Hi,
Does anyone know one needs to pay the social charges on PT derived income only or worldwide income?
Thanks!
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Hi, I am a freelancer. Working on a daily contract. The Spanish company does not have to pay for my Social Security.
It’s like you employing a builder to build your house. You don’t pay for his Social Security.
Hi again.
Just spoke to a big four company yesterday who lined up 4(!!) specialists to speak to me (with the aim of getting me to pay them for additional analyses).
However, two things became very clear:
- On the dependency issue - the expert stated that in practice, they have never seen the Social Security Contribution authorities demand SSC from a foreign entity (who is getting invoiced by a contractor in Portugal). So whilst the dependency article may not actually speak to foreign entities - the fact is that they do not uphold it towards foreign entities (even with a 100% dependency).
- However, it was also clear from the conversation that additional analyses had to be carried out to assess whether the kind of work carried out could result in a Permanent Establishment for the client (which would have tax and SSC implications for the client company). This was perhaps specific to my case where I already work for the company now and would retain a similar role - albeit as a contractor - which could be seen as me still being employed (indirectly).
I hope this helps.
Best,
JF
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In Germany, that kind of ‘additional analysis’ can be voluntary and has the purpose of giving you and your client clarity about the work relationship (i.e., how the tax office sees it). It is only not voluntary once the tax office (roughly spoken, in practice it is a different institution) requests it explicitly.
That is why I wonder what you/they meant with the additional analyses >having< to be carried out. Especially considering that it should involve the current client directly, i.e., contacting them/requesting information. And more importantly, which criteria for dependency would apply during such analysis? I’m not sure if it is a good idea to request that analysis to be honest, aside of for the ‘specialists’ who will earn a nice bag of money with it…
The issue is that at the end of the (tax-?)year, the tax office may notice that you earned more than 50% of your income from a single client, and then requests social security contributions from them. In theory at least…
Any update? I am a remote worker for a US based company and have a D7 visa (arriving in March in Portugal) - I thought NHR has my income tax exempt to my surprise its not 
I am currently in the process of investigating this.
I currently run my own consulting company in a Nordic country but I’d like to get away to warmer weather and lower taxes.
But doing calculations on how this would work in Portugal under the NHR scheme I’m not seeing how it’s very beneficial.
`17%` CIT on the first 25k,
`21%` CIT on the remaining.
`23.75%` SS company has to pay
`20%` PIT (NHR RATE)
`11%` SS I pay myself
Even if I pay everything out as salary so that I wouldn’t pay any CIT I’d still only get to keep 0.8*0.89*0.77 ~ 54%.
Is it really this high? Or are there better ways to optimize my taxes working as self-employed/freelancer with Portugal as base.
Edit:
Under the NHR scheme it’s the SS payments that are taking a lof of the potential upsides away from moving to Portugal in my eyes.
There looks to be a better way and it’s the “self-employed/freelancer” way.
Apparently you don’t need to pay social security for your first year? (source needed for this)
And after that it’s a tax of 21.4% of your income, OR, the IAS 12 * 12 * *443.20 ~ 63820 , whichever is lower.
Then the following would be true for your taxes as a self-employed/freelancer in Portugal under the NHR:
First year:
20% of income
Second year onwards:
20% of income +
lowest (63820, 70% of income * 0.214)
Since at one certain point the lowest will always be the fixed IAS calculation the max SS we would pay is: ~13657
Giving us a max of:
20% of income + 13657
But I’ve found some conflating information with regards to these calculations though.
There has been talk about a “professional coefficient” for your income to adjust how much you actually need to pay PIT on.
Then there are other resources that don’t mention the “lowest of IAS and 70% of income” SS payments.
If anyone here has updated information or could fix my mistakes/update me with what I’m missing that would be great.
Because this selfemployed way of calculating the taxes does seem quite interesting and could make Portugal a very nice place for a freelancer/contractor like me.
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First year you don’t pay, second year is 25% discount I think.
They also have simplified regime by which you can pay tax on 75% income + with SS
What is really bad is SS that you pay yourself in case of self-employed and its 21.3 on 70% of the income.
So they got rid of (or I misunderstood) that you could do min(IAS*12*12 , 21.3% of 70% of income) for social security?
