Introdução
The name “simplified regime” is dangerous. It suggests you can file your taxes without tracking a single receipt. For low earners, this is true. For everyone else, it is a trap that leads to surprise tax bills.
The system assumes 25% of your income covers business costs. But this allowance is conditional. You must prove you actually spent money to run your business.
If you cannot prove expenses equal to 15% of your gross income, the tax authority (Finanças) does not fine you. Instead, they add the difference back to your taxable income. You end up paying tax on money the government initially said was tax-free.
Here is how the math works and how to protect your income.
How the 15% rule actually works
The rule applies to freelancers under the simplified regime (regime simplificado) earning income from professional services. These are activities under coefficients 0.75 (IT, consulting, design) or 0.35.
The law requires you to justify 15% of your gross annual income with valid expenses (despesas).
If your valid expenses are lower than 15%, the tax authority calculates the shortfall. They add that specific amount to your taxable base.
The calculation formula
Your final taxable income is calculated in two steps.
- Base calculation: Gross Income × Coefficient (e.g., 0.75).
- Adjustment: Add the shortfall if expenses are too low.
The shortfall formula is:
(Gross Income × 0.15) – Total Valid Expenses
If the result is positive, that amount is added to your taxable income. If it is zero or negative, you are safe.
Why low earners are safe
The system gives everyone a standard deduction (dedução específica). For 2024, this is €4,350.24. For 2025, it rises to €4,462.15.
This automatic deduction counts toward your 15% requirement.
If you earn €20,000, your 15% target is €3,000.
The automatic deduction (€4,350.24) is higher than €3,000.
You meet the rule automatically without validating a single invoice.
The safety limit is roughly €29,000. Once your income crosses this line, the automatic deduction is no longer enough. You must bridge the gap with real invoices.
The high income trap
If you earn €80,000, your 15% target is €12,000.
The automatic deduction gives you €4,350.24.
You are missing €7,649.76.
If you do nothing, the tax authority adds that €7,649.76 back to your taxable income. You will pay tax on it at your top marginal rate.
What counts as a valid expense
You cannot use just any receipt. The system accepts specific categories. Some are automatic, while others require manual action.
Automatic expenses
These are applied without you doing anything.
- Standard deduction (dedução específica): The fixed amount mentioned above (€4,350.24 for 2024).
- Social security contributions: If you pay more in social security than the standard deduction, the system uses the higher value. This is a massive help for high earners.
Manual expenses (e-fatura)
These must be validated on the e-fatura portal. You must classify them correctly.
- Professional services: Fees paid to lawyers, accountants, or subcontractors.
- Materials and goods: Items bought specifically for your business.
- Rents: Office rent counts 100%. Home office rent counts differently (see below).
The mixed-use rule
Many freelancers work from home and use personal assets for business. The law allows you to deduct these, but with a cap.
Expenses like home internet, electricity, and rent for a mixed-use property are considered “mixed.” Only 25% of the total value counts toward your 15% goal.
If you pay €100 for internet, only €25 counts as a business expense. You must mark these invoices as “partially affects activity” in the e-fatura portal.
Foreign expenses
This is where digital nomads often fail.
Expenses from foreign companies (Adobe, Zoom, Google, foreign travel) do not appear in the Portuguese e-fatura system.
You must manually declare these in your annual tax return (Modelo 3, Annex B). If you forget this step, those expenses do not count, and you may trigger the add-back.
Critical deadlines and enforcement
The tax cycle is rigid. Missing a date usually means the system locks you out.
February 25: The validation deadline
You must validate and classify all invoices on the e-fatura portal by February 25 of the following year.
If you leave invoices unclassified, the system assumes they are personal. They will not count toward your professional 15% requirement.
July 2025: The digital mandate
Starting July 1, 2025, new laws make the digital process stricter. The ability to manually override e-fatura data in your final tax declaration will become limited. The focus is shifting entirely to the portal.
April to June: The correction window
If you missed the February deadline, you have one final chance. During the tax filing window (April 1 to June 30), you can manually enter your total expenses in Annex H of your tax return.
This overrides the e-fatura values. However, doing this often triggers a manual review or audit by the tax authority, as the numbers will not match their system.
Riscos e soluções
Here are the specific failure points for this rule and how to solve them.
Risk: Income grows past €29k without tracking expenses
Fix: Check if your social security plus standard deduction covers 15% of your new gross income.
Risk: Foreign software subscriptions ignored
Fix: Manually enter foreign business costs in Annex B, Field 17 of your tax return.
Risk: Missing the February 25 deadline
Fix: Set a recurring calendar alert for February 15 to validate all pending invoices.
Risk: Losing the new activity discount
Fix: If you have a side job (Category A income), the 50% first-year discount is void. Plan for full tax.
Risk: Registering alugar late
Fix: Upload your rental contract to Finanças immediately so rent receipts generate automatically.
Armadilhas comuns (e como evitá-las)
- Assuming the 25% expense allowance is guaranteed
The allowance is a cap, not a gift. You must prove the first 15% with real data. - Ignoring social security payments
Your monthly social security payments count as expenses. For many, this alone solves the shortfall. Verify your payment history on the Segurança Social Direta portal. - Misclassifying mixed expenses
Marking your entire grocery bill as a business expense will trigger an audit. Only mark utilities and specific business purchases. - The “New Activity” discount illusion
New freelancers get a 50% discount on the coefficient in year one. However, the 15% expense rule applies to your full gross income, not the discounted base.
Resultado final
The simplified regime is only simple if you earn very little. Once you earn a professional salary, it becomes a system of verification. The 15% rule is not a penalty for doing something wrong; it is a requirement for keeping your tax rate low. If you ignore it, you are voluntarily paying more tax than necessary.
Perguntas frequentes
Does the 15% rule apply to all freelancers?
It applies to those under the simplified regime with coefficients 0.75 (professional services) and 0.35. It does not apply to sales of goods (coefficient 0.15).
What happens if I don’t have enough expenses?
The difference between your proven expenses and the 15% target is added to your taxable income. You pay tax on that amount.
Do supermarket bills count?
Generally, no. Unless you work in a sector where food is a raw material, supermarket bills are personal expenses.
Does my home rent count?
If your home is your registered place of business, 25% of your rent can count. You must have a registered rental contract.
Do I need to keep paper receipts?
Yes. Even though e-fatura is digital, you should keep physical or digital copies of receipts for 4 years in case of an audit.
Does buying a computer count?
Yes. Equipment purchased for your activity counts 100% toward the requirement.
Can I fix mistakes after February 25?
Yes, but it is harder. You can manually override values in your tax return (Annex H) between April and June, but this increases audit risk.
