YOUR money

RICARDO CHAVES IS HERE TO HELP PEOPLE UNDERSTAND AND DEAL WITH WHAT IS ALLOWABLE –AND NOT – WHEN IT COMES TO PERSONAL AND BUSINESS FINANCIAL MATTERS HERE IN PORTUGAL. THIS MONTH HE EXPLAINS THE VALUE OF INVOICES WITH YOUR NIF NUMBER, HIRING STAFF AND PROBLEMS WITH DEBIT CARDS

On occasions, when I am trying to purchase online using my Portuguese debit card, the card is rejected and I have to start the whole process again, at which point it is accepted. This is time-consuming as well as irritating but when I phone the bank, they don’t want to help in any way. What do you suggest – is it the bank itself and therefore, should I change? I do consider myself a worthwhile customer and would like to be treated that way.

My advice is to meet with your account manager and make sure that the web purchases in your card are active.

Sometimes for your own safety and to avoid fraud, the bank activates some security measures that may limit your purchases online. If you speak to your bank manager, they should be able to explain to you and set the limits that will work for you and your business.

Why do shops – supermarkets especially – ask if I want my NIF on the till receipt. Should I say yes?

What advantages are there in it for me?

The reason for this is because in Portugal many tax deductions are determined by the invoices requested with your NIF, during the year. Please note that if you have the NHR status, or if your income is tax exempt, or if you pay tax at the flat rates of 10%, 20% or 28%, these deductions will not be considered in your tax return.

However, for the income that is taxed at the progressive tax rates, the deductions are accepted and therefore it is important to have a NIF number included in the invoice. Before the submission of the tax return, normally by 25 February of each year, you or your accountant will need to verify your invoices and make sure these are allocated to the correct expense type.

To give you an idea, the amount spent in supermarkets falls under general expenses and you get 35% of the amount spent back. However, the deduction is limited to €250, so you only need to show expenditure of €715.

Other sectors such as medical and health are more important, as you get 15% of the amount spent, with a cap of €1,000. This means that your expenditure limit is up to €6,666 and therefore you should make sure that your medical insurance, your medical bills, your pharmacy bills, etc have your fiscal number.

There are other sectors of activity in which you can benefit if your invoice shows your NIF. For example, on expenses in restaurants, hotels, hairdressers, vets, and others you can get 15% of the VAT paid, with a limit of €250. This means that you would need to have invoices of up to €8,930 to reach the deduction limit.

What is today’s basic salary and what should be built in in terms of paid-for holidays, sick pay, pension contributions, etc? I am thinking of taking on a full time helper to run my consultancy, at a junior level. Or, am I better off to hiring them as freelancers, and pay for the hours they put in? How does that work?

Please note that freelancers are supposed to be independent and therefore they are not your employees and should not be directed by you. When you hire freelancers you become the client and we advise you to seek legal advice to avoid falling into the trap of false employment.

As far as basic salary is concerned, the minimum wage in Portugal for a full-time employee is €760, paid 14 times per annum (this includes holiday and Christmas entitlement). By arrangement with the employee, the 13th and 14th salaries can be paid over the 12 months.

Please note that depending on the sector of activity, there may be a collective agreement in place, which would have higher salary limits for the different types of professions. You need to make sure that your contract is in line with the collective agreement and again seeking legal advice is highly recommended.

In terms of charges, hiring someone for €1,000 basic salary will cost your business €1,237,50. And the employee will receive €890 gross (before tax). On top of the salary, there may be considerations like lunch allowance, which, if paid under the limit, is exempt from social security contributions.