27 October, 2021       LISBON - MAX. Pleasant with plenty of sunshineº, MIN. 01º

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Folders  |  Unexpected or sporadic job ? Here is a very simple system: the Isolated Act
Unexpected or sporadic job ? Here is a very simple system: the Isolated Act
Unexpected or sporadic job ? Here is a very simple system: the Isolated Act

If you are not registered with the Portuguese Tax Authorities and you wish to start working, as an independent worker, you should present a Declaration of Start of Activity at a local Tax Office, choose a taxation regime (simplified regime/ organized accountancy) and present every year thereafter a Declaration of Income. The administrative procedures, although not very complex, are however rather cumbersome, especially if you are not planning to work on a regular/permanent basis.

However, there is a more simple system applicable to all those who may have an opportunity to do an unexpected and sporadic job (not regular or permanent), like for example, a market study, etc: this is called the Isolated Act.

To apply the Isolated Act regime, you cannot already be registered as an Independent worker with the Tax Authorities, or if you are no longer, you should already have submitted a Declaration of Cessation of Activity.

Despite this, however, you can work as an employee for someone else and still do an unexpected and sporadic job, the condition being that your annual income from this act does not exceed 50% of your regular income, and so you can still apply the isolated act tax regime.

For all those situations that qualify as an “Isolated Act”, one does not have to present a Declaration of Start of Activity nor pass green receipts (like an independent worker has to).

All you have to do is follow these procedures:

- Inform your employer/client that you have chosen the “Isolated Act”;
- Fill out a declaration/formal receipt of Isolated Act, with 3 copies (one for yourself, another for your employer/client and the third to be handed in at your local Tax Office), at the latest, on the last day of the month following the conclusion of the job.
The details of this receipt should include at least identification of the service provider and that of the receiver/client (name, address, tax registration number), as well as date, service description, reference that it is an Isolated Act, amount, tax rate and VAT amount;

The value of the service is always subject to VAT at 21%. You have until the last day of the month following the conclusion of the job to pay the VAT at your local Tax office. You do not need to fill out any other form; all you have to do is present the completed Isolated Act form and pay the corresponding VAT.

Payment of tax on the income from these services: There is no retention at source (retention by the employer of part of the tax, who will then pay it directly to the tax office) on the activities of a commercial, industrial or agricultural nature. On the other hand, tertiary services (market studies, translations, etc) are subject to 10% tax retention at source if the value of that service exceeds 10.000€, as well as in those cases where the income of this nature exceeded 10.000€ in the previous year.

ATTENTION: The fact that there is no retention at source does not mean that you are exempted from presenting your annual income declaration or from paying the corresponding tax. So, in your joint income declaration (with wife/husband, for example) the income from this Isolated Act should be filled out in box 4 of Annex B, whether there was retention at source or not.
In conclusion, it is a simple way of working in Portugal, performing isolated jobs on an irregular basis, without having to go through more complex administrative procedures that would imply a longer lasting and continuous sort of activity.

Livinginlisbon.com in collaboration with Mazars & Associados SROC.

Rua General Firmino Miguel, 3
Torre 2, 1º A
1600-100 LISBOA

Telefone : (+351) 21 721 01 80
Fax : (+351) 21 726 79 61
E-Mail: mazarslisboa@mazars.pt

Model of the Isolated Act form is attached.

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