Can I freelance or start a side business?

Freelancing in Portugal starts with a short online form at the tax office (início de atividade). After that you issue electronic “green receipts” (recibos verdes), declare income to social security every quarter, and file an annual income tax (IRS) return. Check your permit allows the work first.

Check your permit first

• Permanent residence and EU long-term residence let you work for yourself freely
• An employee permit can be switched to allow self-employed work, but AIMA must replace your card first
• The self-employed permit (atividade independente) needs a company, a declared start of activity, or a service contract, and social security registration. The D2 visa is the usual way in. See Which Portuguese visa do I need?
• The D8 digital nomad permit is for remote work for people or companies based outside Portugal. The law sets no percentage for Portuguese clients; if you want local clients, ask AIMA or an immigration lawyer whether you need to switch to a self-employed permit
• The D7 is for passive income and pensions, not a route for working in Portugal

Opening activity (início de atividade)

1. You need a tax number (NIF) and social security number (NISS). See How much tax will I pay in Portugal?
2. Open activity online on the Portal das Finanças or at a tax office (Finanças) before you invoice. You choose an activity code (CAE or the IRS code for your profession) and estimate your annual income
3. Social security is told automatically when you open activity
4. Report any change, such as a higher turnover estimate, within 15 days
5. Work accident insurance (seguro de acidentes de trabalho) is compulsory for self-employed people too

Green receipts (recibos verdes)

The name comes from old green paper forms. Today you issue an invoice-receipt (fatura-recibo) for each payment, usually free on the Portal das Finanças, which also reports it to the tax office. Portuguese business clients with organised accounts withhold income tax from your receipts: 23% for the professions on the IRS list, or 11.5% for other services. If you expect less than €15,000 a year, you can opt out of withholding by writing on the receipt: “Sem retenção, nos termos do n.º 1 do artigo 101.º-B do Código do IRS.”

The simplified regime

If your income was €200,000 or less last year, you are taxed under the simplified regime (regime simplificado) unless you choose full accounts. Your taxable income is a fixed share of what you earn:

• In your first year of activity the 75% and 35% shares are cut by half, and in the second by a quarter, if you have no employment or pension income in those years and haven’t closed an activity in the last 5 years
• For the 75% and 35% shares, part of the deduction depends on real expenses: 15% of your service income must be backed by expenses on your e-invoice record or similar, or the gap is added back
• The result is taxed with your other income at the 2026 IRS rates of 12.5% to 48%. See How much tax will I pay in Portugal?

VAT: the article 53 exemption

If your turnover in Portugal was €15,000 or less last year, and you don’t export, you can be exempt from VAT under article 53 of the VAT Code. If your turnover this year goes above €18,750 (€15,000 plus 25%), you must charge VAT on the invoice that takes you over and file a change of details within 15 working days. Selling services to clients abroad, including the UK, has its own VAT rules; ask an accountant (contabilista certificado) how to invoice them.

Social security for the self-employed

• Exemption: your registration as self-employed takes effect on the first day of the 12th month after you start, so you pay nothing in your first year. You can ask to start earlier
• Quarterly declaration: by the end of January, April, July and October, you declare on Segurança Social Direta what you earned in the previous 3 months
• Base: 70% of service income (20% for sales of goods). A third of that is your monthly base for the next 3 months. You can raise or lower it by up to 25%, in steps of 5%
• Rate: 21.4% (25.2% for sole traders with a business). Example: €6,000 of services in a quarter gives a base of €1,400 a month and a contribution of €299.60 a month (about £254)
• Minimum and maximum: at least €20 a month; the base can’t exceed 12 times the IAS (€6,445.56 in 2026)
• Also employed? You can be exempt if your self-employed income is under 4 times the IAS (€2,148.52 a month) and your salary is at least the IAS (€537.13)
• Pay between the 10th and 20th of the following month

Sole trader or company?