Self-employed invoices: simplified scheme or organised accounting?

In summary: Those who work on a self-employed basis pay income tax on a proportion of their turnover (simplified scheme) or on their actual profit (organised accounting). Under the simplified scheme, a consultant, architect or programmer is taxed on 75% of their turnover; for a shop, the rate is 15%. Organised accounting is worthwhile when the actual business expenses exceed the portion excluded by the coefficient: 25% of turnover for services listed in the professional tariff. The change must be requested by the end of March and applies to the current year.

Who is on each scheme

Self-employed workers and sole traders with an income of up to 200 000 € per year remain under the simplified scheme, unless they opt for organised accounting (Article 28 of the Personal Income Tax Code). Anyone whose income exceeds €200,000 in two consecutive years, or in a single year where it exceeds 25%, must switch to organised accounting in the following year.

How the simplified scheme works

Taxable income is turnover multiplied by a fixed coefficient (Article 31):

The portion that is exempt from tax is intended to cover expenses, without the need to provide proof of them. There is, however, one condition.

The 15% rule

For the coefficients of 0.75 and 0.35, the taxpayer must provide evidence of expenses amounting to at least 15% for invoicing. Any shortfall is added to taxable income (Article 31(13)). The following are included:

• the specific deduction for 4 587,09 € in 2026 (8.54 × IAS), or Social Security contributions, whichever is higher;
• staff costs and rent;
• 1.5% of the net asset value of the properties used in the business;
• purchase invoices relating to the activity reported via e-fatura, which must be identified as an ‘activity’ on the Finance Portal by the end of February of the following year. Mixed-use expenses are only recorded under code 25%.

The specific deduction always applies. Therefore, those who earn up to around €30,580 a year This alone satisfies the requirement (€4,587.09 is 15% of €30,580) and no further invoices are required. Above this amount, it is advisable to validate the expenses via e-fatura.

The early years of the business

In the first and second years, the service coefficients are reduced by 50% and 25%, provided that there is no income from employment or pensions in those years. The reduction does not apply to those who ceased working less than five years ago.

How organised accounting works

Income tax is payable on the actual profit: turnover less business expenses, as calculated by the accounts and declared in Annex C. It is compulsory to have a certified accountant, the cost of whom is also a business expense.

It is worthwhile for those with high expenses: rent, staff, expensive equipment, subcontracting and frequent travel. It also allows losses from one year to be carried forward to subsequent years, which the simplified scheme does not permit.

When it’s worth switching: the rule of thumb

Proper bookkeeping starts to pay off when the actual expenditure exceeds the percentage excluded by the coefficient:

• professional fee scale (0.75): expenses in excess of 25% turnover;
• other services (0.35): above 65%;
• sales and catering (0.15): above 85%.

In practice, it is mainly in the professional services sector that the change pays off. In a shop or a restaurant, it is rare for accepted expenses to exceed 85% of turnover.

Example. A designer earns €40,000 a year and has business expenses of €14,000 (studio, equipment, software, travel, accountant).

• In the simplified, the taxable income is 40,000 € × 0.75 = 30 000 €. The expenditure comfortably covers the required 15% (€6,000).
• At proper bookkeeping, the profit is €40,000 − €14,000 = 26 000 €.

That’s €4,000 less in taxable income. The amount of income tax saved depends on the tax bracket and the household’s other income. The simulator below calculates this figure, taking Social Security into account.

More examples

A programmer with a turnover of €25,000

Taxable income under the simplified scheme: €25,000 × 0.75 = 18 750 €. The 15% rule requires €3,750 in substantiated expenses, and the specific deduction (€4,587.09) already covers these. There is no additional charge, even without any expense invoices. With few actual expenses, keeping organised accounts is not worthwhile.

A consultant earning €60,000 with few invoices

Taxable income: €60,000 × 0.75 = €45,000. The 15% rule states that 9 000 € in claimable expenses. He paid €8,000 in social security contributions during the year, which count in place of the specific deduction as they are higher, and has €500 worth of business invoices on the e-fatura system. Total: €8,500. There is a shortfall of €500, which is added to the income: 45 500 €.

All that was needed was to claim a further €500 in business expenses via e-fatura (mobile phone, internet, software, training) by the end of February to avoid the surcharge.

The first two years of operation

A designer starts working for herself, with no other job, and earns €20,000 in the first year and €25,000 in the second:

• 1st year: the coefficient of 0.75 is halved to 0.375. Taxable income: €20,000 × 0.375 = 7 500 €;
• Year 2: reduced rate of 0.5625 on 25%. Taxable income: €25,000 × 0.5625 = 14 062,50 €;
• From the 3rd year onwards: standard coefficient of 0.75.

In the first two years, the simplified scheme is almost always the best choice. You switch to the standard accounting scheme from the third year onwards.

A shop where organised accounting pays off

A sole trader has a turnover of €120,000 per year. Under the simplified scheme, the taxable income is €120,000 × 0.15 = 18 000 € (For sales, the 15% rule does not apply).

Actual expenses amount to €90,000 for goods, €12,000 for rent and €6,000 for other costs: €108,000, or 90% of sales. In the organised accounts, the profit is €120,000 − €108,000 = 12 000 €, minus €6,000 of taxable income. In the case of resales with a small margin, proper bookkeeping can still be worthwhile even with a coefficient of 0.15.

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How and when to change

• At notification of commencement of business, opting straight away for organised bookkeeping.
• For those already working: notification of changes by the end of March. The change applies to the year in which it is made.
• This option remains in place until further notice of any changes. To revert to the simplified scheme, the deadline is the same: by the end of March.

Social Security, payroll deductions and VAT

The personal income tax scheme does not affect National Insurance. Self-employed people pay 21,4% on 70% of income from services, or 20% of sales (25.2% for sole traders). They are exempt during the first 12 months of business. Income is declared quarterly, in January, April, July and October.

Example: A designer who earns €40,000 a year has a relevant income of €40,000 × 70% = €28,000. Contribution: €28,000 × 21.4% = €5,992 per year, around €499 a month.

Customers with organised accounts deduct income tax: 23% for activities covered by the professional pay scale and 11.5% for other services. Anyone expecting to earn less than €15,000 in the year may waive the deduction by stating this on the receipt.

For VAT purposes, the following are exempt (Article 53 of the VAT Code): those whose turnover did not exceed 15 000 € in the previous year. Anyone whose turnover exceeds 25% during the year must start charging VAT immediately.

Frequently asked questions

Can I change halfway through the year?

No. The choice must be made by the end of March and applies for the whole year.

Under the organised accounting system, do I still pay Social Security in the same way?

As a general rule, yes: contributions are calculated on the basis of turnover, using the same rates. However, those with proper accounting records may choose to base their contributions on taxable profit, which is worthwhile when expenses are high.

What if it exceeds €200,000?

If your turnover is above the threshold for one year, up to €250,000, the tax regime remains unchanged. If your turnover is above €200,000 for two consecutive years, or above €250,000 for one year, you are required to keep organised accounts in the following year. At that point, it may also be worth comparing this with setting up a company: see the guide Limited company or sole trader.

The role of Serro & Andrade

We prepare your accounts using the actual figures from your business activity prior to March, take care of the declaration of changes and, if applicable, your organised accounts and Annex C. We work with many self-employed professionals: see the page at accountancy for architects, engineers and consultants or get in touch with us.

Figures for 2026, in accordance with Articles 28, 31, 101 and 101-B of the Personal Income Tax Code and Article 53 of the VAT Code.