,assets)
  • Updates on any legislative changes affecting your professional activity

Fees

This service costs from €60 per calendar month

Additional Services

The Self-Employed Set-Up and Tax Service is ideal for an individual sole trader who is planning to work alone. But, should you later add employees to your expanding business then you will want to add the Fully Managed HR & Payroll Service:

Fully Managed HR & Payroll Service

This service includes the following components:

  • Initial Set-up according to client’s requirements
  • Production of Employee Payslips (printed at client site)
  • Management & Payment of Employer & Employee Social Security Contributions
  • Registration and Removal of Employees from Social Security system

This service costs €25 per month for the first employee and €20 per additional employee.

Client Testimonials

Of course, it is always prudent to consider real, honest testimonials from English-speaking individuals and businesses operating abroad before choosing a professional that will be pivotal in your future success.

Below are real testimonials from previous clients who have sourced tax and accounting services in Europe via Advocate Abroad® (placed by the the clients themselves directly onto the Wufoo client survey platform):

    Regulated Experts

    Our consultants are registered and regulated by the Professional Accountants Body of Portugal and speak fluent English. Therefore, you can be sure that you will obtain timely answers to any queries you may have, in a language that you understand!

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