Last Updated on April 24, 2024 by Prince
Digital Nomadism is on the rise! After a few months of remote work during the pandemic, people started to realize their desk jobs bring very little joy in their lives. And they’re not entirely wrong. People in search of a more meaningful life often find ways to work at their own pace. To find a country that encourages this lifestyle is like landing a jackpot! So here’s how you can become a freelancer in Portugal!
Isn’t living on the coastline with modernity around you the perfect place to have a thriving freelancing career? Charming cities, good infrastructure, and an affordable cost of living have made Portugal a magnet for digital nomads. All you really need is an internet connection and a warm cup of Bica (coffee).
Join us for a guide and learn all about getting a Freelancer Visa to Portugal and the most in-demand skills should you need a local client! Honestly, this might be the easiest way to live and work in this stunning south European country legally. Happy reading!
Who can become a freelancer in Portugal?
We’re living in 2023, folks – anyone with a laptop and an internet connection can become a freelancer in Portugal!
If anything good came out of the pandemic, it’s the sudden realization that digitization has changed the job landscape forever. More and more people have started exploring many options that can boost their freelancing careers. Some do it for a little extra income, while others do it because they wish to work according to their own schedules.
In most cases, you must have a solid plan that guarantees your income streams. Sometimes, that means getting high-value projects once in a while. At other times, it means being consistent with small roles and projects for a longer period of time.
Here’s a list of some high-paying freelance jobs:
- Software Development and Programming;
- Data Science and Machine Learning;
- Blockchain Development;
- Mobile App Development;
- UX/UI Design;
- Digital Marketing, Copywriting, and Content Creation;
- Video Production and Editing;
- Telemedicine and Telehealth Services;
- Translation and Localization;
- Legal Services;
- Project Management.
Such skills help you have a better freelancing career, whether you’re in Portugal or elsewhere. There’s only one condition if you wish to become a freelancer in Portugal – you must meet the minimum income requirement. More on that in just a bit!
Regardless of your educational background or field, Portugal will encourage you to jump on your freelancing journey in its dynamic professional landscape.
What’s the difference between starting a business and becoming a freelancer in Portugal?
Technically, they’re completely different career paths, but in both cases, you’re the one managing yourself professionally. Entrepreneurs use the D2 Business Visa to start a business in Portugal, whereas freelancers use the Digital Nomad Visa.
Portugal’s varying tax obligations and legal structures bifurcate between starting a business and becoming a freelancer. Let us dive into the key differences so you can thoroughly understand how to become a freelancer in Portugal.
When you talk about legal structures, freelancers are self-employed individuals who work individually without any legal entity. On the other end of the spectrum, for starting a business, you can choose from various legal structures such as partnerships, sole proprietorships, joint stock companies, and limited liability companies.
With regard to taxation, freelancers are bound to pay personal income tax, which is calculated by the income level of a freelancer. Corporate income tax is also mandatory for businesses, and the deductions are based on the profit percentage.
How to apply for a Visa as a freelancer in Portugal?
If you’re planning to become a freelancer in Portugal, the first task is to understand the type of Visa available. The whole process of applying for a Visa consists of an accumulation of several different steps.
Now, it’s time for the good news. Portugal is one of the few European countries that have a specific Digital Nomad Visa, with one of the lowest income requirements! Only 12 out of 45 countries offer any such programs.
To apply for the Visa, you must be a non-EU/EEA/Switzerland citizen and qualify as one of the following:
- An individual who works remotely and is self-employed or a freelancer;
- An individual employed by a company in another country who works online.
The first step is to gather your documents and your work portfolio. The main documents that you need to provide are proof of income for the last 3 months, tax-residency documents, and a contract of employment or proof of self-employment.
To meet the minimum income requirement we mentioned earlier, you must show that you earn four times Portugal’s minimum wage. That is, €760 multiplied by four, which is equal to €3,040 per month.
Once you have everything ready, you will fill out your details on the online application portal to schedule an appointment. Next, you’re ready for an interview that determines the approval or rejection of the Visa.
Can your family apply for a family reunification Visa?
The D6 Family Reunification Visa allows individuals to call their family to Portugal based on certain conditions.
The Visa process itself is not complicated; however, the individual must have a Residence Permit. The holder of the permit must show proof of family ties through birth certificates, marriage certificates (same-sex marriages are recognized), proof of kinship, and financial statements.
Although, the validity of their stay is connected to your Residence Permit. In this case, the Digital Nomad Visa allows a 1-year stay for all applicants. You can then apply to extend your Visa for another four years. After these five years are complete, you have the option to apply for Portuguese nationality!
How to register as a freelancer in Portugal?
Registering as a freelancer in Portugal can become a hassle; however, a breakdown of the process can become your saving grace.
A couple of essential documents include your Tax Identification Number, which helps you do pretty much everything from opening a bank account to renting a property.
