Freelancing in Portugal 2026: IRS, Social Security and VAT
Freelancers on the simplified regime pay income tax on part of their turnover, Social Security on 70% of it and, above €15,000, charge VAT.
The basics, step by step
- Register your activity with the tax office (Portal das Finanças), choosing your profession's code.
- Issue a fatura-recibo on the Portal for every job.
- File a quarterly Social Security return and pay contributions monthly.
- File your IRS return the following year with annex B, where withholding is squared with the final tax.
Income tax
For professions in the art. 151 table, only 75% of turnover is taxed (code 1519, "other service providers", uses 0.35). If documented expenses are below 15% of turnover, the gap is added back; €4,587.09 (8.54 × IAS) or your Social Security, if higher, counts automatically. First and second years get a 50% and 25% reduction of the coefficient, if you have no employment income that year.
Social Security on 70% of turnover comes to about 14.98% of what you invoice (21.4% × 70%), so the 15% rule mostly bites when you pay no contributions — for example in your first year. Invoicing €45,000 in year one with no other expenses, you are €6,750 − €4,587.09 = €2,162.91 short, and that amount is added to your taxable income. Office rent, equipment and invoices flagged as business expenses in e-fatura all help.
Withholding
Business clients with organised accounts withhold 23% (table professions) or 11.5% (other services). Below €15,000 a year you can opt out. Any excess comes back in your refund.
Social Security
21.4% on 70% of turnover (20% for sales), declared quarterly, minimum €20/month, exempt in the first 12 months. You can raise or lower the base by up to 25%. If you also have a job, you are generally exempt while average relevant income stays below 4 × IAS (€2,148.52 a month). See Social Security for the self-employed.
VAT
Exempt up to €15,000 a year; above €15,000 you charge VAT from the following year, and above €18,750 from that invoice onwards. Standard rates: 23% Mainland, 22% Madeira, 16% Azores.
Example: €30,000 a year
Table profession, third year, single, business clients withholding 23%: Social Security €4,494 (€374.50 a month), taxable income €22,500, withholding €6,900, final IRS about €3,600 — a refund of roughly €3,300 — leaving about €21,900 for the year. VAT collected is passed on to the State and is not income.
Payments on account
If withholding does not cover your tax, you may be asked for three payments on account (July, September, December) totalling 65% of the tax assessed. They are not due if each instalment would be under €50.
Common mistakes
- Picking code 1519 when your profession is in the table — it means a 0.35 coefficient and 11.5% withholding.
- Spending the VAT you collected. It belongs to the State.
- Skipping the quarterly Social Security return.
- Not setting money aside when clients do not withhold (private individuals or foreign clients).
FAQ
Can I freelance and be employed?
Yes. Both incomes are added up for IRS and the start-up coefficient reduction does not apply that year. For Social Security you are generally exempt as a freelancer up to 4 × IAS of average relevant income.
Employment contract or freelancing — which pays more?
It depends on turnover and expenses. The calculator shows the equivalent gross salary; compare with the net salary guide.
When do I need organised accounting?
It is mandatory above €200,000 of annual turnover. Below that it is optional: you pay tax on actual profit but need a certified accountant.
Does IRS Jovem apply?
Yes — see IRS Jovem. Clients still withhold the full rate; the difference comes back in your refund.