YOUR money

RICARDO CHAVES IS A MAN IN DEMAND – EVERYONE, UNDERSTANDABLY, WANTS THE BEST ADVICE WHEN IT COMES TO PERSONAL AND BUSINESS FINANCIAL MATTERS. THIS MONTH’S INBOX IS FULL OF QUESTIONS ABOUT WHAT YOU CAN, AND SHOULD, CHARGE TO TAX

I am just starting up as a consultant here, specialising in Social Media. I am NHR now and will be working from home and charging clients by the hour. Do I invoice as I would have done in the UK – simply generating and sending out a numbered invoice each month, with details of my bank account for payments to be made?

The first thing you need to know, before you start issuing invoices is that you must register your business activity with the Portuguese Tax Authorities.

If your income is above the VAT threshold of €13,500 per year, you will also be required to submit quarterly VAT returns. In case your customers are international clients, you will still be required to submit VAT returns, even though your invoices do not charge VAT (reverse charge is applicable when invoicing B2B).

All the invoices need to be issued within five days of providing the service or receiving the payment, whatever occurs first. The invoices need to be done through a tax certified software or through the tax portal.

The bank account must be the same as that used when you registered the business with the tax authorities.

I think that the time has come for me to invest in new computers for my wife and me and also a member of staff, in addition to new telephones. Is there a limit if the expenditure is a genuine business expense?

It’s normal to invest in computers and mobiles as these are almost essential for any business. The only limitation I can see in this case is not the amount, but the number of items. If the company only has three staff members, it should only need to buy three computers to use in the office, and maybe a couple of others if they are working from home.

If I go to Spain for the day, can I use petrol and lunch receipts as business expenses here in Portugal?

There is no limitation for the use of these business expenses, based on the country of source. You may need to justify why you were doing business in Spain but besides that, and providing the invoices and receipts have your name (if possible also the fiscal number), you are able to use them in your Portuguese business. Please note that in Spain the invoices and receipts may not have the same requirements as in Portugal, but you would still need to ask for an invoice with as many details as possible to be able to use it here. As you may be aware, some of these petrol and lunch expenses are normally taxed in Portugal at autonomous rate, to avoid any tax abuse.

My car, now 15 years old, has had it and is starting to cost real money, regularly. What is the most sensible way to buy a new car. I am NHR. Should I lease, buy secondhand, or take out a loan? Also, isn’t it more sensible to buy in another European country – prices here are so much higher?

Car prices in Portugal are very high compared to other countries, especially if you consider the cost of living and the salaries here. This is mainly due to the high taxes and the VAT that is added on, and also because of transportation costs (it’s a long way down to Portugal from most factories).

If you are moving to Portugal and have had a car in your own country that you wish to import, there are tax exemptions, providing that:

– The car must have been in your name for at least six months before moving to Portugal

– You must have lived in the country the car is from for at least six months

– You register the car in the first 12 months after becoming a resident here

If you have already moved and are thinking of importing a car, be aware that you will still be liable for taxes when registering the car here. As some of the taxes are based on the emissions of the car, it is very important to choose a more efficient car.

Last but not least, with the increase in interest rates, you should avoid credit, and perhaps use the leasing or renting options. Leasing means the car belongs to the bank until you make the last payment and the renting normally includes other services such as insurance, maintenance, etc, but the ownership of the car will never be yours. For business purposes, in most cases renting is more tax efficient. Both leasing and renting options are normally available at your bank or specialised institutions.