Portugal's 15% Expense Rule for Freelancers: What It Is and How to Meet It

Most freelancers under Portugal's simplified regime end up satisfying the 15% expense rule without thinking about it. Social Security contributions do most of the heavy lifting. But for a specific group of freelancers, the rule catches them by surprise, and by the time they find out, it's too late to fix.

This post explains how the rule works, what actually counts, and what to do in December if you're running short.

What the rule is

Under the simplified regime, AT applies a coefficient to your gross income to arrive at your taxable base. For most services, that coefficient is 0.75: 75% of what you earn is taxable, and 25% is assumed to cover your business expenses.

The "assumed expenses" part has a condition attached.

AT requires you to prove at least 15% of your gross income in documented expenses. If your actual documented expenses fall below that threshold, the gap is added back to your taxable income before the coefficient calculation runs. It is, in effect, a minimum documentation requirement.

The legal basis is Article 31 of the CIRS. The rule applies to Categoria B income under the simplified regime only. Organized accounting operates differently.

What counts toward the 15%

Three things count, and two of them happen automatically.

1. The specific deduction (deducao especifica)

AT applies a specific deduction of approximately €4,104 to your Categoria B income automatically. This deduction counts toward the 15% requirement. You don't need to do anything to claim it.

2. Social Security contributions

Whatever you paid to Seguranca Social during the year counts. For freelancers issuing Recibos Verdes, the standard rate is 21.4% applied to 70% of your gross income. On €30,000 gross, that's roughly €4,482 in annual contributions. These are deductible for the 15% calculation.

3. Business expenses documented in e-Fatura

Expenses classified as professional in your e-Fatura account and invoiced to your NIF count toward the 15%. Software subscriptions, professional services, office supplies, equipment. The key requirement: the invoice must be in e-Fatura, assigned to your NIF, and categorized as a professional expense.

What does not count: personal expenses, even if they appear in eFatura. A dentist bill, a restaurant meal, a rent payment: those go toward Anexo H deductions, which reduce your IRS through a different mechanism. They do nothing for the 15% rule.

The worked example: €30,000 gross

You earned €30,000 in Recibos Verdes income during 2025.

• 15% threshold: €4,500 (this is what you need to document)
• Specific deduction: ~€4,104 (automatic, already counts)
• Social Security: ~€4,482 (21.4% x 70% x €30,000)
• Total automatically covered: ~€8,586

You need €4,500. You already have ~€8,586 counted automatically. No additional business expenses needed.

At €30,000 gross, the rule is not a problem. SS contributions alone exceed the threshold.

Now change the scenario slightly.

Higher income: €60,000 gross

• 15% threshold: €9,000
• Specific deduction: ~€4,104
• Social Security: ~€8,964 (21.4% x 70% x €60,000)
• Total automatically covered: ~€13,068

Still well covered. The math continues to work at higher incomes because SS scales with earnings.

The problem case: low SS or very high income

The rule becomes an issue in two situations.

First: SS contributions are reduced or exempt. New freelancers are exempt from SS for their first 12 months. If you had a strong first year, your automatic coverage is only the ~€4,104 specific deduction. On €40,000 gross, the threshold is €6,000. With only €4,104 covered, you're €1,896 short. That shortfall becomes additional taxable income.

Second: income above roughly €110,000. The SS contribution base is capped at 12 times the IAS per month, so your annual SS stops growing around €110,500 gross. At that point, the 15% threshold keeps rising while SS plateaus. High earners above the cap have a genuine documentation gap that grows with income. At €200,000 gross, the threshold is €30,000. SS is capped at roughly €16,500. The specific deduction adds ~€4,104. You need to document the rest.

How e-Fatura fits in

When you make a business purchase in Portugal and provide your NIF, the transaction lands in your e-Fatura account. If the merchant classifies it correctly, it appears under the relevant category automatically.

For the 15% rule, you need invoices classified as professional expenses. In eFatura, this is a separate category from the personal expense categories (Saude, Educacao). When you log in and review pending invoices, you assign categories yourself for any that AT couldn't classify automatically.

The review window for each tax year runs between February 15 and 25 of the following year. By then, the year is over. Whatever you bought in January through December either has a professional expense classification or it doesn't.

