Taxes and obligations of ENI in Portugal: what you need to know before registering ENI

ENI - Empresário em nome individual - is a fairly popular form for starting a business in Portugal. It is of particular interest to foreigners who are self-employed and who see their future in Portugal. Most of them register as private entrepreneurs in order to carry out their usual activities and receive payment as a Portuguese economic entity.  Some, however, see new opportunities in Portugal and therefore register as ENI to engage in activities that are new to them but promising. A certain number of foreigners register as ENI for migration purposes - to have grounds for obtaining a D2 migration visa in Portugal in the future. 

But no matter why you register an ENI, it's super important to follow all the rules for doing business, even for a relatively simple form of business like this.  

Is it necessary to have an accountant for an ENI? 

One of the advantages of registering an ENI in Portugal, as opposed to registering a company in Portugal, is that there is no obligation to have an accountant, which seems attractive to all entrepreneurs with a small turnover. However, it is wrong to think that accounting is not required for an ENI at all. Therefore, we recommend that you seek accounting advice from the experienced accountants at First Legal Portugal before registering an ENI.     

First of all, mandatory accounting (Contabilidade Organizada) is required for ENIs with an annual turnover of more than 200 thousand.  

In addition, there are types of activities for which organized accounting is also mandatory, regardless of the amount of revenue. These include activities that require a high level of control, such as lawyers, auditors, medical professionals and pharmacists, engineers, notaries, and others.  

Also, an entrepreneur can consciously choose Contabilidade Organizada during registration if their business involves a significant share of expenses.  

As you already understand, Contabilidade Organizada and the simplified regime differ not only in the requirement for an accountant. After all, even an ENI under the simplified regime can have an accountant (this does not mean an automatic transition to organized accounting, but it greatly simplifies the entrepreneur's life). The main difference is what is considered the tax base, i.e., how the income on which income tax is payable is calculated. 

What taxes and contributions must ENI pay? 

Like any individual, ENI pays income tax on a progressive scale. That is, the higher the income, the higher the tax rate may be. Therefore, the amount of tax payable directly depends on the part of income that will be the basis for taxation. 

Entrepreneurs operating under the simplified regime do not correlate income and expenses, but a coefficient is applied to their income. To calculate the tax, a certain portion of income is taken, to which the progressive income tax scale is applied.  

If an entrepreneur provides services, 75% of their income is taken into account for the calculation (it is assumed that 75% is the conditional cost of the activity). 

For ENIs engaged in trade, manufacturing, or public catering, the tax base is considered to be 15% of income, since the share of expenses in these industries is obviously higher.  

Other income of the entrepreneur may be added to the base if he receives it (for example, salary if he is also an employee of a company, rental income, etc.). A progressive tax scale is applied to the total amount. 

Rates may change annually, but in 2025 they are as follows:  

Up to €8,059.00            13.00% 

8,059 – 12,160 euros    16.50% 

12,160 –17,233 euros   22.00% 

17,233 – 22,306 euros  25.00% 

22,306 – 28,400 euros  32.00% 

28,400 – 41,629 euros  35.50% 

41,629 – 44,987 euros  43.50% 

44,987 – 83,696 euros  45.00% 

From €83,696                48.00% 

As can be seen, this accounting regime may be disadvantageous for entrepreneurs in the service sector who have a relatively high proportion of expenses, or for entrepreneurs in the second category, whose expenses significantly exceed 85% of their income.  

In such cases, ENI may deliberately choose organized accounting, even if the parameters of the business do not require it.  

Another reason to choose the accounting regime is that ENI's activities fall under the requirements of the Normal VAT (IVA) regime. 

An entrepreneur can operate under the Exemption Regime and not pay VAT if: 

• The annual turnover does not exceed €15,000; 
• The ENI's activities are not included in the list of activities subject to the IVA regime. 

In other cases, the Normal Regime applies, which requires the payment of VAT. 

If the turnover exceeds €15,000, the ENI automatically switches to the Normal Regime. 

Sometimes entrepreneurs choose to work under the Normal regime voluntarily if they have a large share of VAT expenses, as in this case they can obtain a tax refund.  

The VAT rate in Portugal is 23%. 

Another type of contribution that is mandatory for all ENIs, regardless of their activity parameters, is social security contributions.  

Since a newly registered ENI has an exemption from paying social security contributions, namely, it is exempt from payment for the next 12 calendar months, it is advisable to start operations on the 1st day of the month.  

Another exception is that ENIs that already pay contributions, for example, by working elsewhere as an employee, may be exempt from paying contributions.  

The social security contribution rate for most ENIs is 21.4% of income, with the calculation basis being 70% of actual income (and for some types of activities, even 20%).  

Contributions are paid monthly, by the 20th of the month, and contributions for the current quarter are based on the previous quarter's income. This means that if an entrepreneur's income decreases during the quarter, this will only affect the amount of contributions in the following quarter.  

If the entrepreneur had no income in a given quarter, contributions are still paid, albeit at the minimum amount (around €20). 

What reports are mandatory for ENI? 

In addition to paying taxes and fees, every entrepreneur is also required to submit reports regularly.  

What exactly is required? Monthly, quarterly, and annual reports.  

1. Ficheiro SAF-T (or SAFT) - sales report. Submitted monthly and includes all invoices. It is strictly necessary for entrepreneurs under the normal IVA regime.
2. IVA declaration. If an entrepreneur has a turnover exceeding €650,000 per year, the report is submitted monthly. If the entrepreneur has a lower turnover, the report is submitted quarterly. The declaration lists all sales and services provided with VAT charged, as well as all purchases and expenses containing VAT to be refunded, and where the transactions took place. Accordingly, the amount of VAT payable or refundable is determined.
3. For entrepreneurs who have had transactions with companies from other EU countries, another report is also mandatory – Declaração Recapitulativa. For entrepreneurs on the simplified VAT system: if the annual volume of transactions with companies from other EU countries does not exceed €50,000, the report is submitted quarterly; otherwise, it is submitted monthly. The transition to monthly submission occurs when the €50,000 limit is exceeded. For entrepreneurs on the general system, monthly reporting is required if there were transactions with EU companies in the reporting month. If the entrepreneur does not work with counterparties from other EU countries, or if there were no such transactions during the reporting period, the report is not submitted. This report is not used to calculate tax; it is for informational purposes only.
4. Social Security (Segurança Social) contribution declaration – quarterly report.
5. Annual reports: 

• Informação Empresarial Simplificada (IES) – mandatory for entrepreneurs who keep organized accounts; 
• IRS Declaration – in accordance with the declaration, income tax is calculated in accordance with the accounting regime. 

Is it possible to "take a break" if you are an ENI? 

Another option to keep in mind is the possibility of suspending ENI activities. If, for personal or other reasons, it is desirable for an entrepreneur to suspend their activities, this can be done for a period of 1 to 24 consecutive months.  

During the period when the activity is suspended, no IVA declarations are submitted and no contributions to Segurança Social are calculated, but at the same time, no pensionable service is accrued.  

Suspension of activity does not exempt the entrepreneur from paying previously accrued taxes and repaying existing debts. 

If the activity is not resumed within 2 years, the tax authority may automatically close the ENI.   

If, for certain reasons, the entrepreneur decides not to conduct business, closing the ENI is relatively simple, but the procedure may be somewhat more complicated for entrepreneurs who operate under the normal VAT regime and in the accounting regime.  

We hope that our advice will help you better plan your business activities in Portugal, make an informed decision about opening or closing an ENI, or hiring an accountant to ensure the correct and timely filing of reports and payment of taxes and contributions. First Legal Portugal provides accounting services in Portugal for businesses of all types and sizes.