[ Offshore Tax ] Portugal Tax - The Simplified Regime.

DERREN JOSEPH:
Okay. So, we were saying that everyone is hung up with an NHR, but there are some circumstances I'm thinking people in like the D2 visas, remote workers who want to apply what is known as the simplified regime, how do they make that election? And how does it work?

AUGUSTO PAULINO:
First of all, to have a business income at the individual level will open an activity. So, the first important step would be to identify clearly the nature of the activity, because the nature of the activity will have consequences in terms of the taxation applicable to simplify the regime because there are different percentages of taxation depending of the activity. So first important thing is the activity that you select, or you are going to perform.

DERREN JOSEPH:
And this is separate from the high value-added list of activities, right?

AUGUSTO PAULINO:
It's separate. It could be at the same time, an activity of value-added, but for the simplified regime, it isn't, it is not relevant. If we decide to apply for the general tax rules. And then at the second act at the second stage, when you file the annual personal income tax return, you report the income that is located to that activity, and you might select or not be considered as activity for the purpose of the NHR, right? It is not mandatory. Even if you have the NHR status that you consider that business income, you opt for the tech session in the NHR, and you can simply choose to keep with the simplified tax region.

DERREN JOSEPH:
Okay. So, and so you have two options. You can stick with the NHR. If its high value-added, it will be taxed at 20% flat, but if you opt out of NHR and go the regular tax regime and you can elect simplified, how is there like a table that says, depending on the activity, how much can be excluded from the tax calculation? Is that how it works? Is it table that table from you? And I can put it up on the website. Okay, good. Okay.

AUGUSTO PAULINO:
Yes. Yes. It's in the personal income tax, I can send you sure.

DERREN JOSEPH:
And so, depending on the activity, you can exclude like 80% or 50% of whatever, but from the task calculation. Okay. Yes.

AUGUSTO PAULINO:
There are also service providers or thinking about and the general rule it's excluded 25% from taxation.

DERREN JOSEPH:
Wow. Okay. That's great. And that election,

AUGUSTO PAULINO:
It's only taxed on 75% of turnover.

DERREN JOSEPH:
Okay. That's great. And that election is made when you're doing your tax return there and the following year, or you make it okay. You make it at that. Okay. In the future. Okay. Okay.

AUGUSTO PAULINO:
You can apply both. So, imagine you can have the income, the turn simplified regime and the right and the, the NHR.

DERREN JOSEPH:
Wow. Okay. That's cool.

AUGUSTO PAULINO:
Then HR is relevant for determining the tax rate. If we are talking goodbye about value-added activity, simplify the regime is the way we compute the taxable income.

DERREN JOSEPH:
Okay. I understand. And there's also the option. Now, what about the social charges? So the social security payments, there's I understand that there's an option of excluding it for the first year that you're in Portugal and then afterward, it'll be full, assuming yourself employed. There'll be the full 23 plus 11 or 10%. So, 30 odd percent of social

AUGUSTO PAULINO:
In the case of self-employed, self-employed individuals, it's a one tax rate of 21.4%,

DERREN JOSEPH:
Okay. Right. So, you don't have to add the any additional, like what they, if you were because if you were employed, you would pay 21, 22, whatever, and then your employer would pay some as well, maybe 11% or so. But if you're self-employed you only pay your part.

AUGUSTO PAULINO:
Yes, unless you provide services only to one entity in Portugal, such in such entity that contracts, you may also have an obligation to contribute to social security.


DERREN JOSEPH:
Mm okay. Right. Understood. Great.

AUGUSTO PAULINO:
The idea is if you provide services only to one entity is more or less like you are

DERREN JOSEPH:
And employee anyway. Yeah. So, like a disguised employee. Yeah.

AUGUSTO PAULINO:
Yeah. Which guys know always there is always a contribution for the contractor as well. Okay,

DERREN JOSEPH:
Perfect. Thank you. I appreciate it.

AUGUSTO PAULINO:
Okay. Then when we stay connected, I'll let you know any development in this respect and stay connected. Thank you.

DERREN JOSEPH:
Have a good one. Thank you. Bye.

VOICE-OVER:

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