# Some basic tax questions for Portugal



## IanW (Jun 30, 2012)

Hi,

I am rather confused by this  Could someone give me a basic guidance.

Self Employed working on the internet.

What taxes are we likely to face for a modest income of around €22,000 a year

Is there a tax free allowance?
If this figure dropped lower, would there be any benefits (in the UK for example we get free prescriptions etc.)

From what I can gather one has to pay social security and tax, which appears to take almost half the money, which to be honest makes it rather pointless doing it. Might be better to just live on savings etc.

So I am wondering if I have it wrong, as I am getting confused!

Thanks.


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## canoeman (Mar 3, 2011)

You really need to speak to a Portuguese accountant, and find out the best way to work i.e self employed or opening a company and being a sole proprietor or employee, and also which tax regime you want to come under you have 2 options under simplified scheme you get a fixed deductable % for expenses against earnings or you must employ an accountant to file returns.

Tax free allowance yes but it works differently and called a witholding tax, % depends on earnings, married and work status.
Portuguese Tax system is set up so you tax and then claim back % of allowable expenses on things like prescriptions, glasses, life insurance, pensions etc.

UK will depending on your NI payments fund up to 2.5 years social security, if your self employed you get first 12 months free but that is to assess your future contributions.

Live on savings, your problem with this is you might not get free treatment in the NHS certain areas are making a real issue of a Social Security number and you won't be contributing to any future pension.


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