Self-employed tax in Portugal for freelancers in 2026

The Portuguese tax system can be confusing to navigate for foreign workers, especially if you’re setting up a self-employed business or conducting freelance work.

Managing income from clients abroad, and paying taxes in a different country could be complicated for expats. Multi-currency accounts like Wise Business can allow international freelancers receive payments easily, manage their expenses and pay taxes with mid-market rate and low fees. More on that later.

Keep reading for advice on the following:

The self-employed tax system in Portugal

According to Eurostat, 12.8% of people in Portugal are self-employed workers or freelancers, just below the European average of 13%.

Whether you’ll need to pay income tax or corporate tax on your profits in Portugal depends on the type of business you run. There are also several different accounting methods that freelancers in Portugal may wish to consider.

Self-employed income tax in Portugal

Tax for self-employed sole traders and freelancers in Portugal

Sole traders, freelancers, and people who run unincorporated businesses in Portugal have their income treated as personal earnings and pay income tax rather than corporate tax.

Self-employment income from a business or profession is classed as category B income under the Portuguese personal income tax system.

Sole traders can set up a single-member limited company (Sociedade Unipessoal por Quotas) or an individual limited liability establishment (Estabelicimento Individual de Responsabilidade Limitada). However, in the second scenario, any business assets separate from personal earnings are subject to corporate tax.

Income tax rates in Portugal are progressive. As a result, you pay more tax the more you earn. Non-residents pay a flat tax rate of 25%. Unlike many European countries, Portugal doesn’t have an annual tax allowance. Instead, it has a minimum subsistence threshold (mínimo de existência), below which there is generally no income tax due. In 2026, this amount is €12,880.

Portugal’s rates for individuals for 2025 and 2026 are as follows:

2025 income tax brackets

Income tax bracket	Tax rate
€0–8,059	13%
€8,060–12,160	16.5%
€12,161–17,233	22%
€17,234–22,306	25%
€22,307–28,400	32%
€28,401–41,629	35.5%
€41,630–44,987	43.5%
€44,988–83,696	45%
€83,697 and above	48%

2026 income tax brackets

Income tax bracket	Tax rate
€0–8,342	12.5%
€8,343–12,587	15.7%
€12,588–17,838	21.2%
€17,839–23,089	24.1%
€23,090–29,387	31.1%
€29,388–43,090	34.9%
€43,091–46,566	43.1%
€46,567–86,634	44.6%
€86,635 and above	48%

For self-employed workers dealing with international clients, managing payments across multiple currencies can add complexity to tax reporting.

Wise Business offers local account details in major currencies such as USD, GBP and EUR, allowing freelancers to receive payments from global clients without excessive fees that could affect profit margins and tax calculations.

Tax on partnerships in Portugal

Partnerships, where two or more people share all business profits and have liability for business debts, are taxed in the same way as sole traders.

Consequently, each partner pays tax on their share of the profits through the income tax system.

Tax on limited companies in Portugal

Limited companies in Portugal must pay corporate tax on their profits.

If two or more people set up a business and incorporate it as a limited company, profits generated by the company that are not declared on personal income tax returns are subject to corporate tax.

The main limited company structures in Portugal are Private Limited Companies (Sociedade por Quotas), Public Limited Companies (Sociedade Anomina), and Limited Liability Partnerships (Sociedade em Comandita).

How do I register for self-employed tax in Portugal?

If you’re planning on setting up a business in Portugal, it’s important to check you meet the legal requirements as well as register with any necessary trade bodies.

Unlike in some countries, self-employed workers can’t simply start a business without gaining accredited status in their industry.

To set up shop in some industries, you’ll need professional qualifications. In some cases, this means that you may need to take a Portuguese language exam.

When setting up your business, you’ll need to apply for a fiscal number (Número de Contribuinte or NIF) at your local tax office. There are several online services specialize in helping newcomers with their NIF, bank accounts, and more. These include Anchorless, Bordr, and e-residence.

When establishing your business in Portugal and obtaining your NIF, you may need to transfer initial capital or receive funds from abroad. International money transfer services like Wise can help you move money to Portugal at the mid-market exchange rate with transparent fees. 

Wise also offers automatic discounts on transfer fees for large transfers (over 20k GBP or equivalent in other currencies), allowing you to save on financial costs.

Self-employed tax deductions and credits in Portugal

When it comes to calculating your taxable income, you can deduct any business expenses that you’ve incurred as part of running your enterprise. For example, this can include the likes of rent costs for your office, material costs, product costs, and utility bills.

The way these are deducted depends on the tax regime chosen: in the simplified regime a portion of income (typically 25%) is deemed deductible without itemizing expenses, whereas under organized accounting (also known as the direct method) you deduct actual costs. 