After this, you choose your area of expertise. The next step is registering with a social security office, followed by a legal registration if you plan on forming a company. Don’t forget to learn about invoices, receipts, and financial records during the process.
Here is the step-by-step process to make your life easier:
- Obtain your NIF Number (Fiscal Number) – You can do this remotely, but it will cost you money because a tax representative will be needed;
- Open a bank account in Portugal;
- Obtain your social security number by calling 300 502 502 to make an appointment.
- Register as a freelancer online at Portal das Finanças or at a tax office. Search for “Beginning of Activity”. You will go to “Services > Activity > Beginning of Activity” and then “Deliver The Certificate”. You must mention the date of beginning your activity and the amount you estimate you’ll earn in one fiscal year.
- You must choose between simplified or organized accounting. Simplified is a default setting where you do not need an accountant. This can also be an option if you’re expecting to earn less than €200,000 a year. On the other hand, organized requires you to have an accountant.
- You have now officially “Opened Activity”, which allows you to bill and send invoices to clients.
How’s the tax system for freelancers in Portugal?
When you become a freelancer in Portugal, it is essential to understand the tax system so you can navigate it without any trouble or confusion. Freelancers, independent traders, and business owners in Portugal have their income treated as personal earnings. So, they are bound to pay Portuguese income tax instead of corporate tax.
The income of a self-employed individual in Portugal is defined as Category B Income. The tax rate is directly proportional to your earnings; you have to pay more tax if you are earning more.
If you’re earning more than €12,500 annually, you must inform the tax authority and fill out a form known as the declaração periódica do IVA.
It’s usually not a complicated process. But if dealing with taxes isn’t your cup of tea, sit back and relax. Tax consultants at Viv Europe provide limitless opportunities to freelancers by providing accounting services that help them traverse the tax system.
All you need to do is get in touch and let experts deal with the bureaucracy you want to avoid!
- Read Also: Portugal Tax System: Easy Breakdown For Expats.
Recibos Verdes (Green receipts)
Next up in learning how to become a freelancer in Portugal is getting to know how to bill clients legally!
Recibos Verdes or Green Receipts are invoices used between freelancers and clients to invoice them and declare income for tax and social security purposes. As a freelancer, these receipts allow you to comply with the Portugal tax obligations.
Freelancers and self-employed individuals must issue Recibos Verdes (Green Receipts). Even if you are working on a contract with a company and at the same time you plan to provide freelance services to another company.
Recibos Verdes are used to gauge how much you must pay for income tax and social security every month. Let’s now brief you on how to use them!
How to invoice clients using Recibos Verdes
It is a very straightforward process once you get a hold of it. But in the beginning, it can be tough, even for someone who speaks Portuguese. We recommend that you take the help of someone in the field or a translator who can help you understand certain terms.
Here’s the step-by-step guide for reference:
- Log in to Portal das Financas with your NIF and respective password;
- Select “Faturas e Recibos Verdes” > “Emitir”;
- Choose the appropriate receipt/invoice;
- Select the type of activity and date of the service;
- Insert the client’s tax number (whether Portuguese or not);
- Choose “Payment of goods and services” where it asks you why you wish to charge your client;
- Describe the service under the title “Descrição” and add value;
- Under the heading “Base de Incidencia em IRS”, select the appropriate option with reference to your income;
- Press enter. Now, you may print and sign the document;
- Send it to your client!
You need to master the details in Recibos Verdes, including header, recipient, description, dates, and total amount. Always form a record of your Recibos Verdes in a ledger to maintain a copy of your activities.
Let’s Move to Europe
With Viv Europe your plans for Europe will come to a reality
How to do your Income Tax (IRS) as a freelancer in Portugal
You can use accounting software or actively engage with a qualified accountant as they assist in providing the numbers a structure for the tax authorities. Before this, you need to collect the required documents, such as invoices, records of your expenses, and other financial documents.
Fill out the IRS form by filling in the details about your expenses, earnings, and deductions. The form is your declaration, so you must keep the receipts and documents safe for tax authorities.
You must submit the form between April 1st and June 30th.
- Read Also: How To File Your Income Taxes In Portugal.
What about the freelancers under the Non-Habitual Resident (NHR)?
The status of a Non-Habitual Resident for a freelancer allows a special tax regime for newcomers in Portugal. If you become eligible for NHR, you can avail favorable tax rates on freelancing earnings. This status also allows a flat 20 percent tax rate on your freelancer earnings for up to 10 years!
For freelancers under NHR status, the process for doing Income Tax is registering with the Portuguese tax authorities. As an NHR freelancer, you report your income from Portugal and foreign sources to the tax authorities.
Another important thing to remember is that for your job to be considered “high-value”, it must be related to the field of science, art, or technology.
You need to file your annual tax return at the end of the fiscal year. However, you must look out for changing tax rules under the NHR status.