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Not too sure what you mean. I have a D7 visa and trying to move but the tax system is kind of frightening atleast from where I’m coming from… I also work remotely for a US based company (web dev).
But Nordic countries are even worse with tax 
so you should be good.
Further up in the thread there was someone talking about how the there where two ways of calculating the social security payments are a freelancer/self employed.
And it was that you take the lower of the IAS payment * 144 OR 21.3% of 70% of your income.
What this would mean is that when your income goes higher you’ll reach a “roof” of your SS payments since it will never be higher than the 144 * IAS payment.
This would make a huge difference if you’re working as a developer billing clients in the Nordics (US I think as well). Since you’re easily billing €100k+ per year.
I did not know about it, when I did my math which was 20% (under NHR) and 21.3% on SS it was something like 33%
Yes well like I said, I am not sure if this is how it works still since the OP in the thread didn’t post any sources for it.
I’ve tried contacting some tax advisors for clarification, but it’s honestly a bit hard to find good ones over the internet when you don’t know anyone.
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Same here €70 down the drain for speaking to an accountant who answered in plain “yes/no”.
The way contributions on income derived from services rendered by a self-employed professional or a sole trader are calculated is as follows:
- The monthly contribution is calculated on the basis of the relevant income, which is 70% of the value of services rendered in the previous quarter divided by 3.
- The social security contribution is then payable either at 21.4% (plus 7% or 10% by a resident employer) in the case of a self-employed professional, or 25.2% in that of a sole trader.
- The self-employed professional or sole trade may choose to increase or decrease this monthly contribution by 25%.
- For instance, with a quarterly self-employment income of €15,000, a self-employed professional would have a monthly relevant income of €3,500 (€15,000/3*0.7), paying a monthly contribution of either €749, or €561.75 if opting for the 25% decrease, or, still, €936.25 if opting for the 25% increase.
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Hi All this is an incredible thread and I wish there was a way to save it. I have spent so many hours over many months trying to find the information here.
My work is probably going to put me in Gibraltar, as an employee there. But I would rather live in Portugal 
, which I have done long-stays before, and have the NIF.
I have a fair amount of assets in the way of shares, and to be honest I don’t want to domicile them in Portugal because I think the PTA is pretty dysfunctional and would mis-tax me. Gibraltar is quite straight forward since its just 0% CGT, 0% dividends and a favourable income tax rate. My company can only set me up in Gibraltar or the UK, not employ me in Portugal.
My job is definitely in the “High value added” category so I think I’d be able to get an NHR. It is all online however - I can do it anywhere. It is online consulting for Australia, and all clients are there.
Is there a way for me to make it work? The options I have thought of are the following, with the stumbling blocks;
-
Set up a Gibraltar company, and then distribute dividends to myself in Portugal. Problem - its a blacklisted country without a DTA, but has signed a share tax info agreement. I would run into CFC rules.
-
Pay income tax to Gibraltar, and according to the NHR my non-domestic income is tax-free? If I live in Portugal while doing the work there - is it thought of as Portugal sourced or overseas-sourced?
-
Become self-employed in Portugal and contract myself to my own Portuguese company? Again headache dealing with CFC rules.
-
Set up a Portuguese company to pay me, and the Portugeuse company bills the Gibraltar company? Complicated
Thankyou! 
Hi @TidyTraveler … I was wondering how things are going with your tax expert?
If it’s been positive, would you be willing to share her contact details? I’m also an American who’s just moved to PT, and am finding it hard to get consistent answers from various accountants about NHR, etc.
Thank you!! 
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could not find any confirmation on this over the whole internet. Is it still valid rule and applicable to all self-employed in thier first two years?
Did you find an anwer to your question? I have heard in case of no income from PT you pay SS based on min salary (822 eur per month), but nobody here mentioned it
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Hi what does the -25% decrease entail, a smaller pension, I’m confused if i can apply this to my case, I’m just a regular self employed person on the NHR. My calculations were SS @21.4% on 75% of what I earn under the simplified regime, the additional -25% I’m a bit lost with.
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What if you converted your LLC to an S-Corp. Paid yourself a reasonable salary and the rest via dividends. Just need to find a way to keep “effective control and management” in the States. 