Freelancer vs Company Simulator 2026

Freelancer vs company in Portugal 2026: as a freelancer (simplified regime) you pay IRS on 75% of income for professions in the art. 151 table, or 35% for other services (progressive up to 48%) + Social Security at 21.4% (Article 168(1) of the Contributory Code) on the monthly base, which is one third of the relevant income of the quarter (Article 163(1)) — relevant income being 70% of service fees (Article 162). 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 a monthly base equal to one third of the relevant income of the quarter, relevant income being 70% of service fees (Articles 162, 163(1) and 168(1) of the Contributory Code)
  • 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)

Full freelancer guide in Portugal →

Frequently asked questions

At what income does a company beat green receipts?

There is no single figure. It depends on your real expenses, the simplified-regime coefficient (75% or 35% of income is taxed, article 31 of the Personal Income Tax Code), Social Security and how much you want to take out of the company. The simulator compares both scenarios with your numbers.

What corporate tax does a single-member company pay in 2026?

An SME or small mid cap pays 15% on the first €50,000 of taxable profit and 19% on the rest (article 87 of the Corporate Tax Code, as amended by Law 64/2025). A municipal surcharge of up to 1.5% may apply (article 18 of Law 73/2013).

How are dividends taxed?

At a flat 28% (article 71 of the Personal Income Tax Code). Alternatively you can opt to aggregate them with your other income, in which case only 50% of the dividends is taxed at the progressive rates (article 40-A). Dividends carry no Social Security.

What is the difference between a sole trader (ENI) and a single-member company?

A sole trader does not separate personal and business assets and can stay in the simplified regime up to €200,000 of income (article 28 of the Personal Income Tax Code). A single-member company has limited liability, a minimum share capital of €1 and must keep organised accounts.

What are the fixed costs of running a company?

Organised accounting, which is mandatory for companies (from €150 a month at HVR, excluding VAT), any insurance your activity requires, and annual filings such as Modelo 22 and IES. Incorporation costs €220 through Empresa Online with pre-approved articles or €360 through Empresa na Hora.