Working for yourself almost always begins with the same step: registering activity with Finanças (the Portuguese Tax Authority). The process is free and can be done online, but the choices you make at the time of registration will impact your business throughout the year. This guide explains how to start activity as a self-employed worker in 2026 and what you need to know about taxes and Social Security.
Step 1: Gather what you need
Have your Número de Identificação Fiscal (NIF – Tax Identification Number) and your Portal das Finanças login credentials ready. This is also the time to decide on the activity you will perform, as you will need to identify it using a code (CAE – Classification of Economic Activities, or a code from Article 151 of the Código do IRS).
Step 2: Register your activity on the Portal das Finanças
The registration is done on the Portal das Finanças, under the 'start activity' option. During the process, you will indicate the start date, the activity code, your estimated annual turnover, your tax regime (by default, the simplified regime), and your IVA (Value Added Tax) status. The estimated turnover is important because it determines, among other things, whether or not you will be exempt from IVA.
Step 3: Understand your IVA status
Anyone who expects to bill below the exemption limit of Article 53 of the Código do IVA (VAT Code) may be exempt from charging IVA to clients (limit to be confirmed for 2026). This exemption simplifies the start-up, but those who are exempt also cannot deduct the IVA on their expenses. If you are going to make significant initial investments, it is worth assessing whether giving up the exemption is beneficial.
Step 4: Social Security exemption in the first year
Anyone starting activity for the first time is exempt from Social Security contributions for the first 12 months. The exemption is automatic and counts from the date of registration with Finanças, not per calendar year. From the 13th month onwards, you will start paying contributions at a rate of 21.4% on your relevant income, with a minimum payment of approximately 20 Euros per month. Please note: income from previous months may already be included in the calculation, so it is not a good idea to concentrate invoicing at the end of the exemption period.
Step 5: The quarterly declaration
After the exemption period, you will submit a quarterly income declaration to Social Security in April, July, October, and January. In this declaration, you summarise the amounts received in the previous three months, and your contribution is calculated based on this.
Step 6: Organise your invoicing from the outset
From the moment you start activity, you are obliged to issue an invoice or simplified invoice (fatura-recibo) for each service rendered, through the Portal das Finanças. Keeping this up-to-date avoids problems with your IRS (personal income tax) and facilitates the justification of expenses, especially under the simplified regime.
Common mistakes to avoid
Choosing the IVA status without proper calculations, forgetting that the Social Security exemption ends after 12 months, missing the deadline for the quarterly declaration, and mixing personal with professional expenses are the most frequent mistakes.
Start on the right foot
An ill-conceived framework for IVA or IRS can cost you money that you will never recover. At Grupo Your, we assist with starting activity from scratch and handle tax and Social Security obligations. If you are considering becoming a self-employed worker in 2026, speak with us before registering your activity.
