Most foreigners don’t do sufficient homework before moving to Portugal. While hoping for the best, you should plan for the worst case scenario and have a contingency plan and sufficient funds to last until you’re established (this also applies to employees).
If you’re planning to start a business in Portugal, you must also do battle with the notoriously obstructive bureaucracy (good luck/ ¡boa sorte!).Note that it’s difficult for non-EU nationals to obtain a residence permit to be self-employed in Portugal.
If you’re an EU-national or a permanent resident with a residence card ( autorização de residência), you can work as a self-employed person or as a sole trader in Portugal.
If you want to be self-employed in a profession or trade in Portugal, you must meet certain legal requirements and register with the appropriate organisation, as applicable. Under Portuguese law a self-employed person may require an official status and it may be illegal to simply hang up a sign and start business.
Members of some professions and trades must possess professional qualifications and certificates recognised in Portugal and are usually required to sit a written examination in Portuguese. In certain professions, such as the law, it’s unusual to be permitted to practise in Portugal without Portuguese qualifications.
As a self-employed person you don’t have the protection of a limited company should your business fail, although there are certain tax advantages. It may be advantageous to operate as a limited company such as a Sociedade por Quotas (Lda).
Obtain professional advice before deciding whether to operate as a sole trader or form a company in Portugal, as it has far-reaching social security, tax and other consequences. All self-employed persons must register for income tax, social security and VAT ( IVA), and anyone with an income in Portugal requires a foreigner’s identification number ( numero de contribuinte), obtainable from your local tax office ( finanças).