What is an ato isolado (one-off invoice) and its taxes?

What is an ato isolado?

An ato isolado (isolated act) is the provision of a service, or the sale of goods, made on a single, occasional basis by someone who has no registered activity at the tax office¹. It is the legal way to issue an invoice-receipt (the old "recibo verde") for a one-off job (a training session, a project, a repair, an occasional sale), without registering as a self-employed worker.

The key word is occasional: the ato isolado must be a one-off and not foreseeable. If the activity repeats or is planned to continue, it is no longer "isolated" and the law requires you to open an activity. There is also a value limit: above €25,000 per year, opening an activity as a self-employed worker is mandatory.

Although it is a one-off, an ato isolado pays taxes, and there are two frequent surprises: VAT is always due, and the value feeds your IRS. To work out your case, use the ato isolado calculator.

What taxes do you pay on an ato isolado?

Two: VAT and IRS. Social Security does not apply. Let's take each.

VAT: always due, whatever the amount

This is the part that surprises most people. Someone with registered activity and low income can benefit from the article 53 VAT exemption (up to €15,000 of annual turnover). But that exemption does not apply to isolated acts⁴: on an ato isolado you must always charge VAT on the invoice and remit it to the State, even for a small amount.

On the mainland, the standard rate is 23%; there is also the intermediate (13%) and the reduced (6%) rate, depending on the good or service. The VAT is not yours: you collect it from the client and hand it to the tax authority. The only exception is when the service itself is exempt for another reason (article 9, covering, for example, certain medical or teaching acts).

To add or remove VAT from an amount, use the VAT calculator.

IRS: only part of the value is taxed (the coefficient)

Under the simplified regime (the one that applies to isolated acts), IRS does not fall on the whole value: a coefficient is applied that presumes the expenses of the activity².

• Provision of services (the art. 151.º list): coefficient 0.75: 75% of the value is taxable.
• Sale of goods (merchandise): coefficient 0.15: only 15% is taxable.

The result is the taxable income, which is added to your other income for the year (your salary, for example) and taxed at the general IRS brackets. So the final tax depends on your total income and your marginal rate, and it is not a fixed figure. Our calculator shows the taxable income that feeds the IRS, not the final IRS, which is only assessed in the annual return with the IRS calculator.

Withholding: only for services and only above €15,000

For the provision of services, the client, if they keep organised accounting (a company or professional), withholds 25% of the value as an advance on IRS and remits it to the State for you. But withholding is waived when the annual income does not exceed €15,000 (article 101.º-B of the IRS Code, which follows the article 53 VAT threshold)³. The sale of goods has no withholding.

It is important to see that withholding is not an extra tax: it is an advance, settled in the annual IRS return. If too much was withheld, you get the difference back; if too little, you pay the rest.

Does an ato isolado pay Social Security?

No. Someone issuing an ato isolado is not a self-employed worker and has no obligation to contribute to Social Security on that income. So Social Security is €0, an important difference from the recibos verdes of someone with registered activity, where the 21.4% contribution on 70% of income is mandatory.

Worked example

Take a €1,000 service as an ato isolado, at the standard VAT rate (23%):

• VAT: €1,000 × 23% = €230. You invoice €1,230 and remit the €230 to the State.
• IRS (taxable income): €1,000 × 0.75 = €750, added to your other income.
• Withholding: as €1,000 is below €15,000, there is no withholding.
• Social Security: €0.

If, instead of a service, it were a sale of goods, the taxable income would be just €1,000 × 0.15 = €150, and there would again be no withholding. Work out your case with the ato isolado calculator.