Freelancer Tax in Portugal (2026): What You Actually Pay on Recibos Verdes
Updated 28 October 2026 for the 2026 tax year. Rates are from the 2026 State Budget and the Código do IRS. This is general information, not tax advice.
Working for yourself in Portugal means three bills: income tax (IRS), social security and, above €15,000 a year, VAT. None of them is hard once you know how each one is worked out. This guide covers the rules that apply to most freelancers on recibos verdes, with real numbers for 2026.
The short version
- Most freelancers use the simplified regime. Portugal taxes only part of your income: 75% for professions on the official list, 35% for other services (including the catch-all code 1519) and 15% for sales, restaurants and hotels.
- In your first year that share is halved, and in your second year it’s cut by a quarter.
- Income tax runs from 12.5% to 48% on the taxable part, slice by slice.
- Social security is 21.4% on 70% of your income, and you pay nothing for your first 12 months.
- You can stay out of VAT while your turnover is under €15,000 a year.
- Portuguese clients with organised accounts withhold 23% (listed professions) or 11.5% (other services) from your invoices, unless you expect to earn less than €15,000 and say so on the receipt.
- NHR is closed. IFICI rarely works for standalone freelancers. IRS Jovem does, if you’re 35 or under.
How freelance income is taxed: the simplified regime
If your freelance income was under €200,000 last year, you’re on the simplified regime unless you choose organised accounting. You don’t deduct expenses line by line. Instead, the law decides what share of your income counts as profit, and that share is taxed.
| Activity | Share taxed | Examples |
|---|---|---|
| Professions on the article 151 list | 75% | Programmers, designers, consultants, translators, teachers and trainers, engineers, architects, accountants, lawyers, doctors and therapists, journalists, artists |
| Other services, including code 1519 | 35% | Services with no specific professional code |
| Sales of goods, restaurants and hotels | 15% | Online shops, cafés, guesthouses |
New freelancers get a break. In the first year of activity the share is halved, so a listed profession is taxed on 37.5% of income. In the second year it’s cut by a quarter, to 56.25%. From year three the full share applies.
You can switch to organised accounting by the end of March of any year. Then you pay tax on real profit, after real expenses, and you need a certified accountant. It usually pays off only if your genuine costs are well above the share the simplified regime assumes.
Your activity code decides which share applies
When you register, you pick an activity code. That code decides whether 75% or 35% of your income is taxed, so it’s worth getting right. The catch-all code 1519, “other service providers”, is taxed at 35%, not 75%. The tax authority confirmed this in Circular 2/2016. It’s only for services with no specific professional code, and the tax office can reclassify you if your real work is on the list.
If you’re on the 75% list, there’s one more rule. You need to show expenses worth at least 15% of your income on e-fatura, such as rent for an office, equipment or professional fees. If you show less, the gap is added to your taxable income.
Income tax rates in 2026
The taxable part of your income goes through the same scale as everyone else’s. Each slice has its own rate, from 12.5% on the first €8,342 to 48% above €86,634. A solidarity surcharge of 2.5% applies between €80,000 and €250,000 of taxable income.
On 9 October 2026 Parliament approved lower rates for the first six slices, for all 2026 income. The Government still has to publish the decree that sets them, so the numbers below use the rates in force.
Example: €40,000 of freelance income
| Listed profession (75%) | Code 1519 (35%) | |
|---|---|---|
| Taxed part of income | €30,000 | €14,000 |
| Social security (from year 2) | €5,992 | €5,992 |
| Income tax | €6,260 | €2,009 |
| What you keep | €27,748 | €31,999 |
In your first year as a listed profession, the same €40,000 leaves about €37,779: tax on only €15,000 and no social security. In year two it’s about €30,062.
Social security
Freelancers pay 21.4% on 70% of their relevant income, which works out at about 15% of what you invoice. The contribution base is capped at 12 times the IAS a month (€6,445.56 in 2026).
You declare your income to Segurança Social Direta every three months, in January, April, July and October. That sets your contribution for the next three months, which you pay monthly by the 20th.
Your first 12 months are exempt. If you register in March 2026, contributions start in March 2027.
VAT
Under the special exemption (article 53 of the VAT Code) you don’t charge VAT while your turnover stays under €15,000 a year. If you go over by more than 25% in the current year, so above €18,750, you leave the exemption straight away. If you end the year above €15,000, you move to the normal regime from 1 January.
