Freelancer Tax Deductions in Portugal: Guide by INLIS Consulting

INLIS Consulting
Nov 4
5 min read

How freelancers in Portugal can maximise tax deductions, choose the right regime, and stay compliant with expert guidance from INLIS Consulting.

If you are working as a freelancer in Portugal, whether you are a local, a digital nomad, or an expat relocating, navigating tax and deduction rules can be tricky. At INLIS Consulting, we help freelancers register correctly, select the right tax regime, and maximise legitimate deductions so you can keep more of your income.

In this guide, you will learn:

The key tax regimes for freelancers in Portugal.
What expenses are deductible, and how to document them.
Common pitfalls and how to avoid them.
How INLIS Consulting can simplify your tax planning.

1. The Basics: Registering as a Freelancer in Portugal

1.1 Opening Activity (“Início de Actividade”)

Before you can deduct expenses or issue invoices, you must register your activity with the Portuguese Tax Authority (Autoridade Tributária e Aduaneira) and the Social Security system (Segurança Social).

Here’s how to start:

Obtain your NIF (tax number).
Submit the Declaração de Início de Actividade via the Portal das Finanças.
Choose the correct CAE code (economic activity classification) for your freelance work.
Register with Segurança Social as a self-employed professional (trabalhador independente).

1.2 Social Security Contributions

Freelancers in Portugal contribute to Social Security at a general rate of 21.4%. However, many new freelancers qualify for a 12-month exemption when they first start. At INLIS Consulting, we review your contribution base, handle your registration, and ensure you stay compliant while optimising costs.

1.3 Issuing Invoices (“Recibos Verdes”)

Each time you get paid, you must issue a digital receipt — known as a Recibo Verde — through the Portal das Finanças. This is how your income is legally recorded and tied to your activity for tax purposes.

2. Choosing the Right Tax Regime: Simplified vs Organised Accounting

2.1 Simplified Regime (Regime Simplificado)

This is the default option for freelancers earning under approximately €200,000 per year.

Under this regime:

A fixed percentage of your income is automatically considered as expenses.
For most service activities, 75% of income is taxable, and 25% is assumed expenses.
You must still justify at least 15% of your gross annual income as real expenses with valid invoices.

Pros:

Easy to manage.
No need for full bookkeeping.
Ideal for those with low operating costs.

Cons:

You might pay more tax if your real expenses exceed 25% of your income.
Limited flexibility for high-cost freelancers.

2.2 Organised Accounting (Contabilidade Organizada)

This system allows you to track and deduct actual expenses instead of relying on fixed assumptions. It is mandatory for those earning above the threshold, but it can also be chosen voluntarily.

Pros:

You can deduct every legitimate business expense.
Offers detailed control over your finances.

Cons:

Requires a certified accountant and full bookkeeping.
Slightly higher administrative costs.

2.3 Which Regime Is Best for You?

If you’re just starting and have low expenses, → Simplified Regime may be best.
If you have high equipment, travel, or operating costs → Organised Accounting could save you more.

INLIS Consulting can analyse both options for you and show which yields the lowest tax bill based on your projected income and expenses.

3. Deductible Expenses for Freelancers in Portugal

Understanding what qualifies as a deductible expense and how to document it is key to saving money and staying compliant.

3.1 Home Office & Utilities

If you work from home, you can deduct a portion of your rent, electricity, water, internet, and heating costs — based on the space you use for business. Keep all invoices in your name with your NIF and record the percentage of your home dedicated to work.

3.2 Equipment & Office Supplies

Laptops, monitors, chairs, printers, and phones used for business purposes are deductible. Even smaller supplies like stationery or chargers can be claimed when justified.

3.3 Software, Tools & Subscriptions

Monthly or annual subscriptions for tools like Adobe Creative Cloud, Canva, Zoom, Microsoft Office, or accounting software count as valid business expenses.

3.4 Travel & Client Meetings

Transportation, fuel, parking, tolls, and business travel costs can be deducted if directly related to your freelance work. Meals with clients or business partners are also deductible within reasonable limits.

3.5 Training & Professional Development

Courses, workshops, and certifications that improve your professional skills can be claimed as expenses. For example: UX design courses, online learning platforms, or industry conferences.

3.6 Business Insurance & Professional Fees

Liability insurance, equipment insurance, or membership fees for professional associations can also reduce your taxable income.

3.7 Foreign or Non-Portuguese Invoices

If you buy software or services from abroad, keep all invoices manually; foreign receipts do not appear automatically in eFatura. Make sure they include your name and NIF to remain deductible.

4. How Much You Can Save: Real-World Scenarios

Example 1: Freelancer with Moderate Expenses

Income: €30,000
Under Simplified Regime: 75% taxable (€22,500)
With proper documentation of €4,500+ in real expenses, your taxable base remains legitimate and optimised.

Example 2: Freelancer with High Operating Costs

Income: €100,000
Real expenses (equipment, travel, software, etc.): €12,000
In this case, switching to Organised Accounting can reduce your taxable income significantly — saving thousands annually.

INLIS Consulting can calculate your break-even point and determine when changing regimes is most beneficial.

5. Common Freelancer Tax Mistakes in Portugal

Failing to issue Recibos Verdes correctly.
Mixing personal and business expenses.
Forgetting to include NIF on invoices.
Not saving foreign invoices.
Staying in the Simplified Regime when the Organised system would save more.
Misreporting international income.

INLIS Consulting helps freelancers implement simple systems for expense tracking, compliance, and accurate annual declarations.

6. Why Work with INLIS Consulting

Specialists in freelancer and expat taxation in Portugal.
Guidance in English and Portuguese.
Assistance with registration, invoicing, accounting setup, and tax filing (IRS).
Support with Social Security registration and contributions.
Regular tax reviews and deduction tracking for better optimisation.

7. Step-by-Step Freelancer Action Plan

Register your activity — file the “Declaração de Início de Actividade.”
Select the right regime — Simplified or Organised.
Track expenses — always include NIF on invoices.
Issue invoices properly through the Portal das Finanças.
Review quarterly — ensure you meet the minimum expense documentation (15%).
File your IRS tax return between April 1 and June 30.
Re-evaluate your tax regime annually with professional advice.

8. Frequently Asked Questions

Q: Can I deduct my full home rent?

A: No, only the portion used for business can be claimed, typically calculated by the area used for work.

Q: Can I deduct expenses paid abroad?

A: Yes, as long as you have valid invoices with your NIF. Keep them manually, as they won’t appear in eFatura.

Q: What if my clients are outside Portugal?

A: As a Portuguese tax resident, you pay tax on worldwide income, but you may qualify for double-taxation relief under certain treaties.

Q: When must I switch to organised accounting?

A: Once your annual income exceeds €200,000, or if your business expenses are high enough to justify the change.

Conclusion

Freelancing in Portugal offers incredible flexibility, but understanding your tax rights and obligations is essential. With the right planning and professional guidance, you can maximise your deductions, reduce your tax burden, and stay compliant.

INLIS Consulting works with freelancers and digital nomads across Portugal to simplify tax management, handle registrations, and ensure you only pay what’s necessary, nothing more.