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. For anyone below roughly €30,580 of gross services income, the fixed specific deduction covers the rule on its own. 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 professions specifically listed in the Art. 151.º table of activities, that coefficient is 0.75: 75% of what you earn is taxable, and 25% is assumed to cover your business expenses. Services the table does not specifically list, including its catch-all code 1519, use 0.35.

The "assumed expenses" part has a condition attached.

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

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

What counts toward the 15%

Article 31 n.º 13 counts six kinds of cost. Three of them apply to most freelancers with no staff and no business property, and two of those happen automatically.

1. The specific deduction (deducao especifica)

AT counts a specific deduction of approximately €4,587.09 (2026) toward the 15% automatically. You don't need to do anything to claim it. It's the floor, not an add-on: it's what you get even in a year with zero Social Security contributions.

2. Social Security contributions, capped at 10% of your gross

Whatever you paid to Seguranca Social during the year counts, but only up to 10% of your gross services income (Art. 31 nº13 a) CIRS). For freelancers issuing Recibos Verdes, the standard rate is 21.4% applied to 70% of your gross income, roughly 14.98% of gross. That's above the 10% cap, so in practice the capped amount, not your full SS bill, is what counts here.

The specific deduction and your capped SS don't add together. AT takes whichever of the two is larger, not the sum. The floor exists precisely to cover the years your SS leg falls short.

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.

The other three kinds are salaries you pay and have communicated to AT, rent for property used in the activity (on invoices communicated to AT), and a fixed share of the tax value (VPT) of property you own and use for the activity (a higher share for hotel or local accommodation use). If you have none of those, the three above are your whole picture. Goods and services bought from another EU country count too, and the foreign suppliers section below explains how.

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 earn €30,000 in Recibos Verdes income for the year, with full Social Security contributions (no exemption, no quarterly adjustment).

• 15% threshold: €4,500 (this is what you need to document)
• Specific deduction: ~€4,587.09 (2026) (automatic floor)
• Social Security, capped: €3,000 (10% of your €30,000 gross, the cap, not the ~€4,494 you actually paid)
• What counts: the larger of the two, ~€4,587.09 (2026), not the sum

You need €4,500. The specific deduction alone covers it, with about €87 to spare. No additional business expenses needed, but the margin is thinner than "specific deduction plus SS" would suggest.

Now change the scenario slightly.

Higher income: €60,000 gross

• 15% threshold: €9,000
• Specific deduction: ~€4,587.09 (2026)
• Social Security, capped: €6,000 (10% of €60,000; the actual SS bill, ~€8,988, doesn't matter here, only the capped figure counts)
• What counts: €6,000 (the SS cap now exceeds the specific deduction, so it's the one that applies)

That leaves a €3,000 shortfall to document with real business expenses. This is the detail that catches people: because Social Security only counts up to 10% of gross, and 10% is always less than the 15% threshold, the automatic coverage alone can never fully close the gap once your income clears roughly €30,580. Above that point, real documented expenses aren't optional, they're required at every income level.

The problem case: SS exemption or very high income

The gap widens further in two situations.

First: SS contributions are reduced or absent. A first-time freelancer does not contribute to SS until the first day of the 12th month after registering. If you had a strong first year, your automatic coverage is only the ~€4,587.09 (2026) specific deduction, since the capped-SS leg is €0 with no contributions to cap. On €40,000 gross, the threshold is €6,000. With ~€4,587 covered, you're short by roughly €1,413. That shortfall becomes additional taxable income.

Second: income above roughly €110,500. The Social Security contribution base is capped at 12 times the IAS (the social support index) per month, so your annual SS bill stops growing there. But the 10%-of-gross cap on the 15% rule already limits what SS counts at every income level, so the SS plateau mostly matters for how much SS you owe, not for how much of it counts toward the 15%. At €200,000 gross, the threshold is €30,000; the capped SS leg is ~€16,550 (the SS plateau, which only falls below 10% of gross above roughly €165,500); you'd need to document the remaining ~€13,450 yourself.

How e-Fatura fits in

When you make a business purchase in Portugal and provide your NIF, the invoice lands in your e-Fatura account, in a sector based on the merchant's registered activity.

For the 15% rule, you need invoices classified as professional expenses, and that classification is yours to make. AT asks anyone with a professional activity to validate and classify every invoice: mark whether it relates to your activity wholly or partly, and put it in the right sector (CIRS Art. 31.º n.º 15 a)). An expense only partly used for the activity counts at 25% (n.º 14).

The deadline for classifying each tax year's invoices is the end of February 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. A US-based SaaS tool, a design subscription, a US-based contractor: none of these suppliers necessarily has 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 is that those costs don't count. Whether they do depends on where the supplier is, and one of the cases is genuinely unsettled.