Since 1 July 2025 the exemption is for businesses established in Portugal or, under the EU small-business scheme, in another EU country. That’s one reason not to open activity before you actually move.
On the normal regime you charge 23% VAT to Portuguese clients and file VAT returns every quarter. Services to businesses in other countries are usually invoiced without Portuguese VAT, under the reverse-charge rule, but you still report them.
Withholding on your invoices
A Portuguese client that keeps organised accounts withholds part of your fee and pays it to the tax office for you (article 101 of the Código do IRS):
- 23% for professions on the article 151 list
- 11.5% for other services
- 20% if you’re under IFICI
Foreign clients and Portuguese private individuals don’t withhold. If you expect to earn less than €15,000 in the year, you can ask not to have tax withheld by adding this line to your receipt: “Sem retenção, nos termos do n.º 1 do artigo 101.º-B do Código do IRS.”
Withheld tax isn’t extra tax. It’s credited against your bill when you file.
Deadlines to put in your calendar
| When | What |
|---|---|
| Before your first invoice | Register your activity at Finanças (início de atividade) |
| January, April, July, October | Quarterly declaration to Segurança Social |
| Every quarter, if you charge VAT | VAT return and payment |
| 1 April to 30 June | Annual IRS return for the previous year |
| 20 July, 20 September, 20 December | Advance tax payments, if the tax office has calculated them for you |
Advance payments (pagamentos por conta) are based on your tax from two years earlier. The tax office sends you the amounts. If each one would be under €50, nothing is due.
Freelancer, sole trader or company?
A sole trader (empresário em nome individual) is taxed exactly like a freelancer, on the same IRS scale. The difference is mainly legal.
A Unipessoal Lda is a different animal. The company pays corporate tax (IRC) of 15% on its first €50,000 of profit and 19% above that in 2026, plus up to 1.5% municipal surcharge. You then pay yourself a salary, dividends or both. Above a certain income this can leave you more, but it also means accounting costs and a minimum social security charge as a manager. Our guide to choosing between freelancing and a Unipessoal Lda runs the numbers.
IFICI, NHR and IRS Jovem for freelancers
NHR is closed to new applicants. If you registered before it closed, you keep it until your 10 years end.
IFICI, its replacement, gives 20% on income from qualifying activities. On paper it covers self-employment. In practice, standalone freelancers working for foreign clients rarely qualify, because the activity and the entity have to meet strict criteria. Our IFICI guide explains who does.
IRS Jovem is the one most young freelancers can use. If you’re 35 or under, part of your freelance income is tax-free for up to 10 years: all of it in year 1, 75% in years 2 to 4, 50% in years 5 to 7 and 25% in years 8 to 10, up to €29,542 a year.
Getting set up
- A NIF, your Portuguese tax number
- A NISS, your social security number
- A Portuguese bank account for your IBAN
- Your activity registration at Finanças, with the right activity code
Register only once you’re actually living here and ready to invoice. Opening activity early can start your social security and VAT obligations before you need them. If you want a second opinion on your setup, our tax consultation is a 45-minute call with a certified Portuguese accountant.
Frequently asked questions
How much tax does a freelancer pay in Portugal?
It depends on your activity code and year. On €40,000 from year 3, a listed profession keeps about €27,748 after income tax and social security, and code 1519 about €31,999. In year 1 a listed profession keeps about €37,779.
Is code 1519 taxed at 75% or 35%?
At 35%. The tax authority confirmed this in Circular 2/2016. It’s only for services with no specific professional code.
Do I pay social security in my first year?
No. Your first 12 months of activity are exempt. After that it’s 21.4% on 70% of your income.
When do I have to charge VAT?
Once your turnover goes above €15,000 a year, or above €18,750 in the current year. Below that you can use the article 53 exemption.
Can a freelancer get NHR or IFICI?
NHR is closed to new applicants. IFICI rarely works for standalone freelancers. IRS Jovem is available if you’re 35 or under.
Sources
- Código do IRS, article 28: the simplified regime and its €200,000 limit
- Article 31: the shares taxed and the first-year reductions
- Article 68: income tax rates for 2026
- Article 101 and article 101-B: withholding and when you can skip it
- Article 102: advance payments
- Article 12-B: IRS Jovem
- AT Circular 2/2016: code 1519 and the 35% share
- Segurança Social: self-employed workers
