Before you hire anyone in Portugal, check their NIF: here's how and why

Last year I needed some work done on the house. Asked around, got a recommendation on a local Facebook group, and a guy showed up two days later with a quote scribbled on a napkin. No website, no business card, no company name. Just a first name and a phone number.

This is normal in the Algarve. Most small businesses here don't have a website. Hiring decisions are based on who your neighbor used last time, which name keeps coming up in Facebook groups, and whether someone has decent Google Maps reviews. It works surprisingly well, most of the time.

But sometimes it doesn't. And when it doesn't, you realize how little you actually knew about the person you handed money to.

Why online reviews don't work the same way here

If you're coming from Northern Europe, the UK, or the US, you might assume you can just check reviews before hiring someone. Bad experience? Leave a one-star review and warn others.

Portugal makes that risky. The Portuguese Penal Code (Articles 180-183) criminalizes defamation, and the penalties go up when the statements are made through social media or other public channels. Writing a negative review about a specific person or business can lead to criminal charges, with penalties up to six months in prison or a fine of up to 240 days. And these laws get enforced. This isn't a dusty statute nobody uses.

The result is a culture where people are cautious about publicly naming bad experiences. Facebook groups in the Algarve are full of posts asking "can anyone recommend a good electrician?" but almost never "avoid this electrician, here's what happened." The information asymmetry favors the service provider.

So if you can't rely on public accountability the way you might in other countries, what can you check?

The 30-second NIF check

Every person working legally in Portugal has a NIF (Número de Identificação Fiscal), a 9-digit tax number. Solo entrepreneurs (trabalhadores independentes) use their personal NIF as their business number. Companies use a NIPC (Número de Identificação de Pessoa Coletiva), which also has 9 digits but starts with 5.

Here's the useful part: if the person you're hiring earns above €15,000 per year, they're required to be VAT-registered. And VAT registrations are publicly verifiable.

You can check any EU VAT number through VIES (the EU's VAT Information Exchange System), or through our free NIF business check. Type in a Portuguese NIF with the PT prefix (like PT123456789) and you get an instant answer.

What makes Portugal unusual is how much information comes back. When you verify a Portuguese VAT number, you get:

1. Confirmation of registered activity: the number is active and linked to a real business registration
2. The full name. For solo entrepreneurs, this is their legal name, not a trade name they picked. You can compare it to the name on their ID.
3. The registered address: where the business is officially registered with the tax authority

Not every EU country gives you this. Germany, for privacy reasons, won't reveal the name or address behind a VAT number through VIES. Portugal does. It's one of the more transparent countries in the system.

What a valid result tells you (and what it doesn't)

A successful VIES lookup tells you the person has an active business registration with the Portuguese tax authority (Autoridade Tributária). They've done the abertura de atividade (opening of activity), they're in the system, and the Finanças knows about them. That's a real signal.

You can also cross-check the name and address against whatever the person told you. If they said their name is João Silva and the VIES result says Maria Santos, that's worth a conversation. If the registered address is in Porto but they told you they're based in Lagos, same thing.

But a valid VAT number doesn't mean someone does good work. It doesn't mean they're licensed for the specific trade. It doesn't mean they have insurance. It's one check, not the only check. Think of it like verifying someone's driver's license: it tells you they're allowed to drive, not that they're a good driver.

The €15,000 gap

There's a catch. Solo entrepreneurs earning below €15,000 per year can operate under a VAT exemption (Article 53 of the CIVA). These workers are legally registered with the Finanças, but they don't have an active VAT number. A VIES check will return "not found" even though they're perfectly legitimate.

This matters in the Algarve because plenty of part-time workers, seasonal service providers, and people early in their freelance career fall under this threshold. A failed VIES check doesn't mean fraud. It might just mean the person earns less than €15,000.

What to do when the check finds nothing for an individual

Here's where it gets important: there is no public database where you can directly verify an individual freelancer's registration status. VIES is a VAT registry, not a business registry. If someone's NIF doesn't appear there, you simply can't confirm or deny their AT registration status through any public tool.

Which means you have to ask them for proof. Two options, both easy on their end:

Option 1: Ask for a recibo verde or fatura. Any registered freelancer can generate one instantly through the Portal das Finanças. The act of issuing it proves they have an open activity registration, because the portal blocks you from issuing one if your activity is closed. If they send you a document with an ATCUD code at the top, that's a certified invoice from a registered person. Free to generate, takes about a minute.

Option 2: Ask for a comprovativo de início de atividade. This is the official document proving their activity is registered with AT. They get it by logging into Portal das Finanças and going to: Todos os Serviços, then Atividade, then "Consultar declarações de início, alteração e cessação." They open the declaration, then save or print it. The whole thing takes about 30 seconds.

Either document confirms registration. A registered freelancer can produce both without any effort. Refusing, or claiming they don't have access to these documents, is a red flag.

What the comprovativo does not tell you: it doesn't show income, tax filings, or whether they're currently active in any meaningful sense. It just confirms they did the paperwork. But it's the paper trail that exists, so it's worth asking for.

The not-found-for-an-individual problem mainly affects sole traders. If the number starts with 5, you're dealing with a company (NIPC) and the VIES result tends to be more definitive, since companies usually exceed the VAT registration threshold quickly.

NIF vs NIPC: reading the first digit

A quick way to tell if you're dealing with a person or a company: look at the first digit of their tax number.

• 1, 2, or 3: personal NIF (individuals, including solo entrepreneurs)
• 5: NIPC (companies and other legal entities)
• 6: public administration entities
• 9: provisional numbers (non-residents, temporary registrations)

When someone gives you a number starting with 5, they're operating through a company. The VIES check works the same way, but the name returned will be the company name, not a personal name.

A practical habit

I've started doing the VIES check before any significant payment. Hiring someone for a kitchen renovation, booking a contractor for pool maintenance, engaging a freelance designer: 30 seconds on our NIF business check gives me a baseline. It doesn't replace asking for references or checking past work. But it's the easiest first filter I've found.

The Portuguese system, for all its bureaucracy, gives you this one thing for free: a way to verify that the person asking for your money is at least registered as a business. In a market that runs on word-of-mouth and where public reviews carry legal risk, that's worth something.