Article 89 and Paragraph 2 of the Immigration Law, Effective July 4th, 2007, and amended in 2012 and 2017, states that only foreign nationals with a legal identity or an employment relation as a freelancer professional in Portugal and who are registered with the Portuguese Social Security System will be issued residence permits for self-employment purposes.
Under the same law, eight steps must be followed in order to obtain the temporary residence in Portugal:
Step 1: Declaration of legal entry into Portugal:
SEF must be notified if a foreign national enters the country from a Member State through an uncontrolled border (Portugal Immigration department). If you are a foreign national of a country other than Portugal and you enter the country. In that case, you must file an entry declaration within three business days per the act 23/2007 of July 4th, as amended, specifically articles 14 and 16.
No further declaration requirements:
Nationals of third countries who cross a controlled border into Portugal are allowed to stay for more than six months. Foreign nationals staying in hotels or other accommodation units that submit accommodation forms to SEF after entering the country and are covered by EU legal framework or equivalent arrangements.
Step 2. Generate tax identity (NIF Number):
NIF number is a unique number in Portugal issued by the Finance and Taxation department for personnel who are not only taxpayers but are also involved in other business activities within the country such as contracts, opening bank accounts, sales, and purchases, additionally obtaining any registration and resident status, among other things.
To receive a NIF number, you must present a valid ID document (Citizen’s Card or Passport) and a fiscal representative’s declaration either in person or through assigned power of attorney to the Finance department.
NIF is issued right at the time of the request, with a standard report indicating the period during which you will receive your final taxpayer’s card.
Step 3: Confirmation of Accommodation Letter:
Every municipality in Portugal has an executive governing body called the Junta de freguesia. This body is responsible for delivering the confirmation letter of residence required by law after two citizens have provided valid local proof of accommodation or reference. A correspondent address is required to receive the letter from public and private Institutions in Portugal (as proof of identity).
Step 4: Register your business in Portugal as a limited liability company or as a freelancer:
In order to start or establish a business in Portugal, the applicant must either be physically present in the country or hire a legal representative who has power of attorney to conduct business in Portugal. Conformity with required documents, such as a passport, drafting an article of association, and registration for either physical or virtual office space, depending on the nature of the business.
The nature of the company’s business and the LDA’s (Limitada) definition of standard companies determine the type of company that can be formed in Portugal. It is required for the company to open a bank account and make a report to the tax and financial authorities in Portugal within fifteen days of the company being formed in Portugal.
The management of the Portuguese LDA is ensured by a director who is appointed in the general meeting by the shareholders under the supreme authority. To the establishment with the capital payment for the identity of 1 euro or 5,000 euros. Each shareholder must contribute to the capital, and their liability is only as much as their investment.
Freelancers and other self-employed professionals in Portugal must report the nature of their work and their total annual income to the country’s tax authorities.
Step 5: Obtaining Social Security Number (SSN):
Any expat/employee/individual who wishes to work in Portugal is required to acquire a Social Security number. The number issued by the Segurança Social Institute for social security.
To apply for and obtain a Portuguese NISS social security number, you must submit a copy of the employer-certified employment contract. If the contracting firm intends to hire a foreign national, it may issue a promise contract.
Freelancers and self-employed individuals can request a social security number without a job offer.
The competent authority issues an SSN number within 90 days of submitting the required worker admission application to Portugal’s social department.
Step 6: Tax implications and employment contract:
Laws pertaining to employment in Portugal are those of the Portuguese labor sector (articles 273– 275). A person can start working at the age of 16, the age of 18 years, and find gainful employment even if they haven’t finished high school.
There are various kinds of employment contracts.
The Portuguese government raised the monthly minimum wage from €557 to €580 in 2018. By the end of the 2019 parliament session, the government has pledged to raise Portugal’s minimum wage above €600 for the first time. In 2020, it was raised to 635 euros.
Income tax and social security must be withheld or remitted by the employer to satisfy the employee’s tax liability.
Here’s how much each party puts in:
– Employers put in up to 23.75%.
– Up to 11% of the salary is tax-deductible for the worker.
– Contribution to the Gross is 34.75 Percent.
In Portugal, the standard rate of value-added tax, or VAT, is 23 percent.
It’s a necessary step whenever you’re trying to make a sale of any kind. The rules derive from EU regulations.
Step 7: Visiting the SEF office to register the biometrics:
Make an appointment at the SEF beforehand (either online or over the phone) and fill out an application form. The applicant can choose the time and date that works best for him or her.
Required documents are:
- Residence Proof
- Identity Documents (NIF, SSN, Employment Contract, JUNTA)
- Criminal record
- Proof of Social Security Payment
- Job Confirmation Letter
SEF may request an in-person meeting or additional paperwork for the successful completion of the application.
Step 8: Delivery of residence card:
The final step is receiving your temporary residence card from Junta de freguesia, which will be mailed to the address provided on your JUNTA certificate.