Working as a freelancer or self-employed individual in Portugal means operating as a trabalhador independente (independent worker), issuing green receipts (recibos verdes) for your services, and managing your own IRS and Social Security contributions. This guide covers how to get started, key tax rates, and when to consider switching to a company.

Key Numbers for 2026

• VAT exemption threshold: €14,500/year (Article 53 of the Portuguese VAT Code)
• Social Security rate: 21.4% on 70% of quarterly gross income
• IRS withholding: 25% when client is a Portuguese company
• Simplified regime limit: €200,000 gross annual revenue

How to Open Activity (Abrir Actividade) in Portugal

1. Register at Portal das Finanças: go to Início de Actividade, select your CIRS activity code, choose your VAT regime and IRS regime. Takes 15 minutes online.
2. Register at Social Security: within 30 days of opening activity. First-time openers get a 12-month SS contribution exemption.
3. Start issuing invoices: every service must be invoiced immediately as a recibo verde through the Portal das Finanças.

IRS Regimes for Freelancers

Simplified Regime (up to €200,000)

A 75% expense coefficient is applied automatically — only 25% of gross income is taxable at progressive IRS rates. No need to track actual expenses. The standard choice for most freelancers.

Organised Accounting (above €200,000 or optional)

A certified accountant tracks real income and deductible expenses. More advantageous when actual costs exceed the 75% coefficient (e.g., significant subcontracting, rent, equipment).

Social Security for Self-Employed Workers

Rate: 21.4% of the "relevant income" = 70% of quarterly gross invoicing. Payments due quarterly by the 20th of January, April, July, and October. New activity openers get a 12-month exemption (not available if you had activity in the previous 2 years).

When to Switch from Freelancing to a Company

At annual revenues above €30,000–€50,000, a Portuguese limited company (Lda.) taxed at 17% IRC typically becomes more tax-efficient than the progressive IRS rates (up to 53%) on individual income. Use the Freelancer vs Company Simulator to find your exact breakeven.