Portugal tax guide for UK expats: what you need to know about freelancing after the non-dom abolition

The UK abolished non-dom status in April 2025. Since then, Portugal has been receiving more serious enquiries from UK nationals who are either considering a move or have already relocated. The tax question they are asking is almost always the same: what does self-employment actually look like in Portugal, and how does it compare to what I had?

This is that guide. It covers the tax regime for UK nationals who are moving to Portugal and planning to work as freelancers or run a small business, including the income tax regime, Social Security, VAT, and the IFICI tax incentive that replaced NHR. It is not a substitute for professional advice, but it gives you the numbers and the structure to have an informed conversation with an accountant.

Your starting point: residency and registration

Before anything else, you need to establish tax residency in Portugal. The standard criteria: spend more than 183 days in Portugal in a calendar year, or have your habitual residence (your main home) here. Portugal uses both tests; meeting either one makes you a tax resident.

Once you are a tax resident, you register your self-employed activity with AT (Autoridade Tributária e Aduaneira, Portugal's tax authority). This is called abertura de atividade and you do it through the Portal das Finanças. You choose a CAE code that describes your activity, and from that point you are a trabalhador independente: a self-employed worker issuing recibos verdes (AT-certified invoices) for your services.

There is no visa or residency permit built into the tax registration. If you are a non-EU national (which UK nationals are, post-Brexit), you will need a separate right to reside in Portugal: the D8 digital nomad visa or another applicable route. Tax registration and residency permits are parallel processes with the same outcome requirement: you need both to work legally and pay taxes correctly in Portugal.

The simplified tax regime

Most freelancers in Portugal start on the simplified tax regime (regime simplificado). It covers anyone with annual gross revenue under €200,000. Under this regime, AT calculates your taxable income using a fixed coefficient applied to your gross revenue rather than requiring you to maintain a full accounting ledger.

For services (the category most freelancers fall into), the coefficient is 0.75. This means AT treats 75% of your gross services revenue as taxable income and assumes the remaining 25% represents your expenses. You do not need to prove your actual expenses for this 25% deduction. You do need to keep records of at least 15% of your revenue in documented expenses (invoices, contracts, receipts) or AT will add back the gap.

The tax rates that apply to your taxable income are Portugal's progressive IRS (income tax) brackets. For 2026, these run from 13.25% to 48%, with the brackets applying cumulatively. At typical freelance income levels, the effective rate is well below the top bracket.

Two things reduce your tax in the first years:

The first-year discount. In your first year of registration, only 37.5% of your services revenue is taxable (half the normal 75% coefficient). In year two, 56.25%. From year three onward, the full 75% applies.

Specific deductions. You can deduct Social Security contributions from your taxable income, up to the applicable cap. This reduces your IRS bill directly.

IFICI: the flat 20% tax incentive

If you are arriving in Portugal for the first time (or have not been a Portuguese tax resident in the previous five years), you may qualify for the IFICI regime (Incentivo Fiscal para a Competitividade e o Crescimento), which replaced NHR in 2024.

IFICI applies a flat 20% IRS rate to income from qualifying high-value activities or intellectual property for ten years. The qualifying activities include most professional services: technology, consultancy, research, management, and other listed professions under CIRS Art. 151.

The 20% flat rate applies to your Portuguese-sourced professional income. Foreign income received during IFICI status is typically taxed in the source country under the applicable double taxation treaty.

IFICI is not automatic. You apply through the Portal das Finanças within three months of establishing tax residency. The application is straightforward, but the eligibility criteria (particularly the qualifying activity requirement) need to match your actual work. If your CAE code does not correspond to a listed profession, you may not qualify.

The non-dom comparison. The old UK non-dom status sheltered foreign income from UK tax. IFICI does not do this for Portuguese purposes. Under IFICI, your Portuguese income is taxed at 20% (rather than the standard progressive rate up to 48%), and your foreign income is assessed under standard Portuguese tax rules and relevant tax treaties. IFICI is a rate preference, not a foreign income shelter.

UK-Portugal double taxation treaty

The UK and Portugal have a double taxation agreement (DTA) that determines which country taxes which income. The key rules for UK nationals working in Portugal:

Employment and self-employment income earned in Portugal is taxable in Portugal once you are a Portuguese tax resident. The DTA does not give the UK a concurrent right to tax income you earn by working in Portugal.

UK-source income (rental income from a UK property, UK pension income, interest from UK accounts) may still be taxable in both countries, with a credit in one country for tax paid in the other. The specific rules depend on the income type (pensions have different treatment than property income, for example).

UK state pension. Under the UK-Portugal DTA, UK state pension is taxable in the UK only, not in Portugal.

Remittance. Portugal taxes residents on their worldwide income, including amounts remitted from abroad. There is no remittance basis equivalent to the old UK non-dom rules under Portuguese domestic law; IFICI is a rate reduction, not a shelter for unremitted income.

Given the DTA's complexity for people with both UK and Portuguese source income, a bilateral tax adviser is worth the cost in the first year.

Social Security contributions

If you are self-employed in Portugal, you contribute to Portuguese Social Security (Segurança Social) rather than UK National Insurance. Contributions are mandatory once you have been registered for 12 months and are based on your gross professional income from the prior year.

The standard contribution rate is 21.4% of your contribution base. The contribution base is calculated at 70% of your gross quarterly income (your average monthly income for SS purposes is your quarterly professional income divided by three, multiplied by 70%).

Social Security contributions in Portugal fund your access to healthcare via the SNS (public health system), sick pay, and eventually a Portuguese state pension. UK National Insurance contributions made before your move continue to count toward UK state pension entitlement under the UK-Portugal Social Security coordination agreement.

VAT: Art. 53 exemption for services freelancers

Portugal's Art. 53 VAT exemption lets you invoice without charging IVA (VAT) if your annual revenue from Portuguese clients stays under €15,000. Most new arrivals with modest Portuguese client bases qualify initially.

Two thresholds to know:

• Under €15,000: exempt from IVA. Your invoices carry a footnote: "Isento de IVA nos termos do artigo 53.º do CIVA."
• €15,001 to €18,750: exemption continues through December 31 of the year you cross the threshold. VAT registration required from January 1 of the following year.
• Above €18,750 mid-year: VAT registration is immediate. The invoice that crosses €18,750 must include IVA.

Revenue from EU business clients is zero-rated (reverse charge applies) and does not count toward the Art. 53 threshold. If you work primarily for UK or other foreign businesses, your Portuguese-sourced revenue may stay comfortably under the threshold even as your total income grows.

AT-certified invoicing

Every invoice a Portuguese freelancer issues must come from a certified invoicing system. There is no option to issue invoices manually or through a non-certified tool. The certified system generates an ATCUD code for each invoice, which appears alongside a QR code. AT uses these codes to verify every invoice.

Descodify is an AT-certified invoicing platform built specifically for freelancers in Portugal. Invoicing is free on every plan. The Completo plan adds guided VAT declarations, Social Security declarations, and IRS filing support.

What to do first

The sequence that works:

1. Apply for Portuguese tax residency (NIF, tax registration, residency permit if applicable)
2. Open your self-employed activity on Portal das Finanças (abertura de atividade, choosing your CAE code)
3. Apply for IFICI within three months of establishing residency if you qualify
4. Set up a certified invoicing system before issuing your first invoice
5. Speak with a bilateral tax adviser to understand your UK obligations (especially if you have UK-source income, rental property, or pension income)

Step 5 is not optional if you have ongoing UK ties. Portugal and the UK tax treaty requires careful reading for dual-income situations, and the interaction with IFICI adds another layer.