Freelancer vs Company Simulator 2026
Compare the total tax burden of operating as a freelancer (IRS on personal income) versus creating a company (IRC 21% + 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 21% (17% on first €50k for SMEs) + 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)