How is self-employed income taxed under Portugal's simplified regime?

Checked on 2026-10-25

Under Portugal's simplified regime, tax applies to a fixed share of gross self-employed income: 75% for professional activities in the official table, 35% for other services and 15% for sales of goods. It applies if gross income did not exceed €200,000 the previous year. In the first two years these shares are cut by 50% and 25%.

Key facts

What	The law says	Source
Who is in the simplified regime	Anyone whose gross category B income did not exceed €200,000 in the previous tax year	Código do IRS, art. 28(2)
Professional activities in the official table	75% of gross income is taxable	Código do IRS, art. 31(1)(b)
Other services	35%	Código do IRS, art. 31(1)(c)
Sales of goods; restaurant, bar and hotel services	15%	Código do IRS, art. 31(1)(a)
Intellectual property and some other income	95%	Código do IRS, art. 31(1)(d)
Services to a company you hold at least 5% of (or family 25%), or a tax-transparent company you are a partner in	100%	Código do IRS, art. 31(1)(g)
First two years	Coefficients (b), (c) and (f) reduced by 50% in the start year and 25% in the next year	Código do IRS, art. 31(10)–(11)
Expense condition	15% of gross service income must be matched by listed expenses, or the shortfall is added to taxable income	Código do IRS, art. 31(13)
Leaving the regime	Over €200,000 in two consecutive years, or more than 25% over in one year	Código do IRS, art. 28(6)

How it works

The simplified regime doesn’t tax your actual profit. The law applies a fixed coefficient to your gross income, and the result is your taxable income from self-employment. Article 31(3) says this amount is then added to your other income and taxed at the normal IRS rates.

The 0.75 coefficient covers the professional activities listed in the table referred to in article 151 (a table of activities approved by ministerial order); other services not listed take 0.35.

Lower coefficients when you start

Article 31(10) reduces the 0.75, 0.35 and 0.10 coefficients by 50% in the tax year you start the activity and by 25% in the following year. Two conditions apply: in those years you must have no employment (category A) or pension (category H) income, and the reduction does not apply if you ceased an activity less than five years earlier (art. 31(11)).

The 15% expense rule

For the 0.75 and 0.35 coefficients, part of the built-in deduction depends on real costs. Article 31(13) adds to taxable income the difference between 15% of your gross service income and the sum of certain items: the specific deduction or your mandatory social security contributions, staff costs, rent for business premises, a percentage of the tax value of property used for the business, and other business expenses on invoices communicated to the tax authority. Expenses only partly used for the business count at 25% (art. 31(14)).

Choosing accounting instead

You can opt to be taxed on the basis of organised accounting, either in the start-of-activity declaration or by the end of March of the year you want to change (art. 28(3)–(4)). In the first year, the regime follows the income estimate in your start-of-activity declaration (art. 28(10)).

One client only: if all your income comes from services to a single entity, you can choose each year to be taxed under the employment-income (category A) rules instead (Código do IRS, art. 28(8)).

Sources

Código do IRS, art. 28.º – Formas de determinação dos rendimentos empresariais e profissionais (Portal das Finanças, AT) checked 2026-10-25
Código do IRS, art. 31.º – Regime simplificado (Portal das Finanças, AT) checked 2026-10-25

Change history

2026-10-25: Page created

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