May is the month when many independent workers receive a surprise transfer from the government. No, it’s not a system error. It’s the IRS refund - money that was withheld beyond what you actually owed during the previous year.
Marta, a graphic designer in Lisbon, received €800 last May. “I thought it was a mistake. I called my cousin who’s an accountant and he laughed. It was my IRS refund. I didn’t even know I was entitled to it.”
Let’s explain how this system works - and how you can maximise what you receive.
What is withholding tax (and why they take money from you)
When you invoice a company, it automatically withholds part of the amount for the government. It’s like an advance payment of the IRS you’ll owe in the future.
Imagine you go to a café every morning. Instead of paying at the end of the month, you leave one euro on the counter each day. At the end of the month, you settle up. If you left more than you owed, the owner gives you the difference back.
Withholding tax works exactly like this. Companies withhold a percentage of what they pay you and hand it to the government. When you file your annual IRS declaration, the Tax Authority calculates what you really owed. If they withheld more than necessary, they refund the difference.
How the actual IRS calculation works
João works as a marketing consultant. In 2025, he invoiced €24,000 to companies that withheld 23% at source - the rate applicable to professional activities under Article 151 of the CIRS (consultants, designers, programmers, translators).
⚠️ Warning: If you don’t file your annual IRS declaration on time (usually between 1 April and 30 June), you won’t receive the refund. The government won’t chase you to give money back.
Situations where the refund can be larger
Sofia is a freelance photographer. In 2025, she had withholding tax on all her company work. But she also had deductible expenses that reduce the IRS owed:
- Health expenses - dentist appointments, new glasses
- Education expenses - advanced photography course
- PPR - retirement savings plan she opened at the bank
Since withholding was calculated without considering these deductions, Sofia’s refund was substantial.
Pedro, an independent programmer, had another situation. He only worked 6 months in 2025 (started in July). Companies withheld as if he’d work the full year. Result: big refund in May 2026.
How to maximise your refund
The mistakes that cost you money
Rita, a freelance translator, lost hundreds of euros in refunds from one simple mistake: she didn’t validate her invoices in the e-invoice system. “I thought it was automatic. I only found out when a colleague told me they’d received a much bigger refund than me.”
Another common mistake: not asking for invoices with your NIF on everyday expenses. Bruno, an IT consultant, calculated he lost at least €200 in refunds by not asking for his NIF at the supermarket for an entire year.
The worst mistake of all: not filing the annual IRS declaration. Tiago had withholding tax throughout 2024 but didn’t file his declaration. Result: zero refund. The money stayed with the government.
How to Maximise Your Refund
The biggest challenge is staying organised throughout the year. Keep a clear record of all your professional income and expenses. When it’s time for the annual IRS declaration, you have everything to hand.
Questions about whether you can deduct a particular expense? Check the Finance Portal or consult an accountant. Questions like “Can I deduct this computer?” or “Does this training count as an expense?” have clear answers in the law.
The refund timeline
✅ In summary - 3 points
-
Withholding tax is an advance payment of IRS - if you paid more than you owed, you get the difference back in May
-
To maximise your refund: always ask for invoices with your NIF, validate in the e-invoice system monthly, consider a PPR or health insurance
-
Organisation is everything - keep records throughout the year, validate e-invoices monthly, and file your declaration on time. FIZ (Auto Pro plan) organises income and expenses automatically and includes a Tax Shield up to €500 if anything goes wrong.
Your IRS refund isn’t a bonus or luck. It’s your money coming back to you. With organisation and the right tools, you can make sure you receive every cent you’re entitled to.