This is why December matters.

What about invoices from foreign suppliers?

Here is where the expat experience diverges from the standard advice.

A significant part of your business costs probably never touches e-Fatura at all. Stripe, AWS, GitHub, Figma, Google Workspace, a US-based contractor: none of these suppliers have any obligation to report to the Portuguese tax authority. Their invoices are invisible to AT's systems. They will never appear in your e-Fatura account automatically.

The natural conclusion, and the wrong one, is that those costs don't count.

They do. Article 31 CIRS conditions the expense deduction on verification "through validation in e-Fatura or by identifying the expense in Anexo B, Quadro 17." The "or" matters. There is no PT-supplier-only rule and no EU/non-US distinction on the IRS expense side. A US invoice is treated exactly like an EU one, and both are treated exactly like a Portuguese invoice: they count, you just have to bring them in yourself.

Two routes to claim foreign expenses:

Route 1: Register the invoice manually in e-Fatura

Log in to e-Fatura, go to "Registar fatura" as adquirente (acquirer), and enter the supplier details, your NIF, and the amount. Once registered, the invoice follows the same classification flow as any other e-Fatura entry: assign it as a professional expense, and it counts toward the 15%.

This works well for recurring subscriptions you want AT to have a record of. It takes a few minutes per invoice.

Route 2: Declare it directly in Anexo B, Quadro 17-C

When you file your IRS Modelo 3, Quadro 17 in Anexo B is where you declare expenses not captured by e-Fatura. Specifically, field 17-C covers "other goods and services" under Art. 31 n.13. You enter the amounts here directly. AT sees the expenses without the e-Fatura intermediate step.

This is simpler if you have several foreign invoices and prefer to handle them once at filing time rather than one by one during the year.

One important difference from PT-supplier expenses

When a Portuguese supplier invoices you, the SAF-T chain provides AT with independent verification. With foreign invoices, there is no electronic trail. You are the only source.

That makes record-keeping critical. Keep the original invoice, the payment confirmation (bank transfer, credit card statement), and any currency conversion documentation for 10 years (Art. 52 CIVA). The 4-year figure that appears in bank summaries and many blog posts is the AT's caducidade (the window AT has to assess or correct a return). The document-retention obligation is a longer, separate clock. AT can ask to see supporting documents during an audit, and without the paper trail, the expense doesn't hold up.

EU vs US: no distinction here

The EU single market distinction, reverse-charge VAT, the place-of-supply rules: those matter for VAT on the invoice itself. They do nothing for the IRS expense side. A German SaaS subscription and a US SaaS subscription land in the same Quadro 17-C field and count the same way toward the 15%.

The e-Fatura auto-capture gap is an administrative quirk of how AT's systems work, not a restriction on what counts. The manual routes exist precisely because AT knows most freelancers use foreign tools.

The December window

If you check your expense position in December and find you're short of the 15% threshold, you have a few weeks to close the gap by making qualifying business purchases before December 31.

Things that typically qualify as professional expenses:

• Software subscriptions and tools (project management, cloud storage, design tools)
• Hardware and equipment (laptop, monitor, keyboard, external drives)
• Training and professional development courses
• Professional services (accountant, legal, subcontractors in Portugal)
• Office supplies

The purchases need to be documented with your NIF on the invoice and categorized as professional expenses in eFatura. Foreign subscriptions (tools based outside Portugal) don't appear in eFatura automatically. See the section above on foreign invoices for how to claim those.

One practical distinction: the January 31 deadline is when eFatura receipts must be finalized and assigned to your NIF. The December 31 deadline is when purchases must actually happen. Buying something on January 3 of the following year counts for the new tax year, not the old one.

When to check where you stand

The worst time to discover a shortfall is in June when you're filing. Closing the gap with a business purchase in June of the following year isn't possible: the tax year has already ended.

The useful checkpoints are:

• November: review your documented professional expenses for the year so far. Compare against 15% of your expected gross income. If you're short, you have six weeks to make qualifying purchases.
• Early December: last comfortable window. After mid-December the calendar gets tighter, and making a qualifying purchase, getting the invoice, having it appear in eFatura, and assigning it correctly all take time.
• December 31: hard cutoff. Nothing purchased after this date counts for the current tax year.

