Why Portugal is the perfect base for freelancers

A growing number of people are choosing sunny Portugal as their new home - and for good reason. With the rise of remote work, living where you truly want has never been easier, and Portugal regularly tops the list for digital nomads and remote workers. 

If you’re able to work from anywhere, why not choose a country known for its beautiful coastline, affordable living, and excellent quality of life?

Whether you're already a freelancer or planning to pivot, becoming a registered freelancer in Portugal could be the perfect path forward.

What it means to be a freelancer in Portugal

Being a freelancer simply means you work independently, without a formal employment contract. You might work for multiple clients or just one - but legally, you’re operating under your own name.

As a freelancer in Portugal, you must:

• Register with the Portuguese Tax Authority

• Issue invoices for your services

• File regular tax and social security declarations

Freelancing vs. creating a company: what do I need to do? 

Here’s the good news: you don’t have to start a company to work as a freelancer. In fact, unless you specifically need to limit liability or qualify for certain tax statuses like the Non-Habitual Resident (NHR) regime, registering as a freelancer is usually the smarter, cheaper, and simpler option.

Why? It’s simple: No incorporation costs, lower ongoing accounting expenses, and simpler compliance obligations

If your annual revenue is under €15,000, you might even be exempt from charging VAT, making things even easier.

Freelancing vs. being an employee: what is the better option? 

This is where things get really interesting.

When you're employed, your ability to reduce your taxable income is very limited. But as a freelancer, Portugal offers a major tax break: the simplified accounting regime.

Here’s how it works:

• Instead of tracking and deducting every little expense, your taxable income is automatically calculated as a percentage of your total revenue, usually 75%.

• In your first year, this drops even further to 37.5%.

• In your second year, it’s 56%.

• By the third year, it stabilises at 75%.

So, for someone earning €100,000 in their first year, their taxable income would be just €37,500, before any additional deductions. Even better: if you declare qualifying expenses totaling 15% of your revenue, you could lower that even further.

Special bonuses for young professionals

Are you under 35? Portugal offers even more advantages 

Through the Under 35 Regime, a large portion of your taxable income can be exempt from tax. In the above example of €100K income, only a small fraction would end up being taxed after these exemptions.

Combining Freelancing with Portugal's NHR 2.0 Program

Can you freelance and still qualify for the new NHR 2.0? Yes, you can, but there are certain conditions, with the main one being that you’ll need to meet one of the qualification criteria first (learn more about NHR 2.0 here).

If you do, the benefits can be enormous:

• Pay just 20% flat tax on a substantially reduced taxable income.

• Avoid Portugal’s progressive tax rates altogether.

If you already have the original NHR status, even better: you’ll enjoy the same 20% flat tax rate, as long as your freelance work falls into the list of highly qualified activities.

What are your obligations as a freelancer?

Getting structured is simple. You’ll need to:

• Register as a freelancer with the tax authorities

• Issue invoices for every service

• Track expenses related to your professional activity

• File quarterly VAT and social security returns

• Submit an annual income tax return

• File monthly EU service declarations if you provide services to EU VAT-registered clients

Feeling overwhelmed? We've got you covered.

Freelancing in Portugal comes with big benefits – but only if you know how to make it work for you. That’s where Touchdown comes in.

We specialise in relocation, tax strategy, and business setup for global professionals landing in Portugal.

Want to know how? We’ll walk you through it – no jargon, just straight answers. Answer a couple of questions in the Touchdown Advisor to book a free introduction call with our team.