Portugal Taxes – Simplified Regime?
We have written about Portugal taxes before here - https://htj.tax/?s=portugal
We always stress one principle - one size never fits all. That means that depending on your situation? The NHR alone may not work for you. The NHR really works well for those enjoying foreign passive income - especially foreign pension income.
The simplified regime involves paying income tax at the standard rates on a portion (eg 75%) of your overall income and providing expense receipts to offset the remaining 25%. Because all sole traders can make use of a tax-free deduction of €4,104, those with lower incomes may find the simplified regime a beneficial option.
New businesses start off using the simplified regime, but it’s possible to switch to another method at a later date. You can request to change systems until the end of March each year, but you’ll need to stick to the new system for three years after making the change.
Businesses with an annual turnover of more than €200,000 aren’t eligible for the simplified regime. They must instead file their annual accounts using the direct method.
If you are an independent contractor such as a remote worker or freelancer or digital nomad? What may be worth considering is the simplified regime? As explained in the video above, you get to exclude a portion of your income from the tax calculation which may be more efficient than the NHR on it's own.
Think about it. Get advice from professionals.