Income Tax for Freelancers

In Portugal, self-employment income is classed as category B for income tax (IRS). You will have to submit your annual IRS declaration between April 1 and June 30 of the year after. However, you do not have to pay your IRS only once a year. Using the “retencao da fonte”, your can pay your IRS in “installments”.
You can also deduct business expenses such as the rent of your office and utility bills, which will not be calculated in your taxable income. However, there are limits to this. Expenses for travel and entertaining clients can only be deducted if they amount to less than 10% of your overall income. If you work from home, you can claim expenses up to 25% of your overall income.
Freelancers can also take advantage of the simplified regime where they pay income tax on 75% of their overall income and the remaining 25% is offset with expense receipts. If you make over €200,000 you aren’t eligible for the simplified regime.