Portugal's growing number of young entrepreneurs

It could be much better if the tax system was sane.

Let's say you want to do some freelance work for someone. In Portugal you have to register your service ("abrir actividade") and use an oficial invoice booklet provided by the government ("recibos verdes") to invoice your customers. You need to pay a substantial amount of social security and income tax ( a designer friend was making around €1000 a month and paying almost €500 per month in taxes ), and if you stop trading and forget to tell the government, even if you have zero income you need to pay the minimum social security ( around €60 per month ) just to be registered as a service provider.

Basically, you are taxed pre-emptively wether you make any money or not. This stops a lot people from even trying to sell their services as freelancers, let alone start a company ( can't imagine the tax labyrinth that must be ). Sometimes I want to hire a friend for a small gig and they refuse because they can't afford the social security bill incurred in being a registered service provider.

This is killing the formal economy, stifling entrepreneurship, and it's also driving more and more people to informal contracts with cash transactions that deprive the state of needed income. I won't even talk about the crazy income tax band system we have...

(Just a short note on an irksome phrase in that piece:)

"This is because in Portugal owning your own house or apartment has always been such a matter of pride that it is the first choice of most people, even young adults."

That's if "always" means "as far as I can remember", written by a fairly young writer. Fifty years ago renting was the most common mechanism in Portuguese cities, until rent-control (first instituted before 1970's inflation) nearly killed it, and state-subsidized bank mortgages became the norm. Unsurprisingly, forty years of that contributed to the economy crash.

In times of economic downturn there is always an uptick in newly minted entrepreneurs. Some of them will make it, most of them will not and will be re-employed in at most a few years. Think of them as the unemployed that refuse to give up, and that alone makes them worth watching, they're fighters, but that doesn't change the stats too much in their favour. Something similar is happening in Spain.

When a bunch of people have nothing to lose they can do impressive things. In this case, nothing to lose means that they don't have good employment prospects not because of personal failings but rather macroeconomic or structural problems. When there's little to no opportunity cost to trying to start your own business it shouldn't be surprising that so many do try.

Realmente hoje em dia tenho muito pouca idea de como as coisas estejam, mas admira-me que a malta toda (que possa fazer apps) não-se tenha despachado prá Alemanha e a Inglaterra.

Most of them were totally Mo-Lo-So. Nowadays, I guess they're all So-Lo-Mo. :)

I wonder what the social safety net is like in Portugal. It looks like they have national health service, so maybe dealing with employee health insurance is one worry their entrepreneurs would lack.