Waiving the art. 53.º exemption: when it pays

Ricardo is a freelance developer. Last year he invoiced €11,000, all of it to two agencies that hire him by project. He’s comfortably below €15,000, so he doesn’t charge IVA - he benefits from the art. 53.º exemption (isenção).

This year, though, he’s about to renew his kit - laptop, chair, two monitors: nearly €3,000, IVA included. And he noticed something: if he were on the normal regime when he buys, he could recover all of that IVA.

The question Ricardo asks - and maybe you do too - is this: is being exempt always better?

No. Sometimes leaving the exemption on purpose earns you more. Let’s see when.

What it means to waive the art. 53.º exemption

When you opened your activity with a small turnover, you were placed in the special exemption regime (art. 53.º of the CIVA) - the rule that lets you invoice without charging IVA as long as you stay below €15,000 a year.

Waiving the exemption (renúncia) is the voluntary step of telling the AT (the tax authority) “I want to move to the regime normal de IVA”, even though you’re below the threshold. Nobody forces you - you do it by choice, because it pays.

The difference from the neighbouring article: crossing €15,000 is a compulsory move that lands on you. The renúncia is a choice you make calmly, when the maths says it’s worth it.

The question that decides everything: who are your clients?

Before any maths, answer this: are your clients businesses or final consumers?

This is why the type of client decides almost everything.

If you invoice a business that deducts IVA (most, on the normal regime), the 23% you add doesn’t bother it - it recovers it on its own return. You stay just as competitive, and in exchange you gain the right to deduct the IVA on your expenses. (A business that’s exempt - art. 9.º or 53.º - or has partial deduction may not recover it all; there your IVA does weigh on it.)

If you invoice private individuals, every euro of IVA makes you 23% more expensive than an exempt competitor. You either lose clients, or cut your margin to keep the price. It rarely pays.

The maths: Ricardo’s case (business clients)

Ricardo delivers a €1,000 service to an agency. He has €200 of expenses on that job, on which he paid €46 of IVA.

Here’s the difference between staying exempt and waiving:

In other words: by charging IVA to a business client, Ricardo doesn’t become more expensive for the client and still recovers the IVA on his expenses. He gains €46 for every €1,000 invoiced.

And remember the kit he wants to buy - nearly €3,000. The right order is waive first, buy after; done that way, look at what he recovers:

Had he bought while exempt, those €690 would be a sunk cost - art. 25.º doesn’t let you recover the IVA on equipment bought before waiving. Buying after switching to the normal regime, he deducts them. For anyone with a heavy upfront investment - equipment, software, a workshop - this is often the reason that weighs most.

And when it does NOT pay: Sofia’s case (private clients)

Sofia is a personal trainer with private clients. Same €1,000 service, same €200 + €46 IVA expenses - but her clients are final consumers.

If she waives, she has two options, both bad:

• Keep her headline price and add 23% on top: clients now pay €1,230 instead of €1,000. She’s 23% dearer than the personal trainer next door who stays exempt.
• Keep the final price at €1,000 so she doesn’t lose clients: then the IVA eats her margin from the inside.

Sofia’s profit fell from €754 (exempt) to €613 (regime normal) - just to keep the same price. For her, waiving would be shooting herself in the foot.

Warning: Waiving hurts anyone who invoices final consumers. If your clients are private individuals - hairdressers, personal trainers, beauticians, wedding photographers - the IVA is a direct price increase, and you become dearer than the exempt competition. And there’s a second trap: waiving locks you into the regime normal for 5 years (art. 55.º n.º 3). It’s not an experiment you undo next month.

The 5-year trap (read before you decide)

Waiving is quick and easy. Reversing it is not.

Art. 55.º n.º 3 of the CIVA obliges you to stay in the regime normal for at least 5 years, counted from the date the waiver takes effect. It’s not an experiment you undo the following year.

You can only return to the exemption during the month of January of one of the years after that period ends (art. 55.º n.º 4), and only if your turnover in the previous year stayed below €15,000.

There’s a narrow exception: in the case of an “essential change” to your activity, you can ask the AT to leave earlier, with a reasoned request (art. 55.º n.º 5). But don’t count on this as a plan B.

So: don’t waive just to make the most of a single big investment this year if next year your clients go back to being mostly private individuals. The decision has to make sense for the next 5 years, not the next 5 months.

How you waive it, in practice

The process itself is simple - the same form as the neighbouring article, only here it’s by choice:

1. Go to the Portal das Finanças → “Serviços” → “Atividade” → “Declaração de Alterações”.
2. Change your status from “Regime Especial de Isenção, Art.º 53.º” to “Regime Normal de Tributação”.
3. Submit.

The change takes effect from the date you submit (art. 55.º n.º 2). If you file the declaração de alterações on 10 July, every invoice issued from that day on carries IVA.

What changes day to day after you waive

You take on the same obligations as anyone who crossed the threshold:

• You charge IVA on every invoice. For most services that’s the 23% rate; some goods and services are 6% or 13% (see the guide to IVA rates of 6%, 13% and 23%). The invoice now itemises the base, the rate and the tax amount.
• You deduct the IVA on your expenses (arts. 19.º and 20.º of the CIVA): software, materials, accounting, communications. Mind the exclusions in art. 21.º - entertainment expenses, passenger cars, accommodation and meals don’t give a dedução.
• You submit the periodic IVA return, usually quarterly for those who invoice little. By the 20th of the 2nd month following each quarter (Q2 extends to 20 September); payment by the 25th of that month.

What you remit to the state is the difference: IVA charged − IVA deducted. If you deduct more than you charged (typical in the quarter of a big investment), you’re left with a credit you carry to the next quarter.

Warning: There’s one deduction you can’t recover: the IVA on equipment you bought while you were still exempt (art. 25.º n.º 5). You only deduct the IVA on purchases made after the renúncia takes effect. So if you know you’re going to waive and you’re about to buy heavy equipment, the right order is waive first, buy after - not the other way round.

✅ In summary

1. Who your clients are decides it. If you invoice mostly businesses that deduct IVA, waiving usually earns more - you don’t become dearer to them and you start deducting the IVA on your expenses and equipment. If you invoice final consumers, the IVA is a direct price increase and waiving almost never pays.

2. It’s a decision for 5 years, not 5 months. Waiving locks you into the regime normal for at least 5 years from the effect date (art. 55.º n.º 3), with a return to the isenção only in January after that period (art. 55.º n.º 4). And the IVA on equipment bought while exempt can’t be recovered (art. 25.º n.º 5) - if you’re going to waive, buy after.

3. With FIZ, the periodic IVA returns are submitted automatically the moment you’re in the regime normal, with the IVA on your expenses already deducted in the calculation - no extra quarterly deadline to manage. See the plans and decide on the renúncia with the maths in front of you, not blind.