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CAE & CIRS Codes in Portugal: A Comprehensive Guide

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When you open a business or freelance activity in Portugal, you'll need to allocate activity codes to your venture, also known as CIRS or CAE. Portugal requires these codes to determine the specific business activities your venture will engage in.

Key Takeaways

• Businesses and Freelancers in Portugal need to register their activities with the tax office using specific activity codes known as CAE or CIRS codes.
• Both CAE and CIRS codes are unique identifiers that classify the main economic activities of companies or self-employed individuals in Portugal, helping streamline taxation processes.
• If you are an independent professional who will exclusively provide services in one of the industries listed below or in the [Annex 1 of Article 151 of the IRS code]
• If you plan to develop a business activity or sell products, you will choose a CAE code (or codes).
• You can have one main CIRS code and up to 4 secondary ones.
• You can have one main CAE and up to 19 secondary ones.
• Understanding and correctly assigning activity codes is crucial for ensuring compliance with local laws and managing tax obligations successfully.

Understanding Activity Codes in Portugal

Activity codes in Portugal, also known as CAE and CIRS codes, play a significant role in defining the operations of businesses. Each business must identify its primary activities and register these with the Portuguese tax authorities using specific activity codes, which then will be shown on the company [Certidao Permanente](https://rauva.com/blog/request-certidao-permanente-online).

This registration process helps authorities monitor business operations for tax purposes and ensures each organization meets regulatory requirements related to their particular work field.

As a rule of thumb, if you are an independent professional who will exclusively provide services, you must choose a CIRS code, and if you plan to develop a business activity, you will choose CAE codes.

Companies engage in various activities that may not necessarily fall under one category, and in these circumstances, multiple activity codes might be necessary. It's also possible, when starting your business in Portugal, to register codes in different categories, and in categories of activity that you ‘might’ engage in in future. 

What are CIRS codes?

CIRS codes, or Código do Imposto sobre o Rendimento das Pessoas Singulares, play a significant role in the Portuguese tax system, and are used when individual persons provide a service. 

CIRS categorisation is divided into 15 sections, which correspond to 15 different groups of professional activities.

• Architects, engineers and similar technicians;
• Visual and assimilated artists, actors and musicians;
• Bullfighting artists;
• Economists, accountants, actuaries and similar technicians;
• Nurses, midwives and other paramedical technicians;
• Lawyers and solicitors;
• Doctors and dentists;
• Teachers and similar technicians;
• Professionals dependent on official appointment;
• Psychologists and sociologists;
• Chemicals;
• Priests;
• Other people exercising liberal professions, technicians and assimilated workers;
• Veterinarians;
• Other activities exclusively related to the provision of services.

What are CAE codes?

CAE codes, or Código de Atividade Económica, on the other hand, are used to classify and identify business activities in Portugal. These unique identifiers encompass an array of business operations, from running a guesthouse to retail trade.

The list of CAE codes to choose from is extremely long, and understanding your applicable CAE code(s) is very important when establishing a legal structure for your entrepreneurship projects in Portugal and optimizing your taxation conditions, so we’d always recommend seeking the advice of a legal or financial professional when forming a business entity in Portugal. 

Selecting a CAE Code

1. Familiarize Yourself with the Structure

To choose a CAE code, delve into the structure: Section, Division, Group, Class, and Subclass. This framework provides a clear path for narrowing down the most suitable code for your company's activities.

2. Analyzing the Sections and Divisions

Take, for example, Section I, which encompasses Accommodation, Restaurants, and Similar. Within this section, Division 55 pertains to accommodation, while Division 56 relates to restaurants and similar establishments. This initial analysis guides you toward the appropriate divisions that align with your business.

3. Refining Your Choice

Upon identifying the division, it's time to pinpoint the specific code. Consider a hotel with an associated restaurant: the CAE code would be 55111. Conversely, a hotel without a restaurant would be represented by the code 55121. For instance, a restaurant offering "take-away meals" holds the CAE code 56106, while a bar falls under 56302.

4. Seeking Expert Assistance

While the process might seem intricate, professional guidance can simplify it and ensure compliance with industry standards.

Changing Your CAE Code

Companies have the flexibility to modify their chosen CAE codes, provided it's within the legal timeframe and follows the designated procedure. The alteration can be executed through the Finance Portal or by visiting a physical office. It's important to note that while the request is free, its approval is contingent on review and acceptance by the relevant entity.

How many CIRS or CAE codes can you have?

In Portugal, you can have one main CIRS code and up to 4 secondary ones, or one main CAE and up to 19 secondary ones. 

A company may choose to register for multiple activity codes based on their area of operation. For instance, if your businesses involve both tech services and physical goods sales, you would need two different CAEs - one for computer programming activities and another for retail sale of computers.

Similarly, freelance professionals requiring multiple CIRS classifications can obtain them as well.

Useful Portuguese Vocabulary

• CIRS Codes: Códigos de IRS
• CAE Codes: Códigos CAE
• Taxable Income: Rendimento Tributável
• Turnover: Volume de Negócios
• Business Activity: Atividade Económica
• Sole Proprietorship: Empresário em Nome Individual (ENI)
• Freelancer: Trabalhador Independente
• Tax Office: Finanças

Conclusion

When starting a business in Portugal, navigating business codes, whether CAE or CIRS, is a crucial step for entrepreneurs and freelancers embarking on their ventures in Portugal. These codes serve as the cornerstone of your business's legal and financial planning structure, determining taxation, how you invoice your clients, compliance, and more. Whether you're delving into the realm of liberal professions or engaging in diverse business activities, the correct assignment of codes is essential.

Frequently Asked Questions

What role do CAE codes play in business activities in Portugal?

CAE codes, or "Códigos de Atividade Económica" in Portuguese, are classification codes used to categorize various economic activities carried out by entities in Portugal.

A CAE code is crucial for regulatory purposes and help to standardize reporting across different industries.

In sectors such as manufacturing, fishing, and own production, specific CAE codes are assigned to denote the type of activities entities carry out. For instance, in manufacturing, different CAE codes are allocated based on the type of material being processed or the types of products being manufactured.

Similarly, in fishing, CAE codes distinguish between different types of fishing activities, such as commercial fishing or aquaculture.

These codes are essential for businesses to accurately report their activities and ensure compliance with regulations in Portugal.

Useful Resources

Here are some useful links about CAE and CIRS codes in Portugal for entrepreneurs:

[Portal das Finanças]: The official website of the Portuguese Tax and Customs Authority provides information and services related to taxation and business activities in Portugal.

[ePortugal.gov.pt]: The official website of the Portuguese Government provides information and services for citizens and businesses, including resources related to starting a business and choosing CAE and CIRS codes.

Entrepreneurs in Portugal can use these government resources to learn more about CAE and CIRS codes and how to choose the right codes for their businesses.

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