Freelancer vs company in Portugal 2026: as a freelancer (simplified regime) you pay IRS on 75% of income (progressive up to 48%) + Social Security 21.4% on 70% of revenue. As a Lda company you pay IRC 15% on the first €50,000 profit (SME rate, Law 64/2025) + 19% above + 28% withholding tax on dividends. Typical break-even: €30,000-€50,000 annual revenue — below freelancer wins, above Lda starts to make sense.
Compare the total tax burden of operating as a freelancer (IRS on personal income) versus creating a company (IRC 19% general / 15% SME on first €50k + dividend withholding 28%) in Portugal 2026.
Freelancer vs Company — When to Switch
The break-even point in Portugal is typically between €30,000 and €50,000 in annual turnover. Below this, freelancer status is usually more tax-efficient. Above it, operating via a company often saves significant tax.
Freelancer (simplified regime): IRS up to 48% + Social Security 21.4% on 70% of income
Company (Lda): IRC 19% (15% on first €50k for SMEs, Law 64/2025) + 28% on dividends distributed
Company advantage: retained earnings taxed only once at IRC rate; ability to deduct business expenses
Setup cost: company creation from €360 (Empresa na Hora)