Going to live in Portugal and working there as a self-entrepreneur is an intensely exciting adventure. Every day new opportunities, ideas and challenges come to expats who are tempted by the freelance adventure in Portugal. One of the most important challenges as an expatriate in Portugal is of course the language. When it comes to important topics like your career as a freelancer it is essential to avoid some mistakes that can sometimes be very expensive. So that your "portuguese dream" does not end earlier than expected, Lisbob has gathered for you the 5 mistakes to avoid as a self-employed person in Portugal. With these tips no doubt you will already have fewer (bad) surprises and you can focus on your success.
Here are 5 mistakes not to be made as a self-employed person in Portugal.
1. Do not inquire about the VAT exemption
Being a self-employed worker does not make you forget to charge VAT to your customers, on the contrary! One of the main obligations is precisely the collection of VAT from the companies for which you provide your services and products. However, there are some exceptions.
A self-employed worker is exempt from VAT if he has achieved a turnover of 10,000 euros or less the previous year. Beware when you declare yourself as a self-entrepreneur you will be asked for your projected turnover for the first year: this amount is to proratise. If you start on the 1st of July then you will have to give a turnover of 5000 euros to avoid exceeding the limit and thus stay in the nails for the VAT exemption.
2. Do not transmit (correctly) the green recibos
One of the most common mistakes is the fact of incorrectly filling in and issuing the green recibos. Self-employed persons are exempt from VAT when they fulfill the recibo verde. However, they must indicate the VAT code article referring to their exemption. Failure to do so is common and may result in fines. In addition to the exemption from recovery provided for in section 53, there may also be an exemption for workers whose profession completely exempts them, such as doctors or nurses. It is therefore important to know the conditions of exemption for your profession.
You need to be careful when working as a self-employed person in Portugal
3. Lack of information on the social security level
This is the point on which you can earn a little more money, without working more. Most of the self-employed workers in Portugal working with the Recibos verdes are not well informed on this subject. Indeed it is possible for all self-entrepreneurs to ask social security to reduce their level. It simply means that they can ask to reduce the base tax base, which reduces the contribution they will have to pay to social security. Over 12 months the money saved can be very interesting and can pay some bills.
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4. Save and keep expense invoices throughout the year unnecessarily
When we are freelance our time is precious and time is money. Many self-employed people in Portugal who have chosen the simplified scheme collect bills throughout the year. They are related to their activity and think that they can be deducted in the IRS statement. This is a serious mistake because you should know that only self-employed persons who are subject to the organized accounting system can deduct expenses because of their activity. Be careful not to waste time unnecessarily.
5 mistakes not to be made as a self-employed person in Portugal
5. Do not send the VAT periodic return
This error is the one that can cost the most. Even if you have not issued a recibo verde you have to send the periodic VAT return. This allows the tax administration to be informed of the amounts invoiced to customers in the provision of services. Even if you do not send receipts and as long as you keep the activity open you must continue to submit the periodic VAT return. Bob insists on this because the fines for non-VAT returns can be very high and can simply mean the end of your business.
By avoiding these 5 mistakes you will have already taken a big step towards success. Bob reminds you that he can take care of your steps to become freelance in Portugal and refer to his site. Contact him!
