The IRS applies to the income of private individuals through dependent work, being considered as such every remuneration paid or made available to the holder resulting from paid employment. The income of self-employed or resulting from the fiscal year of a sole proprietorship enterprise, from commercial and industrial or agricultural, forestry, livestock activities is also subject to IRS.
The income from employment is subject to IRS, considering as such every remuneration paid or made available to the holder from paid employment. At the beginning of his functions, or before being paid for the first time or made available of the earned income, you must inform your employer about the indispensable data about your personal and family status, being obliged to inform him about any change fiscally relevant thereafter.
Income from employment is subject to withholding tax at the moment of its payment or availability.
Before starting any activity susceptible to generate income from the self-employment (Category B), subject to IRS, you must communicate such fact to the Tax and Customs Entity (AT) by a Statement of Star-Up of Activity.
Part of the income of the self-employed is that which results from any commercial and industrial or agricultural, forestry, livestock activity, as well as that derived from the provision of independent personal services either stated in the table to which Art. 151 of the IRS Code refers or the Table of the Classificação Portuguesa de Actividades Económicas (CAE) (the Portuguese Economic Activities Classification).
You are required to issue an invoice, receipt or receipted invoice, on the official form, of all the earned values from your costumers, as result of the supply of goods or the provision of services, even though as a provision, down payment or reimbursement of costs and to issue a statement of receipt of every earned value.
You must register on books, or in an accounting system that fulfils all the requirements adequate to the correct aggregation and inspection of the tax, the earned values, the charges to be deducted from the gross income and the values concerning the reimbursement of expenses made on behalf and at customer’s expense.
The clearance of the income from self-employment is determined based on the application of the rules resulting from the simplified procedure or based on the accounts (organized under the commercial law).
The income resulting from commercial and industrial or agricultural, forestry, livestock activities as proprietorship is subject to IRS.
As the self-employed, the sole proprietors that exercise commercial and industrial activities or agricultural, forestry or livestock activities have to inform of the business start date, applied to IRS and VAT, being allowed to do that by electronic data transmission, via Internet, at any Finance Service or Loja do Cidadão (Citizen’s Bureau) by means of a verbal statement processed by computer, or exceptionally, on a printed official form.
The calculation of the business income is made based on the application of the rules resulting from the simplified procedure or based on accounts.
Covered by the simplified procedure are the owners of income that, doing business, have not overcome the gross annual amount of this category of €200 000.
The owners of the income covered by the simplified procedure can choose the definition of income based on the accounts, and this option must be formalized by the taxable persons:
On the Start-Up of Activity Statement
Until de end of March of the year when they intend to change the way of definition of the income through the delivery of the statement of changes
Until de end of March of the year when they intend to change the way of definition of the income through the delivery of the statement of changes
That option is valid until the taxable person delivers the statement of changes, which takes effect on the same year when it is delivered, since it is carried out until the end of March.
The individual entrepreneurs are subject to the same obligations as the self-employed in what concerns the information about the income and deduction at source concerning the income attributed or made available to his co-workers, dependent workers.
The taxable persons that earn business income are obliged to present the Statement Model 3 of the IRS, with the Annex B or C, whether they belong or not to the simplified procedure or organized account and to the fulfilment of the common obligations with the VAT.
To communicate with the tax and customs authority, through the Tax Office Portal, you can request the corresponding password at www.portaldasfinancas.gov.pt through the option New User, on the right side of the computer screen and fill the application form with your personal data, on such terms you are requested for.
You can also allow the tax and customs authority to send you optional messages and messages of support to the voluntary compliance, through text-messages and email. This service is free, of personal and confidential nature. However, to allow us to provide it in a safe way, we need you to ensure your email and your mobile phone number.
As soon as the password request takes place, two codes will be automatically made available:
- To ensure your mobile phone, by text message;
- To ensure your email, through electronic mail
These codes can only be confirmed at the Tax Office Portal Cidadãos>Outros Serviços>Confirmação de Contactos (Citizens>Other Services>Confirmation of Contacts, after receiving the password to the Tax Office Portal, that is sent by mail, in a message-envelope, to your tax address.
Related links
Tax Office Portal: http://www.portaldasfinancas.gov.pt/at/html/index.html
Source: Ministry of Finance