If you use the direct method, you’ll need to employ an accountant to calculate your gross annual profit. Businesses with an annual turnover of more than €200,000 aren’t eligible for the simplified regime, and so must use the direct method.

Before deciding which method to use, you should take professional advice from an accountant, as the right choice will vary from business to business.

Corporate tax in Portugal

Corporate tax rarely applies to self-employed workers and freelancers in Portugal.

However, businesses pay corporate tax in Portugal at a flat rate of 19% on their taxable profits (down from 20% in 2025). There are plans to reduce the rate to 18% in 2027 and 17% in 2028.

Businesses in Portugal may also need to pay surcharges on top of their corporate tax bill, depending on their location and overall profits.

Small- and medium-sized businesses pay a reduced Portuguese corporate tax rate of 15% on their first €50,000 of taxable profit (down from 16% in 2025).

How to file self-employed tax in Portugal

The Portuguese tax year runs from 1 January to 31 December. Workers must complete their tax returns for 2025 income between 1 April and 30 June 2026. Self-employed people can pay their tax in three installments, in July, September, and December.

You’ll need to submit your self-employed tax online. Again, tax payments are made in three installments, and payments are usually based on the previous year’s assessment.

VAT in Portugal for self-employed people

VAT in Portugal (Imposto Sobre o Valor Agregado, or IVA for short) is payable by all businesses with a turnover of more than €15,000 on taxable goods and services.

There are three rates of IVA in Portugal:

• General rate: 23% on taxable goods and services
• Intermediate rate: 13% on food and drink
• Reduced rate: 6% on essential necessities including certain foods (e.g., meat, fruit, vegetables, cereals), books, newspapers, medicines, transport and hotel accommodation

Madeira (22%/12%/5%) and the Azores (16%/9%/4%) apply slightly different rates.

If your business is liable for VAT in Portugal, you will also need to apply for a VAT number, or NIF (Numero de Identificacao Fiscal).

IVA is payable to the Portuguese Tax Authority seven days after the reporting deadline periods, either quarterly or monthly.

A Wise Business account can help streamline receiving payments in multiple currencies while maintaining clear records of transactions for VAT reporting. This is especially useful when working with clients in countries with different VAT requirements or when you need to track which services are exempt from Portuguese VAT.

Learn more about Wise Business features here.

Social security for self-employed workers in Portugal

Self-employed workers are responsible for making their own social security contributions. While employed workers’ contributions are topped up by payments from their employers, those who are self-employed have to pay the full contribution themselves.

The vast majority of self-employed workers in Portugal must pay contributions through the Portuguese social security (Segurança Social). How much you’ll need to pay varies, but the general rate of contributions for self-employed workers in Portugal is 21.4%. Payments need to be made monthly between the 10^th and 20^th of the month.

In return for social security contributions as a self-employed worker, you are entitled to unemployment benefits, an allowance for sickness, parenting benefits, family allowance, invalidity benefit, as well as pensions and survivor’s pensions.

After 12 months, however, you’ll start paying based on the previous year’s taxable income.

Self-employed tax fines in Portugal

The financial penalties for filing late or incomplete Portuguese income tax returns range from €25 to €3,750. Late payments can be penalized from 10% to 100%, plus interest.

If you file your corporate tax return late, you may have to pay a penalty of between €300 and €3,750, depending on the severity of the misdemeanour. There may be additional fines for more serious reporting failures.

If you pay your taxes late, you will be charged daily interest at an annual rate (currently around 6%). Your company could face fines of between 30% and 100% of the tax due, capped at €45,000. If the delay is intentional, this could rise to €165,000.

Associations for entrepreneurs in Portugal

• EO Portugal – Portuguese branch of the global peer-to-peer organization for business owners
• Startup Portugal – Organization offering advice and information for people starting businesses in Portugal

How to find an accountant or financial advisor in Portugal

You can get advice on tax and social security issues from an English-speaking chartered accountant through the Ordem dos Contabilistas Certificados (Order of Certified Accountants).

Plenty of firms specialize in tax affairs for foreigners. These include:

• Anchorless – offer tax consultations
• Bordr – provide an income tax filing service for internationals
• e-residence – count tax filing among their many offerings tailored to those living abroad
• Tytle – have a range of services for internationals living in Portugal, including tax advice

Useful resources

• Autoridade Tributária e Aduaneira – the Portuguese tax authority
• British-Portuguese Chamber of Commerce
• Find an English-speaking accountant
• Ordem dos Contabilistas Certificados – find a certified chartered accountant
• Segurança Social – Portuguese social security