The new contributory regime for self-employed workers was published in the Portuguese Official Gazette by Decree-Law no. 2/2018, of 09 January 2018, however it will only take effect on 01 January 2019.
The self-employed contributory rate will be inferior and the basis on which their discounts will apply it is also amended. There are also amendments for the contracting entities, a concept which will be more extensive.
Self-employed workers will discount 21.4% against the current 29.6%. The rate also lowers from 34.75% to 25.2% in the case of sole shareholders and the owner of sole shareholder private limited liability companies. The rate of 28.3% for farm producers with exclusive income from farm activities also disappears.
The relevant income will continue at 70% of the value of the provision of services and 20% of the income from production and sale of goods. In the case of hotel activities, the 20% is maintained.
On the other hand, under the new regime, the incomes will be calculated at four different periods of the year and the discount can then be amended every three months. With the present regime in force, the contribution remains the same for 12 months, which do not coincide exactly with the calendar year. Even so, until the new regime comes into force, self-employed workers are still subject to the rate stated in 2017.
Another relevant amendment is the possibility of adjusting the level of the discount: currently, the law allows employees to lower up to two contributory levels - when they are not already within the minimum limits - deducting less (and can also increase up to two levels, contributing more and reinforcing rights in social protection). In the future, the employee may choose to set a lower or higher income up to 25% as a result of the new quarterly statement. And this can be performed in 5% intervals.
In order to perceive in which situations employees are discounting, it is necessary to take into account the new lower rate but also the fact that it affects the relevant income adjusting the discount level.
In the case of self-employed workers with organized accounts, the relevant income corresponds to the twelfth of the taxable profit calculated in the previous year, with a minimum limit of 1.5 IAS, and takes effect for 12 months. However, these contributors may decide for the quarterly regime, which in this case will be applied from January.
Employees whom are subject to the regime (i.e., not exempted from making contributions) must report quarterly to Social Security system the value of the income from the production and sale of goods and services. In this statement, other relevant amounts considered for the determination of the relevant income must be recognized in accordance with regulatory legislation.
The afore-mentioned statement must be filed until the last day of April, July, October and January, concerning the income obtained in the previous three months. The base contribution shall be constant for three months, corresponding to a third of the relevant income for the quarter as a whole.
Those who accumulate dependent and independent work can only be exempted from contributing “green receipts” if they have a relevant income below four IAS.