Regime simplificado for freelancers (recibos verdes): how your taxable income is calculated

If you work a recibos verdes (as a self-employed worker) in Portugal, one of the first things worth understanding is the regime simplificado — the default way the tax authority (AT) works out how much of your income is actually taxed.

The coefficient is the key idea

Under the regime simplificado you are not taxed on everything you invoice. Instead, the AT applies a coefficient to your gross income to estimate your taxable profit, on the assumption that part of your turnover covers business expenses.

For most service activities the coefficient is 0.75. In plain terms: if you invoice €30,000 in a year, about €22,500 is treated as taxable income and the remaining €7,500 is a presumed expense allowance — you don't need receipts for that portion, though a part of it may need to be justified with real deductible expenses above a threshold.

Different activities carry different coefficients, so the first question is always: which coefficient applies to your CAE / activity code?

First and second year relief

To make starting out easier, the taxable base produced by the coefficient is reduced in your first two years of activity:

• –50% in the first year of activity
• –25% in the second year

This relief is subject to conditions in the CIRS — it doesn't apply if you had the same activity recently. It's one of the most commonly missed reliefs, so it's worth checking.

Regime simplificado vs. organised accounting

The regime simplificado is the default while your income stays under the legal threshold. Above it — or by choice — you move to contabilidade organizada, where your tax is based on actual profit (income minus documented expenses) and a Contabilista Certificado is mandatory. Which regime is cheaper depends entirely on how high your real expenses are relative to the presumed allowance.

Don't forget Segurança Social

Social Security for the self-employed is calculated on its own relevant income basis and reported quarterly — it is completely separate from the IRS coefficient above. Budgeting for it from day one avoids an unpleasant surprise.

And IRS is only half the picture: whether you also have to add VAT to your invoices is a separate question. See our guide to IVA and the article 53 exemption for freelancers.

The figures and reliefs above are the general framework; the exact coefficient, thresholds and conditions depend on your specific activity and year. This article is general information, not personal tax advice — confirm your own situation with a Contabilista Certificado.