If you’re researching how to set up a sole proprietorship in Portugal, the good news is that the legal structure, Empresário em Nome Individual (ENI), is intentionally simple. One person owns the business, there’s no minimum capital, and you can start fast without forming a company. ENIs typically invoice using recibos verdes and operate without employment contracts.
What a Sole Proprietorship (ENI) Is
An ENI is a business run by an individual who assumes ownership and control. It suits small, low-risk ventures and requires no initial share capital. In practice, you issue recibos verdes for your services and work independently.
How to Set Up a Sole Proprietorship: The 2 Official Steps
- Declare the start of activity with the Tax Authority: file your declaração de início de atividade online via the Portal das Finanças. This is what formally opens your ENI for tax purposes.
- Register with Social Security: Submit the self-employed worker form to enrol in the Social Security regime. For a first-time inclusion, coverage begins on the first day of the 12th month after your activity start date.
Your Ongoing Obligations (The Essentials)
- Social Security: Make contributions once your coverage starts under the self-employed regime.
- Income Tax (IRS): File your returns as required for independent activity; timing and frequency depend on your situation.
- VAT (IVA): You may be exempt if your turnover stays below the legal threshold; otherwise, register and comply with VAT rules.
Key Benefits of the ENI Route
- Minimal bureaucracy is needed to launch, and fewer companies must close than other companies.
- No mandatory starting capital
- .Autonomy: Full control over decisions.
- Banking access: You can open and use business banking products.
- Simple taxation options (simplified regime or organised accounting, depending on turnover).
- Possible VAT exemption if you remain below the threshold.
Risks You Need to Weigh
ENIs don’t separate personal and business assets. If debts exceed the business’s cover, your personal property, and potentially a spouse’s assets under a community property regime, may be at risk. Consider this carefully if your activity carries meaningful financial exposure.
ENI vs. “Self-Employed” (Trabalhador Independente)
Both are self-employment, but an ENI is a business you own and can use to sell goods and services. A typical trabalhador independente primarily provides services without operating a broader business structure.
Bottom line
You now know how to set up a sole proprietorship in Portugal: make the Tax Authority declaration and register with Social Security, then keep up with IRS, Social Security, and VAT rules as they apply to you. If liability or risk worries you, speak with a qualified professional before you launch.
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