The 15% Expense Proof Rule, Simplified Regime in Portugal (2026)

How it works

Under the simplified regime, the tax authority assumes 25% of your services revenue covers business expenses (the 0.75 coefficient means 75% is taxable, 25% is assumed costs).

But there's a catch: you must prove at least 15% of your gross income in documented expenses. If you fall short, the gap between your documented expenses and the 15% threshold gets added back to your taxable income.

What counts toward the 15%

Expense type	Counts?	Notes
Business expenses with NIF in e-fatura	Yes	Must be classified as professional expenses
Social Security contributions	Yes	Automatically included
Specific deduction (~€4,104)	Yes	Applied automatically by AT
Personal expenses (health, education)	No	These go to Anexo H deductions, not the 15%
Portuguese invoices without your NIF	No	Without your NIF the invoice is not linked to you in e-Fatura and cannot be used
Foreign supplier invoices (Stripe, AWS, etc.)	Yes, if declared	Not auto-captured by e-Fatura. Count toward the 15% if you register them manually on the e-Fatura portal (registar fatura as adquirente) or declare them in Anexo B Quadro 17. Keep originals and payment proof for 10 years (Art. 52 CIVA).

The math

Example: €40,000 in services revenue

• 15% threshold: €6,000
• Specific deduction: ~€4,104 (automatic)
• Social Security: ~€5,990 (21.4% × 70% × €40,000)
• Total documented: ~€10,094

In this case you're well above the 15% threshold. Social Security contributions alone often cover most of it.

When it becomes a problem

For most service freelancers paying normal Social Security, contributions alone cover around 15% of gross (21.4% on 70% of income is roughly 14.98%), so the proof is automatically satisfied across most of the income range. The ~€4,104 specific deduction covers the low end; SS contributions cover the middle. Goods sellers (0.15 coefficient) are not subject to this rule at all.

The documented-expense shortfall opens for three specific groups:

First-year freelancers above around €27,360 gross. The first 12 months of activity are SS-exempt. No SS means the only automatic coverage is the ~€4,104 specific deduction. On €27,360 gross, that exactly meets the 15% threshold. Earn more than that in year one, and you need to document the gap with real business expenses.

Freelancers with reduced or adjusted Social Security. If you lowered your quarterly SS declaration (the Declaracao Trimestral lets you adjust down by up to 25%), your SS contributions can fall below 15% of gross. The shortfall becomes your problem.

High earners above around €110,000 gross. SS contributions are capped at a monthly base of 12 IAS (roughly €6,446/month). Above around €110,000 gross, SS plateaus while the 15% threshold keeps climbing. The gap between what SS covers and what the rule requires grows every euro above that point, and documented business expenses are the only way to close it.

How to track it

The only way to know where you stand is to track your documented expenses throughout the year. Finding out you're short when you file your IRS in June means it's too late to do anything about it for that tax year.

December is the last chance to make business purchases (equipment, software, training) that count toward the current year's 15% threshold.