Self-employed or company: when each one is worth it
Being self-employed means less paperwork and lower maintenance costs, but you are liable with your personal assets and your personal income tax rate can be high. A company protects your liability and allows you to reinvest profits, in exchange for monthly accounting and tax obligations.
If you invoice little or are testing a market, registering as self-employed is usually the fastest route. When income grows or you plan to hire, a company starts to pay off.
Portugal: green receipts
Portuguese self-employed workers register with their NIF and open an activity with the Autoridade Tributária under the green receipts regime. Social security is around 21.4% of relevant income and IRS is progressive.
It is a system designed to start without bureaucracy: you can invoice the same day you register if you already have your NIF.
Germany: Freiberufler or Gewerbe
Here the nature of your work matters. Liberal professions register as Freiberufler and do not pay the municipal trade tax (Gewerbesteuer), only personal income tax. Everyone else registers as Gewerbe with the municipal office.
In both cases you request a tax number from the Finanzamt before issuing invoices. Turnover thresholds and VAT determine when you move to regular accounting.
France and Italy: micro-entrepreneur and Partita IVA
France has the micro-entrepreneur, a simplified regime with social contributions proportional to turnover and annual income caps. If you exceed them, you move to the general regime.
In Italy you need a Partita IVA. The forfettario regime applies a flat tax of 15% (5% for the first years) plus INPS contributions, with a turnover limit.
Andorra and Dubai
Andorra is not a destination for the occasional freelancer: you need residency, which requires a real presence and paying into the CASS. In return, the maximum personal income tax is 10%.
In Dubai, the freelance permit from the free zones allows you to invoice with 0% personal income tax and no mandatory social security contributions for expatriates. Think carefully about your residency, because it determines where you actually pay taxes.
Taxes and residency: what you must not forget
Being a freelancer in a country does not automatically make you a tax resident. The general rule is 183 days of presence, but each country adds its own criteria and double taxation treaties resolve conflicts.
If you invoice from several countries without clarifying your residency, you may end up being taxed twice. It is advisable to resolve this before issuing your first invoice.
