Social security for the self-employed in Portugal: what you really get

What you pay, and why it decides everything

Social security for the self-employed starts with a simple sum. That sum decides how much you get later, when you fall ill, have a child, or retire.

The rules of the sum (Contributory Code, Law 110/2009):

• Rate: 21.4% for a self-employed worker. 25.2% for a sole trader.
• Relevant income: 70% of what you invoice in services. 20% if you sell goods.
• Monthly base: 1/3 of the quarterly relevant income. You declare it every quarter.
• Minimum: the contribution is never lower than 20 euros a month, even with no income.

Keep this in mind: your contribution base (the value you pay on) drives your protection. Almost everything else flows from it.

The 6 covers you have (and the 7th that barely counts)

The self-employed scheme covers the same big situations as the general scheme, with its own rules. Here is the map.

Sickness

You go on sick leave and get sickness benefit. But mind two differences: you are paid only from day 11 (not day 4) and the cap is 365 days (not 1,095). The numbers and the formula are in the guide sick pay for the self-employed.

Parental

You get parental benefit when a child is born. You need 6 calendar months of contributions. The amount comes from your contribution base, like everything else. The days and percentages are the same as in the parental leave guide.

Invalidity, old age and death

These are the pensions. They work under the general scheme: the more years you pay in, the higher the pension. For the old-age pension you normally need 15 years of contributions. Here a low base hurts: a working life paying the minimum gives a minimum pension.

The big gap: unemployment

This is the part that catches almost everyone. The self-employed, as a rule, have no unemployment benefit. If your work dries up, there is no support.

There is one single door: the cessation-of-activity benefit (DL 65/2012). But it fits a very specific case only.

Who qualifies (all conditions at once), according to Social Security:

• Be economically dependent: earn 80% or more of your income from a single client.
• Involuntary ending: the client ended the contract, not you.
• Qualifying period: have 360 days of activity with contributions in the previous 24 months.
• Register at the job centre and apply within 90 days.

When there is a right, the benefit is 65% of the reference earnings, like the standard unemployment benefit. The duration depends on age and contribution record.

If you work for several clients, treat unemployment as something you do not have. Keep your own buffer for thin months.

The other gap: work accidents

Social Security covers occupational diseases (problems that build up from the work over time). But it does not cover work accidents.

For that there is separate cover. Work-accident insurance is compulsory for the self-employed (DL 159/99) and it is private, taken out with an insurer. Without it, you pay the hospital and the lost days of an accident yourself.

And there are two more things the self-employed do not have: holiday allowance and Christmas allowance. That is why those amounts are not part of the sickness or parental calculation either.

The "lower your base" trap

Social Security lets you adjust your relevant income up or down, in steps of 5%, up to a limit of 25%. You do it on Segurança Social Direta.

Lowering it looks good: you pay less every month. But it has a hidden price.

Simple rule: the base you choose today is the protection you have tomorrow. Lowering it helps this month's cash flow; it takes away your safety net when you really need it.

How much you must have paid in

Each benefit has a qualifying period (the minimum time of contributions before you can claim).

There is also one condition across the board: your contributions must be up to date. If you owe contributions, benefit payments are suspended until you settle them.

5 common mistakes on green receipts

1. Assuming there is unemployment benefit. There is only cessation of activity, and only for the economically dependent.
2. Counting on benefits based on your invoicing. They come from the contribution base, which is lower.
3. Lowering the base to the minimum "to save". You save this month and lose on sickness, parental and the pension.
4. Skipping work-accident insurance. It is compulsory and Social Security does not cover accidents.
5. Leaving contributions unpaid. Without being up to date, benefits are suspended.

How it links together

Quick check: look at your contribution base. All of your protection comes out of it.

• To see how much sick pay you get: sick pay for the self-employed.
• For the days and amount of parental leave: parental leave.
• If you suspect you are in false self-employment: false self-employment, 8 signs.
• To run unemployment numbers (employee rules): unemployment benefit calculator.