The Simplified Regime in Portugal: How Freelancers Are Taxed

• You are in the simplified regime if your category B income in the previous year was no more than €200,000 (art. 28.º n.º 2). You can opt for organised accounts instead.
• Taxable income is a fixed share of turnover: 0.75 for professions listed in the art. 151.º table, 0.35 for other services, 0.15 for sales (art. 31.º n.º 1). It is taxed at the general IRS scale.
• For services at 0.75 or 0.35, a test compares 15% of your invoicing with the deductions and costs the law lets you count, and any shortfall is added to taxable income (art. 31.º n.º 13).
• The coefficients are cut by 50% in the year you start and 25% in the next, if you have no category A or H income in those years (n.º 10).
• You leave the regime only after two consecutive years above €200,000, or in one year if you exceed it by more than 25% (art. 28.º n.º 6).

The simplified regime taxes a freelancer on a fixed share of turnover instead of real profit. You are in it if your category B income in the previous year was no more than €200,000, and taxable income is your invoicing times a coefficient, taxed at the general IRS scale. For services, a separate 15% test can add part of the income back if your deductions and reported costs are too low. This page explains who is in the regime, the test, the first-two-years reduction and when organised accounts are worth it. Which coefficient applies to you is covered in the CAE and activity codes guide.

Who is in the regime

Art. 28.º n.º 2 puts in the simplified regime the taxpayers whose gross category B income in the previous tax period did not exceed €200,000. In the year you start, the regime is decided by the annual income you estimated in your start-of-activity declaration, unless you opted for organised accounts (n.º 10). You can always opt for organised accounts (n.º 3), either in the start-of-activity declaration or by the end of March of the year you want the change, through a declaração de alterações (n.º 4). The option stays valid until you change it.

You do not leave the regime the moment you pass €200,000. Art. 28.º n.º 6 ends it only when the limit is exceeded in two consecutive tax periods, or in a single one by more than 25%, which is above €250,000. Organised accounts then apply from the following period.

If all your income comes from services to a single entity, n.º 8 lets you opt, each year, to be taxed under the rules of category A instead. That is a different route from the simplified regime, so compare the two if you work for one client. See the category A versus B guide for what changes.

How taxable income is worked out

Art. 31.º n.º 1 sets a coefficient by type of income. Taxable income is the gross income times the coefficient, and it is then added to your other income and taxed at the general IRS scale, which in 2026 runs from 12.5% to 48% (n.º 3).

The table has more rows in the code, for subsidies, local accommodation and crypto-assets, which most freelancers will not meet. The coefficient follows the nature of the income, and art. 151.º lets the AT classify your activity either by the CAE or by its own table. The rules for that are in the guide linked above.

The first two years

Art. 31.º n.º 10 cuts the coefficients of n.º 1 b), c) and f) by 50% in the year you start and by 25% in the following year, as long as you have no category A or H income in those periods. At 0.75 that gives 0.375 in the first year and 0.5625 in the second. At 0.35 it gives 0.175 and 0.2625. It does not apply if you ceased activity less than five years earlier (n.º 11).

The 15% expense test

The presumed deduction under the 0.75 and 0.35 coefficients is only partly free. Art. 31.º n.º 13 adds to your taxable income the positive difference between 15% of your gross service income and the total of the following items.

• The fixed deduction of art. 25.º n.º 1 a), 8.54 times the IAS, or the mandatory Social Security contributions tied to the activity if they are higher. With the 2026 IAS of €537.13, the fixed deduction is €4,587.09.
• Payroll costs you reported to the AT.
• Rent of buildings used in the activity that appears in invoices reported to the AT.
• 1.5% of the taxable property value of buildings you own or hold and use in the activity.
• Other costs of goods and services related to the activity that appear in invoices reported to the AT or issued on the Portal, such as materials, energy, travel and professional subscriptions.
• Imports and intra-EU purchases of goods and services for the activity.

The fixed deduction is the same for everyone, so the test bites harder the more you invoice. At €30,000 of service income the threshold is €4,500 and the fixed deduction of €4,587.09 already covers it. At €40,000 the threshold is €6,000, so €1,412.91 has to be covered by your Social Security contributions, if they exceed the fixed deduction, and by reported costs. At €50,000 it is €7,500 and €2,912.91. Whatever is not covered is added to taxable income.

Two practical points. Expenses only count if they are on invoices reported to the AT, and you identify the invoices linked to your activity through the Portal das Finanças by the end of February of the following year (n.º 15 a)). Costs that serve the activity only in part count for 25% (n.º 14). Alternatively you can declare the figures in the IRS return itself, but you must still be able to prove them (n.º 16).

Separately, n.º 2 lets you deduct, after applying the coefficient, the mandatory social protection contributions tied to the activity, to the extent that they exceed 10% of your gross income, up to your net income and if not deducted elsewhere.

When organised accounts are worth considering

Under organised accounts you are taxed on your real profit, kept by a certified accountant, instead of a fixed share of turnover. It can help when your provable costs are well above what the coefficient presumes: at 0.75 the presumed costs are 25% of turnover, and at 0.35 they are 65%. It also changes how your Social Security base is set, because relevant income becomes the previous year's taxable profit, as the self-employed Social Security guide explains. Run the numbers both ways before you opt, and remember the deadline: the start-of-activity declaration or the end of March.

Checklist

• Check that last year's gross category B income was €200,000 or less, or that you estimated below it when you started.
• Confirm your coefficient from the nature of your income and the art. 151.º table.
• If you started this year or last, check whether the 50% or 25% reduction applies, and whether you have category A or H income.
• Work out the 15% threshold and compare it with the fixed deduction, your contributions and reported costs.
• Identify your activity invoices on the Portal by the end of February.
• If you have a single client, compare the category A option (art. 28.º n.º 8).
• If real costs are high, compare organised accounts, and file the change by the end of March.