If you are a self-employed worker in Portugal, it is crucial to understand how the Simplified IRS Regime works. This regime, provided for in articles 28 and 31 of the IRS Code, offers a simplified form of taxation for business and professional income (Category B).
✅ What is the Simplified Regime?
The Simplified IRS Regime is a taxation method for self-employed workers with annual gross income up to €200,000. Instead of declaring all expenses, a fixed coefficient is applied to the gross income to determine the taxable income.
📌 Who Can Join?
This regime is automatically assigned to self-employed workers who:
- Have annual gross income up to €200,000;
- Have not opted for organized accounting;
- Are not required to maintain organized accounting due to exceeding legal limits.
Even if eligible for the Simplified Regime, the taxpayer can opt for organized accounting by submitting an amendment declaration by March 31 of the year in which the change is desired.
📉 How Does Taxation Work?
Taxation in the Simplified Regime is based on applying coefficients to gross income:
- 75% for service provision;
- 15% for sales of goods and products.
Taxable income is calculated by multiplying the gross income by the corresponding coefficient. For example, for an income of €50,000 from service provision, the taxable income will be €37,500 (€50,000 x 75%).
🧾 Deductible Expenses
In the Simplified Regime, expenses are not individually deducted, as the coefficients already assume a margin for costs. However, some expenses can be considered, such as:
- Mandatory Social Security contributions;
- Property rents allocated to professional activity.
These expenses must be properly documented and associated with the professional activity.
🔄 Changes and Exiting the Regime
Exiting the Simplified Regime can occur:
- By taxpayer’s option, by submitting an amendment declaration by March 31;
- By exceeding income limits:
- If annual gross income exceeds €200,000 in two consecutive years;
- If it exceeds €250,000 in a single year.
In these cases, the taxpayer will be subject to the organized accounting regime in the following year.
🧮 Support Tools
The Order of Certified Accountants provides a simulator that allows calculating the taxable income in the Simplified Regime, facilitating tax planning for self-employed workers.
📌 Conclusion
The Simplified IRS Regime is an advantageous option for many self-employed workers, offering simplicity in taxation. However, it is essential to assess whether this regime is the most suitable for your specific situation. For a personalized analysis and support in tax management, please contact us.
This article was prepared based on information available to date and is intended for informational purposes.