THE NEW CODE FOR SOCIAL SECURITY CONTRIBUTIONS - Self Employed
Employment :: 2009-11-03

The new code for social security contributions, approved by Law No. 110/2009 of 16^th September 2009, aims regulating the various regimes for social security contributions as well as their respective penalties.

 

One of the most important changes introduced has been in terms of the self employed regime of contributions (articles 132 and following). Firstly, the new code has replaced the two existing regimes, the mandatory regime and the voluntary regime, by a brand new regime that confers the right to sick pay and parental leave (in accordance with the respective regulations).

 

Another important change, is the division of the burden associated with the protection of self-employed worker’s welfare rights, and the fact that the self employed have been given the same status as employers. In accordance with the present regime, those who benefit form the activities of the service providers do not have any responsibility in terms of social security contributions, however under the terms of the new code, a new obligation has been created whereby the contracting party - “contratantes de serviços” - must now pay a 5% social security contribution calculated on the services rendered by self employed service providers, and file the respective declaration form.

 

This declaration must be presented quarterly, up to the 10^th day of the month following the end of the quarter. Payment of the contribution must be made between the 10^th and the 20^th day of the month following the respective quarter. A fine will be applied to those cases in which the deadline is not met, and shall de determined in accordance with the classification of the penalty, that can be either light (for cases in which the obligation is met within the 30 days after the due date) or serious (in all other cases).

 

The contribution duties of the self employed in turn arises with the start of the enrolment in the Social Security under the category of self employed and becomes effective with the payment of the contribution. They will also be liable for filing an application for each entity for which he provides a service, and the value of the service provided for the respective calendar year. The applicable rate is determined in accordance with the classification given to the self employed, yet another new aspect of the code, that now classifies self employed as either farmers or fisherman or businessmen to whom a rate of 29.6% is applied, or service providers, where the applicable rate is of 24.6%.

 

In relation to the taxable income - base de incidência – the new code has introduced a system that is similar to the income tax regime in which the relevant income is determined in accordance with 70% of the total value of the services rendered or 20% of the income associated with the production and sale of goods in the previous calendar year. The taxable income is fixed in a remuneration scale determined by reference to a duodecimal of the relevant income.

 

This obligation is not applicable to lawyers and solicitors as they are already contributing towards the CPAS.

 

This new law comes into force on 1^st January 2010.

 

Employment Department

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