Suppliers in another EU country

Article 31 CIRS n.º 13 f) counts "importações ou aquisições intracomunitárias de bens e serviços relacionados com a atividade": imports, and acquisitions from other EU member states. Those you declare yourself on the IRS return, in Anexo B, Quadro 17A, campo 17002. There is no switch involved. It is added to whatever e-Fatura already holds, so you can fill it in at filing time without touching anything else.

A German SaaS subscription is the clear case. Enter the amount you paid in that field.

Suppliers outside the EU (a US SaaS tool, for example)

First check which company actually invoices you: a large provider often bills EU customers from an entity in an EU country, and that is an EU purchase. The same alínea f) names imports, but a subscription to a service from outside the EU is not obviously an "import" in the sense it uses. Whether it has a place in campo 17002, or anywhere else in the 15% calculation, is an open question, and we are confirming it with an accountant. I won't promise you either way. In the meantime, keep these invoices like any other, and ask your accountant before you rely on them to close a gap.

Two routes that don't work for foreign invoices

Don't try to register a foreign invoice manually in e-Fatura. The way a buyer registers an invoice that lacks their NIF uses the QR code or the unique document code that a Portuguese invoice carries, and a foreign invoice has neither.

And Quadro 17C is the wrong place for them. It covers "other expenses" only for invoices communicated to AT, or issued on the Portal das Finanças, so it cannot take an invoice from a foreign supplier.

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.

VAT is a different question

Reverse-charge VAT and the place-of-supply rules matter for the VAT on the invoice itself. They don't decide how a foreign cost is treated on the IRS side, and the IRS answer is the one above: EU acquisitions have a campo, non-EU services are open.

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 end of February is the deadline for invoices to be communicated to AT and classified as professional. 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, it tracks your documented expense progress against the 15% threshold throughout the year on your dashboard, so you can see while there's still time to act whether you are on track to fall short.

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 aren't linked to you. If a supplier issued the invoice without your NIF, it doesn't appear in your eFatura. For the 15% rule it counts only if you register it yourself using its QR code and classify it as professional by the end of February. Otherwise the invoice needs to be issued to your NIF, reported by the supplier to AT, visible in eFatura, and categorized as professional.

A deferred first year changes the picture. If you're in your first year and not contributing to SS yet, your automatic coverage drops to the ~€4,587.09 (2026) specific deduction only, since there's no SS to count. 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: invoices from suppliers in other EU countries that you never declared in Quadro 17A, tools, equipment. The gap is usually smaller than it appears.

Who actually has a problem

Below roughly €30,580 gross (where 15% of gross equals the specific-deduction floor), the fixed deduction alone covers the 15% threshold, with no SS contributions needed at all. Above that income, the automatic leg is capped at 10% of your gross services, and 10% is always less than the 15% you need to document. Once you clear that line, documenting real business expenses stops being optional.

Two groups where the gap is largest:

1. First year of activity, not contributing to SS yet

A first-ever registration does not contribute to SS until the first day of the 12th month after the date you registered. During that window, the ~€4,587.09 (2026) specific deduction is the only automatic coverage you have, since there's no SS to cap. Below roughly €30,580 gross, the deduction alone is enough. Above that, there is a gap. On €40,000 gross, the 15% threshold is €6,000; with ~€4,587 covered, you are short by roughly €1,413.

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 is only for Social Security, which is deferred. IRS is still due on first-year income, and the documented expense requirement still applies.

2. Everyone above roughly €30,580 gross, not just high earners

The automatic legs do not add together - AT takes the larger of the fixed specific deduction and the capped Social Security leg - so coverage stops meeting the 15% threshold at roughly €30,580, where the deduction alone stops reaching it. Above roughly €45,871 the capped SS leg overtakes the deduction and becomes the larger of the two, but by then a shortfall has existed for some time. Because SS is credited only up to 10% of gross against a 15% threshold, that gap never closes on its own and widens as income grows. At €120,000 gross you owe documentation of €18,000; the capped SS leg is €12,000; you have roughly €6,000 left to document. Above about €165,500 gross, the Social Security contribution base cap (12 times the IAS per month) starts to matter too: your actual SS bill plateaus at around €16,550/year, which becomes the binding number instead of the 10%-of-gross figure. At €200,000 gross you need €30,000 documented; the automatic leg tops out at that ~€16,550; you have a real shortfall of roughly €13,450.

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. Invoices from EU suppliers you paid but never declared in Anexo B, Quadro 17A. Software tools billed to a personal card rather than your NIF. Professional development courses. A laptop purchase. Equipment.

The first step is to bring those invoices in: EU supplier invoices in Anexo B, Quadro 17A (campo 17002) when you file IRS, and Portuguese invoices by making sure they are communicated to AT and classified by the end of February. 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 two 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 (the specific deduction, the 21.4% SS rate, the 0.75 coefficient for professions specifically listed in the Art. 151.º table) reflect 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.