Cessação de Atividade

Cessação de atividade is the official notification to the Portuguese tax authority that you have stopped operating as an independent professional. Until you file it, AT normally treats your activity as open. AT can also close an activity on its own initiative, for example after two consecutive years with no taxable operations, but that is not something to wait for.

The 30-day deadline

You must file within 30 days of the date you stopped. You declare it to AT, the same authority you registered the activity with.

What closing triggers

IRS. You still file a Modelo 3 for the year activity ends, declaring the income you earned that year. The simplified regime coefficient applies to that income as a share of the gross, so a shorter year does not change the coefficient itself.

Social Security. Contributions are based on the income you declare each quarter in the Declaração Trimestral, and they are paid monthly, between the 10th and the 20th of the month after the one they cover. The declaration for a quarter is due on the last day of the month after that quarter ends. While you are contributing on the quarterly-declaration path, a quarter with little or no income still costs the minimum contribution of €20.00 a month.

VAT. If you were VAT-registered, your VAT obligations, including the Declaração Periódica, run until your activity is closed. If you were under the Article 53 exemption, you have no Declaração Periódica for domestic work. Cross-border is different: if you bought services from foreign suppliers you file a Declaração Periódica for each period in which you self-assessed VAT.

The 5-year reopening rule

When you first open an activity, the simplified regime gives services a reduced coefficient: half the normal one in the year you start, and three quarters of it the year after. For an Art. 151 profession that means 37.5% taxable in year 1 and 56.25% in year 2, instead of 75%. The reduction is lost in a year in which you also earn employment (Category A) or pension (Category H) income.

It does not come back on demand. If you had any cessação de atividade in the five years before you reopen, the reduction does not apply, whatever the closed activity was. Goods sellers never get this reduction at all, first activity or not.

Common situations

Switching to a company (Lda). Many sole traders close their individual activity when they form a Lda. The two are separate legal entities, and the Lda opens its own activity at AT, with its own CAE codes and its own VAT regime.

Pausing, not closing. If you stop invoicing but do not formally close, your activity stays open. Whether that costs you Social Security depends on your situation: a first-time freelancer pays nothing in the first 12 months, and some exemptions apply after a year with no income. Outside those cases, the monthly minimum contribution still applies. Closing and reopening is the clean path for a genuine break, but remember the 5-year rule above before you do it.