- Blog Post
- Step Inside Accounting, Self-Employee
Copyright income and IRS: 5 rules to know how it is taxed and how to pay tax on only half
Step Inside Accounting · Practical guide
#StepInsideAccounting
1. If you are the author, it is self-employment income
Copyright and other intellectual property income is self-employment income (Category B) when the person receiving it is the original holder: whoever wrote the book, took the photograph, composed the music or created the work. The same applies to anyone paid for the licence of a patent they invented or for sharing their own know-how.
If you receive rights that are not yours originally – because you inherited or bought them – the income is investment income (Category E), with different rules and without the benefit in rule 4.
2. You need an open activity and you must invoice
To receive copyright income on a regular basis, you need an open activity with the Tax Authority, with the code that fits your creative activity, and you must issue an invoice-receipt to whoever pays you – publisher, agency, platform. If it is a one-off, you can issue an isolated act (ato isolado).
As a rule, the transfer of copyright by the author themselves is exempt from VAT. When the payer has organised accounting, it withholds IRS at source, which is credited in your annual tax settlement.
3. Under the simplified regime, 95% counts
Under the simplified regime, income from transferring or licensing copyright has a coefficient of 0.95: 95% of what you receive is taxed. The 15% expenses rule does not apply.
If, besides copyright, you also provide services – for example, an illustrator who does commissioned work and receives royalties from a book – each type of income has its own coefficient. The services follow the activity’s coefficient (0.75 or 0.35) and the copyright income 0.95. That is why you should invoice them separately.
4. Only half counts for IRS – up to a €10,000 benefit
Income from literary, artistic and scientific works received by the author themselves, resident in Portugal, counts at only 50% of its value. The part left out cannot exceed €10,000 a year.
The benefit covers books, music, visual arts (including the sale of one-of-a-kind works of art), photography and educational and scientific works. The following are excluded:
- texts without a literary, artistic or scientific character;
- architectural works;
- advertising works.
This benefit has an end date: it is currently set to run until the end of 2026, and the proposed State Budget for 2027 extends it to 2031.
5. Report it in the right place
In the IRS return, copyright income goes in the annex for the self-employed, in a specific field for intellectual property, separate from services. That is where the benefit is applied. If you report it together with services, you lose the benefit and the wrong coefficient is applied.
Also check the withholding: the publisher or agency reports it to the Tax Authority, and it must match the invoices you issued.
Example
Teresa is a writer, resident in Lisbon, under the simplified regime. In 2026 her publisher pays her €12,000 in copyright.
- 95% of €12,000: €11,400;
- only half counts for IRS: €5,700;
- the part left out (€5,700) is below the €10,000 limit.
Teresa is taxed on €5,700, added to her other income. If she had inherited the rights to a book written by her mother, the €12,000 would be investment income, with no coefficient and no benefit.
Team tip
If you are a creator and get paid in different ways – services, copyright, sales of works – organise your invoicing from the start: one document per type of income, with the right code. That is what makes it possible to apply the correct coefficient and benefit in your IRS return.
Want us to handle this for you?
Companies
Monthly accounting
Bookkeeping, tax obligations and managing partners’ salaries, all in one place.
€250 + VAT / month
Self-employed
Recibos verdes without the stress
Tax returns, VAT and Social Security handled by people who know the regime inside out.
from €80 + VAT / month
This article is for information only and does not replace professional advice. Figures and rules are those in force at the date of publication and may change.
Explore more resources
Share with someone who needs it
Want to know more? Explore the other Step Inside Accounting resources
- Blog Post
- Step Inside Accounting, Company
- Blog Post
- Step Inside Accounting, Self-Employee
- Blog Post
- Step Inside Accounting, Self-Employee