Catarina is a designer invoicing around €1,200 per month. Her colleague Nuno invoices three times as much. Both are freelancers on the simplified regime - but their tax rules are completely different.
Why? Two numbers change everything: €15,000 and €200,000.
The First Threshold: €15,000 Annual Invoicing
This is the VAT threshold. It’s called the “exemption regime” and is set out in Article 53 of the CIVA (Portuguese VAT code).
Below €15,000/year: you don’t charge VAT to clients. Your invoices go out without that extra 23%. The client pays exactly what you agreed.
Above €15,000/year: you must charge VAT on every invoice. A €1,000 service becomes €1,230 for the client. And you must hand over the €230 you collected to the state - in the quarterly VAT declaration, every 3 months.
What Happens When You Exceed the Limit Mid-Year?
Nuno invoiced €13,000 up to September. In October he closed a €4,000 project. Total: €17,000.
There’s a specific rule here: the actual limit isn’t €15,000 - it’s €15,000 × 1.25 = €18,750. You only need to switch immediately when you exceed €18,750 in the same year. If you reach €15,000 in December, you only start charging VAT from January of the following year.
However, if you expect to exceed €15,000 in the current year, you can voluntarily notify the Tax Authority and start charging VAT early.
Warning: Even when VAT-exempt, your invoices must state: “VAT - Exemption Regime - Article 53 of the CIVA”. Without this wording, the invoice may be considered invalid.
The Second Threshold: €200,000 Annual Invoicing
This is the simplified regime threshold. It’s set out in Article 28 of the CIRS (Personal Income Tax Code).
Below €200,000/year: you can use the simplified regime. The state assumes 25% of your income covers expenses, and you pay income tax only on 75% of what you invoice. Simple, no documentation required.
Above €200,000/year: you’re in the transition zone. Under Article 28(6) of the CIRS, switching to organised accounting becomes mandatory if you exceed €200,000 in two consecutive years, or if in a single year you exceed €200,000 by more than 25% (i.e., exceed €250,000). In that case, you switch to organised accounting the following year and need a certified accountant.
Where Most Portuguese Freelancers Stand
The reality is that the vast majority of independent workers are comfortably within both thresholds:
If you invoice €1,500 per month, that’s €18,000 per year - already above €15,000, so you charge VAT. But far below €200,000, so you stay on the simplified regime.
In Summary
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€15,000/year is the VAT threshold - below this you’re exempt and don’t charge clients VAT. Above it, you charge 23% and hand it over to the state in the quarterly VAT declaration, every 3 months.
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€200,000/year is the simplified regime threshold - above this you leave the simplified regime and must hire a certified accountant. The vast majority of freelancers never reach this point.
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Track your invoicing throughout the year - with FIZ, the dashboard always shows where you stand relative to these thresholds and alerts you as you approach the limits.
