Launching a business in Porto is an exciting opportunity for expat entrepreneurs. However, managing Portuguese bureaucracy is crucial to your business success. One essential task is ensuring that your NIF (Número de Identificação Fiscal) also called an NIPC (Número de Identificação de Pessoa Colectiva) is included on all business purchases. This article explains the importance and benefits of this practice.
The NIF is a unique tax identification number for individuals and businesses in Portugal. For companies, this number is referred to as the NIPC. Internationally, this number is typically referred to as your “VAT Number” and you will need to add “PT” prior to the NIPC number when entering it. Including your NIF/NIPC on all business-related invoices and receipts is crucial for deducting these expenses from your taxable income.
Omitting your NIF/NIPC on invoices makes it so that the purchase cannot be taken as a business expense. The Tax Authority in Portugal insists that every expense invoice must have the business’s NIPC in order for it to be a valid expense. By not having these expenses reduce your taxable income, you’ll be far more in taxes than you would (or should have) otherwise.
For instance, a marketing firm in Porto had several high cost software subscriptions for their business. During registration the VAT Number wasn’t requested and was never put on the invoices. These subscriptions summed to thousands of dollars across their team and they couldn’t claim it as a business expenses, paying hundreds of dollars in additional tax because of it. Later, they went to the Billing section of their subscription and were able to add their VAT Number so that future invoices could be claimed as expenses as they should be.
Elevate Accounting provides expert support for expat business owners in Porto. Our team of English-speaking accountants understand the issues and frustrations that expat business owners experience, and make it our goal to simplify your business finances and help you make more money.
Including your NIF/NIPC on every business purchase is vital for tax efficiency. At Elevate Accounting, we offer the expertise and support needed to navigate Portuguese tax regulations effectively.
Contact us today to ensure your business is financially optimized.
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