If you use Descodify, the platform tracks your documented expense progress against the 15% threshold throughout the year and alerts you in November if you're on track to fall short, while there's still time to act.

A few things that trip people up

Personal expenses don't count. Health appointments with your NIF, education costs, veterinary bills: these appear in eFatura and generate Anexo H deductions. They don't count toward the 15% requirement. The two flows are completely separate. A common mistake is adding up everything in eFatura and assuming it all satisfies the rule. Only professional expenses matter here.

Expenses without your NIF don't exist. If a supplier issued the invoice without your NIF, it doesn't appear in eFatura. For the 15% rule, it doesn't count. The invoice needs to be issued to your NIF, reported by the supplier to AT, visible in eFatura, and categorized as professional.

Social Security exemption changes the picture. If you're in your first year and exempt from SS, your automatic coverage drops to the ~€4,104 specific deduction only. Factor this in when projecting your expense position, particularly if you expect strong first-year income.

You probably have more qualifying expenses than you think. Before worrying about making new purchases to hit the 15%, review what you've already paid: foreign supplier invoices, tools, equipment. These count if you bring them in. The gap is usually smaller than it appears.

Who actually has a problem

For most freelancers earning above €27,000 in Recibos Verdes income with regular SS contributions, the rule resolves itself automatically. The specific deduction plus SS contributions typically covers the 15% threshold without any additional business expenses.

Three groups where that math breaks down:

1. First year of activity, exempt from SS, above around €27,000

The first-year SS exemption lasts 12 months from the date you registered your activity. During that window, the ~€4,104 specific deduction is the only automatic coverage you have. Below roughly €27,000 gross, the deduction alone is enough. Above that, there is a gap. On €40,000 gross, the 15% threshold is €6,000. With only €4,104 covered, you are €1,896 short.

The groups most caught by this: expats who started a freelance activity in Portugal mid-year, landed a few good clients quickly, and assumed the first year was a "free" period from a tax perspective. It mostly is, but not for the documented expense requirement.

2. High earners above roughly €110,000

SS contributions plateau. The monthly contribution base is capped at 12 times the IAS (around €537/month in 2026), which means your annual SS stops increasing above roughly €110,500 gross income. The 15% threshold does not plateau. At €120,000 gross you owe documentation of €18,000; your SS is capped at around €16,500; the specific deduction adds ~€4,104. You are covered. At €200,000 gross you need €30,000 documented; SS is still ~€16,500; you have a real shortfall.

This is the less obvious trap. The math that works everywhere else quietly stops working above the SS cap, and most people in that income range don't know the cap exists.

3. Reduced or adjusted-down Social Security

Some freelancers voluntarily reduce their SS contribution base through the quarterly Declaracao Trimestral adjustment (the mechanism allows a -25% variation when income has been lower than the reference period). The reduction saves cash now. What it also does, silently, is push SS below the 15% threshold at income levels where normal SS would have covered it. The detailed mechanics of this particular trap are worth a separate read: how the SS adjustment creates a 15% shortfall.

The shortfall is closeable

A documented expense shortfall sounds alarming. It usually isn't, once you look at what you already have.

"Document real business expenses" is not a tax strategy. It is recognizing that you almost certainly have qualifying costs you haven't claimed yet. Foreign supplier invoices you paid but never brought into e-Fatura or Quadro 17. Software tools billed to a personal card rather than your NIF. Professional development courses. A laptop purchase. Equipment.

The first step is to register those invoices, either manually in e-Fatura or in Anexo B, Quadro 17-C when you file IRS. Not fabricate them. Find the ones that already exist.

If you need to assess your actual position before year-end, the expense proof checker runs the calculation for your income level and SS situation.

If you're in one of the three groups above, November is when to look. December is when to act. June is when it's already too late.

For the full reference on thresholds, what qualifies, and the calculation mechanics, see the 15% expense rule fact page.

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The figures above (€4,104 specific deduction, 21.4% SS rate, 0.75 coefficient for services) apply to the 2025 tax year filed in 2026. Tax rules change with the annual State Budget. Verify current figures with a certified accountant (contabilista certificado) or on the AT portal before filing.