Hi Gisela and Renat,
Thanks for posting in the Community, Portugal is one of the countries I would like to visit some day. Could you please tell us more about the freelancing culture in Portugal and benefits/challenges of working as a freelancer from your personal experience?
Another "tuga" here, from up north Porto.
Vladimir, freelancing in Portugal used to be a great thing about 10 - 15 years ago. Portuguese government invented a new tax policy that permitted anyone to freelance without setting up a company, legally charge clients by emitting a specific invoice (called "recibo verde"), thus declaring income for taxation purposes.
Unfortunately, this backfired majestically. 99,9% of companies started abusing the system and only started hiring people if they'd be under this model, even for full-time jobs. This is because they could simply not hire/fire that person again without any compensation or legal/social security penalties. Withing a few years about 40% of the country was technically a "freelancer".
Basically, they turned Portugal into a death-trap for freelancers. It's a real shame, the idea was awesome.
Things are not getting better. Any serious freelancer either sets up single-member company (which is extremely limiting) because their income is vastly superior to moronic taxation policies (up to 45%), or simply does not declare income to be able to pay for rent and food.
It really is a hostile environment. You definitely can position yourself to be a 100% legal tax payer, but it completely nulls any sense of entrepreneurship. Either your business works out great right off the bat, or you've just dug a huge hole you'll probably never recoup from.
Obviously, this is not the full story, I'm talking about 100% legit freelancing status. If one has a contract with a company that takes care of your IRS and Social Security obligations, then it's pretty much the opposite, you are free to collect as much as you want without major issues. Stupid and silly. Freelancers have to deduct much much higher taxes than medium to big sized companies. It's ridiculous. Like an inverted incentive pyramid... ugg ...
Result? Massive corruption and fraudulent IRS declarations.
But Portugal, as a country, is simply amaaazing! You should definitely come by, and when you do hit me up so I can set you up with a kickass tour of Porto
I'm sorry to hear about the downsides and obstacles freelancers in Portugal are facing. Thanks for the insight and the offer, hopefully I'll have the opportunity to visit Portugal since that's on my wish list.
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