Comparisons
Lda. vs Sole Trader (ENI) in Portugal: Which Should You Choose?
Compare a Portuguese limited company (Lda.) with working as a sole trader (ENI or freelancer): liability, tax, Social Security, costs and credibility.
Updated · 2 min read · By the GetLDA.pt team
Quick answer
A sole trader (ENI or trabalhador independente) is cheaper and simpler to run, but has unlimited personal liability and pays progressive personal income tax on all profit. An Lda. protects your personal assets, pays 15–19% corporate tax on profit and lets you choose how and when to take money out — at the cost of a mandatory accountant and more formalities.
If you're starting on your own in Portugal, the first decision is whether to work in your own name or through a company. Here's how the two compare.
At a glance
| Sole trader (ENI / freelancer) | Lda. or Unipessoal Lda. | |
|---|---|---|
| Legal personality | None — you are the business | Separate legal entity |
| Liability | Unlimited — personal assets are at risk | Limited to the capital contributed |
| Set-up | Declare start of activity online, free | Registration from €220 plus professional fees |
| Income tax | Personal income tax (IRS) at progressive rates | Corporate tax (IRC) at 15–19%, then tax on salary or dividends |
| Accountant | Optional under the simplified regime | Mandatory |
| Credibility with large clients and banks | Lower | Higher |
| Bringing in partners or investors | Not possible | Straightforward |
How a sole trader is taxed
A sole trader's profit is taxed as their personal income. Under the simplified regime (available up to €200,000 of annual turnover), only a fixed percentage of revenue is treated as taxable — for most professional services 75% — and that amount is taxed at progressive IRS rates reaching 48% for the highest incomes.
Social Security for the self-employed is 21.4% of relevant income (70% of service revenue), with an exemption for the first 12 months after first registering as self-employed.
How an Lda. is taxed
The company pays IRC on its profit — 15% on the first €50,000 for SMEs and 19% above that in 2026. You then pay personal tax only on what you take out:
- a manager's salary, taxed at IRS rates with Social Security contributions; and/or
- dividends, taxed at a flat 28% for Portuguese residents.
Profit left in the company is taxed only once, which makes an Lda. attractive if you reinvest. Read the corporate tax guide for details.
Which is better for you?
A sole trader usually makes sense if:
- you're testing an idea or earn modest income;
- your work carries little liability risk;
- you want the lowest running costs.
An Lda. usually makes sense if:
- your profit is high enough that IRC plus dividend tax beats the top IRS rates;
- you sign significant contracts, hold stock or employ people — anything where liability matters;
- clients or investors expect to deal with a company;
- you plan to bring in partners.
A common path is to start as a sole trader and incorporate a Unipessoal Lda. once the business grows. Your accountant can model the tax at your expected income.
Non-residents
If you don't live in Portugal, an Lda. is usually the more practical option: it separates the Portuguese business from your personal tax affairs abroad. See opening a company in Portugal as a non-resident.
This guide is general information, not legal or tax advice. Rules change — figures were last checked on 27 September 2026. GetLDA.pt is not a law firm; our partner lawyers advise on your specific situation.
Related guides
Unipessoal Lda.: The Single-Member Company in Portugal
What a Sociedade Unipessoal por Quotas is, how it differs from a standard Lda. and a sole trader, and how to register one.
Corporate Tax in Portugal (2026): IRC Rates for an Lda.
IRC rates in Portugal for 2026: the 19% standard rate, the 15% SME rate, surcharges, dividend tax and key filing deadlines.
How Much Does It Cost to Open a Company in Portugal?
A full breakdown of the cost of opening an Lda. in Portugal: registry fees, name certificate, share capital, lawyer fees and running costs.