Individual Entrepreneur – Discover All Requirements

Individual Entrepreneur – Discover All Requirements

An individual entrepreneur (ENI) is a person who carries out an economic activity on their own, without establishing a commercial company or an Individual Limited Liability Establishment (EIRL). ENI is unlimitedly responsible for debts incurred in the course of its activity, responding with all of its personal and business assets. Let's see what the advantages and disadvantages are and how to open a sole proprietorship.

Estimated reading time: 5 minutes

Necessary Requirements to be a Sole Proprietorship

To become an ENI in Portugal it is necessary to fulfill some requirements and formalities, such as:

– Have Portuguese nationality or nationality from a Member State of the European Union, or have a valid residence permit in Portugal;

– Being of age or emancipated;

– Not be prohibited from carrying out trade or declared insolvent;

– Have technical and professional capacity to carry out the intended activity;

– Register with Social Security as an independent worker;

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– Make the declaration of beginning of activity in Finance, choosing the appropriate tax regime;

– Obtain the tax identification number (NIF) and the citizen card or identity card;

– Obtain the necessary licenses, permits or authorizations to carry out the activity, if applicable.

For the Tax Authority there is no difference between the Independent Worker and the Individual Entrepreneur, they are both self-employed, but there is an important difference.

While the self-employed only provides services, the Sole Proprietor can also sell goods.

Independent workers are commonly referred to as “Freelancers” and/or Contractors and whose difference lies in the way they work.

Advantages and disadvantages

The legal status of the Individual Entrepreneur in Portugal has advantages and disadvantages, which must be considered before opting for this legal form.

Some of the advantages are:

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– Simplicity and speed in establishing and dissolving the business. For example, to open a business as ENI, simply fill out a declaration of start of activity on the Finance Portal and a self-employed worker form o Mod RV1000-DGSS, without the need for a public deed or commercial registration.

– Autonomy and flexibility in business management. For example, ENI can freely decide on prices, times, suppliers and customers for its business, without having to report to partners or shareholders.

– Lower tax and bureaucratic burden than a commercial company. For example, ENI can opt for the simplified IRS regime, which eliminates organized accounting and applies a flat rate to gross income.

– No requirement for Share Capital.

– Possibility of benefiting from support and incentives for entrepreneurship. For example, ENI can apply for programs such as Microinvest, which grants subsidized credit and exemption from some fees for projects up to 20 thousand euros.

You can also use as a commercial name, in addition to your name, an indication relating to the business area, for example, “Bela Zulmira – Beauty Products and Services”.

Some of the disadvantages are:

– Unlimited liability for business debts. For example, if the ENI contracts a debt with a supplier or Social Security, it may see its personal assets seized to pay it off.

– Greater difficulty in obtaining external financing. For example, banks tend to require more guarantees and charge higher interest rates to ENIs than to commercial companies.

– Lower credibility with customers, suppliers and partners. For example, some clients may prefer to hire companies with a larger size and reputation than a sole proprietorship.

– Greater exposure to market risks and uncertainties. For example, if the ENI becomes ill or has an accident, their business may be paralyzed or compromised.

Sole Trader
Individual Entrepreneur (ENI)

Obligations of the Individual Entrepreneur

Therefore, being a Sole Proprietorship in Portugal also implies fulfilling some tax, accounting and social obligations, such as:

– Issue invoices or green receipts for services provided or goods sold;

– Pay the taxes due, such as IRS, VAT and IRC, if applicable. The IRS is calculated based on the income obtained by the ENI, which can be taxed under the simplified regime or the organized accounting regime. VAT is charged on transactions of goods and services carried out by ENI, which can opt for the normal regime, the special exemption regime or the simplified regime. The IRC is only applicable to ENI that carry out industrial, commercial or agricultural activities and that opt ​​for taxation based on real profit or presumed profit.

– Submit periodic income and VAT declarations to Finance;

– Maintain organized or simplified accounting, depending on the chosen tax regime;

– Pay Social Security contributions as a self-employed worker. Contributions are calculated based on income declared by ENI, with a rate of 25,2% applicable. ENI may benefit from exemption or reduction in contributions in certain situations.

– Comply with legal standards relating to hygiene and safety at work, the environment and the consumer.


Opening an individual company (ENI) in Portugal can be an interesting option for those who want to start their own business, but it requires planning, dedication and responsibility.

Before becoming an ENI, it is advisable to find out about the characteristics, advantages, disadvantages and obligations of this legal form, as well as the support and incentives available to entrepreneurs.

Also consider other ways of setting up companies that best suit the needs of capital and project financing sources, if that is the case.

Contribution Rates for Social Security

Social Security Contribution Rates, April 2020.

Source: General Directorate of Social Security.

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