I’m trying to figure out if Portugal’s simplified tax regime is worth it, but from my research it’s only raised more questions. Would greatly appreciate any help.
Some context on my personal situation, I’m a web developer working remotely for a company in the UK, I’m a Spanish citizen and have a Spanish company set up for invoicing. I’m looking for other options, as the setup I have now isn’t very effective in terms of taxes compared to other solutions available for remote freelancers like myself. Due to the closeness of Portugal to Spain, it has become a very interesting option for me.
From what I understand, the Non-Habitual Residency (NHR) program is not best suited for a situation like mine without creating an elaborate offshore company structure. The next best thing is the Simplified Tax Regime (STR) and my questions are as follows:
- Under this regime, I’ve seen conflicting information on how much of the gross income is actually taxed. Mostly, I’ve seen 35% of the gross income should be taxable (i.e. I made €100k and only €35k would be taxable), but again, it’s difficult to lock down a number.
- Would the portion that is taxable fall under the progressive tax ladder? I am pretty confident this is the case and makes sense as this income falls under the “category B - business and professional income”. Just want to clear it up as some articles mix the NHR 20% flat tax with STR, but they are two very different programs.
- I haven’t been able to corroborate the following as I’ve only seen it in maybe one or two documents. In the first and second year, is the tax amount reduced by 50% and 25% respectively?
- What is the Social Security rate under category B for STR? Is it 29.6%?
- Similar to the first question, what percentage from the gross income is Social Security applied? I’ve seen as much as 70% and as little as 35%.
The best reference I’ve been able to find is the eurofinesco pdf file. On page 23, the table makes the percentages pretty clear, but I haven’t been able to reliably match up the same information.
If anyone has any personal experience with STR or any more relevant information, I would greatly appreciate it. I will most likely get in contact with a tax lawyer in Portugal at some point, but just wanted to clarify some points if possible.