Do you have to pay VAT (IVA) as a freelancer in Portugal?
As a freelancer, you have to pay VAT, but it depends on various factors. Such as the type of services you provide, annual turnover, and your business structure. There is a set threshold of VAT, and if your revenue from freelance activities exceeds the threshold, it becomes mandatory to pay VAT. So, anyone who earns less than €12,500 is exempt from paying VAT.
In Portugal, the standard VAT rate is 23%, but for some services, it is reduced to 13% and 6%. To pay VAT, you must register with the Portuguese tax authorities that provide you with a VAT identification number. As a VAT-registered freelancer, you can demand VAT from your clients that later go to the tax authorities.
The VAT rate for mainland Portugal is 23%, 22% in Madeira, and 18% in the Azores.
- There’s a legal way to minimize how much tax you have to pay. Check out our Top 10 Tax-Saving Tips For Expats Moving To Portugal!
How to apply for a social security number (NISS) as a freelancer in Portugal?
The Social Security Number (NISS) application requires important documents like a Passport or ID card, your residency permit, and proof of your address.
To apply for your social security number, you can try two things: Get an appointment by calling 300 502 502 or go to the nearest social security office.
You will be asked to deposit additional documents like utility bills and rental contracts to confirm your address there. Once your forms are approved, you get your NISS as a freelancer in Portugal.
Please keep in mind that this process can take up to a few months, and you are not required to pay social security for the first 12 months of being a freelancer.
How to apply for a residency permit as a freelancer in Portugal?
The residency permit can open many avenues for you in Portugal as it allows you to reside in the country and work at a location that suits you well.
Assembling the documents is the first step, and after submitting the documents, you are called to the embassy. You need to fully prepare for the interview questions because the approval and rejection of your permit highly depend on what you speak about.
Regarding the interview, the interviewer may ask about your previous activities as a freelancer and your plans. You must also carry the following documents in your interview:
- Valid Passport;
- Proof of regular entry to Portugal;
- Proof of regular income and means of subsistence;
- Proof of accommodation;
- Criminal record from the country of origin;
- Proof of registration with social security;
- Evidence of registration in the tax authority;
- Proof of self-employment/freelance work.
Get more details in our article on the Portugal Residence Permit: How To Obtain One and get more clarity!
What are the requirements for banking and insurance for freelancers in Portugal?
Opening an account at a local bank in Portugal allows seamless transactions with a single click.
So, to open a bank account as a freelancer, you need documents like a Passport, tax identification number, proof of income, and proof of address. Having a local bank account allows you to have more seamless transactions in Portugal.
As for insurance, work insurance is mandatory for all self-employed individuals. Even if freelancing is your side hustle, you are required to have insurance. Portugal does offer free public healthcare, but people often get insurance because the public system is overburdened.
Can you close your freelancer activities in Portugal at any time?
If you have embarked on the freelancing journey in Portugal and want to close it, you can do it anytime. Although the decision is pivotal, it will always remain yours. Before you close it, you need to gather your documents related to freelance activities.
You need to notify your clients that you are closing your services and cancel your registration as a freelancer by notifying the tax office. After this, you inform the Social Security office, ensuring your work has been wrapped up.
And you must also choose the appropriate option on Portal das Finanças.
Benefits of becoming a freelancer in Portugal
Being a digital nomad in Portugal is one of the most beautiful experiences an individual can go through. The country allows you to experience a lifestyle that blends with history and modernity. Oh, let’s not forget being the 7th safest country in the world and having an affordable living cost!
As a freelancer, you get access to a diverse network, which includes fellow Digital Nomads and new clients. The best part of it all is that the quality of life allows you to balance work and leisure, enhancing your overall well-being. Which is pretty much what freelancers are set out to do in the first place!
Remember the tax benefits, access to social security, healthcare services, and most importantly, the flexibility of your routine. You can choose your workplace, which can be a cozy cafe, the beach, or your own comfortable space. Lisbon is known to have some of the best coworking communities in Europe!
Is it worth being a freelancer in Portugal?
Without an ounce of doubt! Thousands of applications pour in for the Digital Nomad Village in Madeira, but only a few get selected. This is enough proof to convince you that this lifestyle is taking 2023 by storm.
Whether you wish to pursue freelancing as your primary source of income or as a side hustle, it will open up many opportunities for you. It’s also an amazing way to earn more income than an average local and spend it on a comfortable lifestyle while saving up for your future.
To get answers to your questions, get in touch with an expert from Viv Europe and learn how other freelancers are coping in Portugal. How quick was their relocation process, and are they having the time of their lives? (Spoiler alert: the answer is yes!)
Also, consider asking questions in our Facebook Group – All About Portugal For Expats, and get insights from people who’ve done it firsthand. Make new friends, get answers, and explore your opportunities!
