The Organized Accounting Regime is a tax option available to self-employed workers and companies in Portugal who want greater personalization in managing their finances. This regime is mandatory for those who exceed certain income limits, but it can also be a strategic choice for professionals or businesses with high and specific expenses.
Who Should Opt for the Organized Accounting Regime?
This regime applies to the following cases:
1. Annual Gross Income Over €200,000
For self-employed workers, this regime becomes mandatory when annual earnings exceed this limit.
2. Companies and Businesses with High Expenses
It is recommended for activities with high costs, as it allows you to deduct real expenses when determining taxable income.
3. Professionals or Companies that Voluntarily Choose
Even with income below €200,000, it is possible to opt for this regime to benefit from greater flexibility in deducting expenses.
How does the Organized Accounting System work?
Under this regime, taxable income is calculated based on the difference between actual income (turnover) and actual expenses related to the activity. To do so, it is necessary to maintain rigorous accounting, managed by an Official Accounting Technician (TOC).
Key Features
Deduction of Real Expenses
All expenses directly related to the activity can be deducted, including:
- Expenses for equipment and work tools;
- Travel and vehicle costs (proportional to professional use);
- Space or office rental;
- Acquisitions of services or goods for the activity.
Accounting Management by TOC
It is mandatory to hire an Accountant to ensure compliance with tax and accounting obligations.
Greater Fiscal Flexibility
Allows you to adjust taxable profit based on actual costs, which can result in fairer taxation, especially for activities with significant expenses.
How does the Organized Accounting System work?
Under this regime, taxable income is calculated based on the difference between actual income (turnover) and actual expenses related to the activity. To do so, it is necessary to maintain rigorous accounting, managed by an Official Accounting Technician (TOC).
Key Features
Deduction of Real Expenses
All expenses directly related to the activity can be deducted, including:
- Expenses for equipment and work tools;
- Travel and vehicle costs (proportional to professional use);
- Space or office rental;
- Acquisitions of services or goods for the activity.
Accounting Management by TOC
It is mandatory to hire an Accountant to ensure compliance with tax and accounting obligations.
Greater Fiscal Flexibility
Allows you to adjust taxable profit based on actual costs, which can result in fairer taxation, especially for activities with significant expenses.
Advantages of the Organized Accounting Regime
Deduction of Real Expenses
Unlike Simples Nacional, where expenses are presumed, here it is possible to deduct all real expenses, as long as they are properly documented.
Greater Adjustment to Financial Reality
This regime is ideal for those who have high fluctuations in income or expenses, providing taxation proportional to real profits.
Tax Transparency
Organized accounting guarantees a clear and detailed view of the business’s financial situation, facilitating management and decision-making.
Advantages for Investment and Growth
Businesses that wish to request financing or attract investors benefit from the clarity and credibility of organized accounting.
How does the Organized Accounting System work?
Under this regime, taxable income is calculated based on the difference between actual income (turnover) and actual expenses related to the activity. To do so, it is necessary to maintain rigorous accounting, managed by an Official Accounting Technician (TOC).
Key Features
Deduction of Real Expenses
All expenses directly related to the activity can be deducted, including:
- Expenses for equipment and work tools;
- Travel and vehicle costs (proportional to professional use);
- Space or office rental;
- Acquisitions of services or goods for the activity.
Accounting Management by TOC
It is mandatory to hire an Accountant to ensure compliance with tax and accounting obligations.
Greater Fiscal Flexibility
Allows you to adjust taxable profit based on actual costs, which can result in fairer taxation, especially for activities with significant expenses.
Advantages of the Organized Accounting Regime
Deduction of Real Expenses
Unlike Simples Nacional, where expenses are presumed, here it is possible to deduct all real expenses, as long as they are properly documented.
Greater Adjustment to Financial Reality
This regime is ideal for those who have high fluctuations in income or expenses, providing taxation proportional to real profits.
Tax Transparency
Organized accounting guarantees a clear and detailed view of the business’s financial situation, facilitating management and decision-making.
Advantages for Investment and Growth
Businesses that wish to request financing or attract investors benefit from the clarity and credibility of organized accounting.
Obligations in the Organized Accounting Regime
TOC Hiring
The presence of an Accountant is mandatory to prepare and present tax returns, as well as to keep accounting records up to date.
Issuing Invoices and Recording Revenue
All receipts must be properly documented through invoices or other official proof.
Delivery of Periodic Declarations
Includes submission of VAT (when applicable), IRS/IRC and other tax obligations.
File Maintenance
It is mandatory to keep all documents related to the activity (invoices, receipts, contracts) for a minimum period of 10 years.
How does the Organized Accounting System work?
Under this regime, taxable income is calculated based on the difference between actual income (turnover) and actual expenses related to the activity. To do so, it is necessary to maintain rigorous accounting, managed by an Official Accounting Technician (TOC).
Key Features
Deduction of Real Expenses
All expenses directly related to the activity can be deducted, including:
- Expenses for equipment and work tools;
- Travel and vehicle costs (proportional to professional use);
- Space or office rental;
- Acquisitions of services or goods for the activity.
Accounting Management by TOC
It is mandatory to hire an Accountant to ensure compliance with tax and accounting obligations.
Greater Fiscal Flexibility
Allows you to adjust taxable profit based on actual costs, which can result in fairer taxation, especially for activities with significant expenses.
Advantages of the Organized Accounting Regime
Deduction of Real Expenses
Unlike Simples Nacional, where expenses are presumed, here it is possible to deduct all real expenses, as long as they are properly documented.
Greater Adjustment to Financial Reality
This regime is ideal for those who have high fluctuations in income or expenses, providing taxation proportional to real profits.
Tax Transparency
Organized accounting guarantees a clear and detailed view of the business’s financial situation, facilitating management and decision-making.
Advantages for Investment and Growth
Businesses that wish to request financing or attract investors benefit from the clarity and credibility of organized accounting.
Obligations in the Organized Accounting Regime
TOC Hiring
The presence of an Accountant is mandatory to prepare and present tax returns, as well as to keep accounting records up to date.
Issuing Invoices and Recording Revenue
All receipts must be properly documented through invoices or other official proof.
Delivery of Periodic Declarations
Includes submission of VAT (when applicable), IRS/IRC and other tax obligations.
File Maintenance
It is mandatory to keep all documents related to the activity (invoices, receipts, contracts) for a minimum period of 10 years.
Practical Example: How the Organized Accounting Regime Can Benefit a Professional
Imagine a self-employed professional who provides services and has the following annual income and expenses:
- Gross Annual Income:€80,000
Actual Expenses:
- Office rent: €12,000
- Travel: €5,000
- Acquisition of equipment: R$8 thousand
- Subcontracted services: €15,000
Taxable Income:
80,000€ – (12,000€ + 5,000€ + 8,000€ + 15,000€) = 40,000€
With the Organized Accounting Regime, the professional only pays taxes on R$40 thousand of taxable income, whereas, in Simples Nacional, taxable income would be calculated assuming 75% of the total (R$60 thousand), without considering all real expenses.
Organized Accounting Regime vs. Simples Nacional
| Criteria | Organized Accounting | Simplified Regime |
|---|---|---|
| Expense Deduction> | Real and proven | Assumed percentages |
| Accounting Management> | Mandatory with OCD | Simple no OCD required |
| Complexity> | High | Download |
| Administrative Cost> | Higher | More reduced |
Conclusion
The Organized Accounting Regime is a more robust and flexible tax option, ideal for professionals and companies with high income or significant expenses. Although it involves more rigorous management and higher administrative costs, it offers benefits in terms of expense deductions and tax planning.
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