← Portugal Tax Guides

Freelancer & Self-Employed Tax Guide Portugal 2026

By Taxpert Editorial · Last reviewed: 26 April 2026

Freelancers and sole traders in Portugal report income as Category B (Cat. B). This guide covers how Cat. B income is taxed, how the simplified regime works, social security obligations, and what deductions are available.

Category B income

Self-employment income — freelance services, consulting, professional practices, and sole-trader businesses — is reported as Category B in the annual IRS return (Modelo 3). Cat. B income is subject to the standard progressive IRS brackets unless a special regime applies.

Simplified regime vs organized accounting

Portugal offers two methods for calculating the taxable base on Cat. B income:

Simplified regime (Regime Simplificado)

The default for most freelancers earning below €200,000 per year. Instead of tracking actual business expenses, a fixed coefficient is applied to your gross receipts to determine the taxable base. The remainder is treated as non-taxable costs (though AT requires you to justify at least 15% of expenses, with social security contributions counting up to 10%).

Example: A consultant earning €60,000 gross in Art. 151 professional services applies the 0.75 coefficient → taxable base of €45,000. Standard IRS brackets then apply to that €45,000 (plus any other income).

Organized accounting (Contabilidade Organizada)

The alternative to the simplified regime. Requires a certified accountant (TOC) to maintain formal accounts and allows deducting actual documented business expenses rather than fixed coefficients. This can result in a lower taxable base if real expenses are high. It is mandatory above €200,000 annual gross.

Most freelancers earning below €200,000 use the simplified regime unless their actual expenses exceed what the coefficient implies.

Social security (Segurança Social)

Self-employed workers pay social security contributions independently — there is no employer to split the cost. The contribution rate is 21.4% on the relevant base, which is calculated from gross receipts using a coefficient (typically one-third of quarterly income).

Social security contributions are paid quarterly (in January, April, July, October). New freelancers who have not previously been self-employed may qualify for an exemption in the first 12 months and a reduced rate (50%) in months 13–24.

The social security base is capped at 12× the Social Support Index (IAS) per year. For 2026 the IAS is €522.50, giving an annual cap of approximately €75,240.

Quarterly advance payments (pagamentos por conta)

If your Cat. B income exceeds certain thresholds, AT requires quarterly advance payments toward your annual IRS liability. These are calculated automatically by AT based on your prior-year return and are paid in July, September, and December. They are credited against your final tax bill when you file in April–June.

VAT (IVA)

Freelancers below €13,500 in annual turnover are exempt from charging VAT under the small business exemption (Art. 53 CIVA). Above this threshold, registration for VAT is required and the standard rate of 23% applies to most services (6% and 13% reduced rates apply to specific categories). VAT is a separate obligation from IRS and does not directly affect your income tax calculation.

Deductions for Cat. B taxpayers

Under the simplified regime, the untaxed portion (implied by the coefficient) substitutes for actual expense deductions. You cannot additionally deduct business expenses on top of the coefficient — the simplified regime is a package deal.

The simplified regime strategy page explains how to optimize your income split across activity types to minimize the taxable coefficient.