Company Tax Issues

Beninuk1996 New member

Member since 25 November 2024

Beninuk1996New memberToday 11:13:28

Dear Expats,

background

I have a couple of issues which I need help with. I applied for a residency card two years ago through my wife’s citizenship(she is Irish). I have lived in Portugal for the past two years 183 days at least each year. This is my third year.

i was advised by my lawyer to set up a company here if I wanted to work for myself. She did this for me. I found the accountant very expensive and unresponsive, so I changed accountants after a few months. My new accountant is not much better in terms of responding either.

i have submitted all my Vats incurred but my accountant tells me I’m not entitled to claim anything as the company is not operating here. I have received a bill which was with the first accountant and not forwarded until a few months ago. Unfortunately my father passed away and I was away for some time sorting out his Estate.

can someone explain to me why I have been billed for this attached photo when I have not been operating?

2) The second issue is my lawyer has a €5000 on the invoice under shares and is not explaining what this sum is for or for what shares.

i would be grateful for your assistance.

kind regards

Ben comprehensive_slip_settl_124048_2506

JohnnyPT Portugal Expert

Member since 23 May 2020

JohnnyPTPortugal ExpertToday 12:59:54

5117

@Beninuk1996,

1. VAT (IVA)

Even if your company has no sales (is not "operating"), the mere fact that it is registered as "active" with the Tax Authority (Finanças) creates immediate obligations.

Why have you been billed if not operating? In Portugal, a private limited company (Lda) incurs fixed costs from the moment of incorporation. This includes Social Security for the director (if you aren't paying it elsewhere), potentially the IRC (Corporate Income Tax) minimums, and the mandatory monthly fees for a Certified Accountant (Contabilista Certificado)

if the company is active, periodic VAT declarations must still be filed, even if they are "zeroed out."

Late Fees: Because you were away dealing with your father’s estate, you may be seeing "coimas" (fines) or "juros de mora" (interest) for late filings or late payments that the previous accountant did not handle.

2. Share Capital (Quotas)

This specific amount of €5,000 is very common in Portuguese business law. It likely refers to the Capital Social (Share Capital).

When a company (Lda) is formed, a specific amount of capital must be assigned to it. While you can now form a company with €1 per shareholder, €5,000 was the traditional legal minimum for many years and is still the "standard" amount many lawyers use by default.

If the lawyer paid the initial share capital into the company bank account on your behalf to speed up the registration, or if they are accounting for the formal "subscription" of those shares, it would appear on their billing.

This money is technically yours (it belongs to the company’s equity), not a fee for the lawyer's time. You should ask for a "Nota de Honorários e Despesas" (Detailed Invoice of Fees and Expenses) to see if this €5,000 is a "reimbursable expense" or an actual legal fee.

Recommended Next Steps:

Request a "Situação Fiscal": Ask your accountant for the "Extrato de Conta Corrente" from the Tax Authority portal. This will show exactly what the debt consists of—whether it is a tax, a fine, or a social security contribution.

Check the "Pacto Social": This is the company's founding document. Look for the section on Capital Social. If it says €5,000, then the lawyer's charge is almost certainly the formal registration of your ownership stakes (quotas).

Residency Implications: Since you are married to an Irish (EU) citizen, your right to be here is protected under EU law. However, having "debts to the state" (dívidas às Finanças) can complicate the renewal of your Residence Card or any future Permanent Residency applications. It is vital to clear these up.