Who must issue recibos verdes

Anyone with Category B income (self-employment, business or professional activity) must issue an invoice, receipt or invoice-receipt for every amount received from clients, including provisions, advances and expense reimbursements. You can do it in the Tax Authority's invoicing applications (the «recibo verde» on the Portal das Finanças) or with invoicing software, issuing an invoice and a proof of payment (article 115(1) of the IRS Code). Whoever pays this income is required to ask for the receipt or invoice (article 115(4)).

Before your first receipt, your activity must be registered with the Tax Authority under the right activity code (CIRS or CAE).

Invoice, invoice-receipt or receipt: which one

How to issue the invoice-receipt, step by step

1. Open the service. On the Portal das Finanças, search for «Faturas e Recibos» and choose Aceder, or go to Serviços Tributários → Serviços → Faturas e Recibos. Log in with your Citizen Card, Chave Móvel Digital or tax number and password.
2. Choose Emitir → «Fatura ou Fatura-Recibo».
3. Transaction date: the date you performed the service (or received the advance). In «Tipo», choose invoice or invoice-receipt.
4. Activity performed: if you are registered under more than one code, pick the one for this service. If it does not appear, change your activity under Entregar → Declarações → Atividade.
5. Client (Adquirente): leave it blank for a final consumer. For a Portuguese client the tax number is enough (for a company, name and address fill in automatically). For a foreign client, enter the tax number and name.
6. Reason for issue: choose why you are issuing the document (for example payment or advance).
7. Products, services or other: click Adicionar and fill in the type, the description of the service, the unit price and the VAT rate. If you are VAT-exempt, the invoice must state the reason the tax does not apply, for example the article 53 VAT Code small-business scheme (article 36(5)(e) of the VAT Code).
8. IRS (withholding tax): this box appears on a services invoice-receipt with the client's tax number. Fill it in only if the client keeps accounts and the income is for services. Rates are in the next section.
9. Payment (optional): enter the payment method.
10. Issue: click Emitir at the top right and confirm. If you identified the client, the document appears automatically in the client's own Portal das Finanças area.

To avoid retyping, create client and service records in the Emitir menu and use «Procurar» when invoicing. Under Consultar → Ver, «Emitir Novo» copies an earlier document so you only change the date.

Withholding tax: when and how much

Withholding only applies when the client keeps organised accounts (a company, for example); for private individuals, leave the box empty. Rates under article 101(1) of the IRS Code:

• 23% for the professional activities in the article 151 table (lawyers, architects, engineers, doctors, consultants, programmers and others);
• 11.5% for other services;
• 16.5% for intellectual or industrial property income.

Withholding applies to the amount before VAT. Example: a consultant invoices €1,000 + VAT (€230) to a company. The 23% withholding is €230, so the client pays €1,000 and remits €230 to the State on the consultant's behalf. A service outside the table, withheld at 11.5% (€115), receives €1,115.

On an invoice (rather than an invoice-receipt), the withholding is entered on the receipt issued when payment arrives.

Withholding waiver: who qualifies and how to state it

If you expect to earn less than €15,000 of Category B income in the year (the article 53 VAT Code threshold), you can waive withholding, except on brokerage commissions (article 101-B(1)(a) of the IRS Code). The waiver is optional and only valid if the document carries the statement «Sem retenção, nos termos do n.º 1 do artigo 101.º-B do Código do IRS.»

• You cannot waive it if you earned €15,000 or more the previous year.
• The waiver ends the month after you reach the threshold.
• Regardless of turnover, there is no withholding when each withholding would be below €25 (article 101-B(1)(d)).

Waiving withholding means more cash each month, but the IRS then falls due all at once in the following year's return.

Deadlines

An invoice must be issued no later than the 5th business day after the tax becomes due, which for a service is when it is performed (article 36(1)(a) of the VAT Code). When you are paid before the service is done, or payment coincides with that moment, the document is issued on the date of payment (article 36(1)(c)); this is the typical invoice-receipt case.

Made a mistake: credit note or cancel?

• Credit note (nota de crédito): to correct the amount or the tax, such as returns, discounts, a wrong price, a wrong VAT rate or VAT charged in error. Issue it under Emitir → Nota de Crédito, or from the invoice under Consultar → Ver.
• Cancellation (anular): for very limited cases with errors in other details, such as the client's tax number. Under Consultar, select the document, choose «Anular» and the reason.

Isolated act (ato isolado)

The isolated-act invoice-receipt is for a one-off service or sale without a registered activity; it is only available to people with no business or professional activity on record. It is filled in like a normal invoice-receipt. If VAT is charged, a payment slip (Modelo P2) is generated after issuing.

Keeping and looking up your receipts

Under Consultar you can search documents issued and received by date and type, open each one under Ver → Imprimir to get the PDF, and use «Exportar tabela» to download the amounts invoiced, VAT charged or cancelled documents to a spreadsheet, which is the basis for your VAT returns and Annex B of your IRS return.

With several business clients, withholding to track or quarterly VAT, HVR's accounting for freelancers handles invoicing, VAT and Social Security for you, in English.

Frequently asked questions

How do I issue a recibo verde on the Portal das Finanças?

Open «Faturas e Recibos», choose Emitir → «Fatura ou Fatura-Recibo», fill in the date, activity, client tax number, description, amount and VAT rate, enter IRS withholding if the client keeps accounts, and click Emitir.

Invoice, invoice-receipt or receipt: which should I use?

An invoice-receipt when you are paid when issuing it. An invoice when payment comes later, followed by a receipt on the day you are paid. A receipt on its own acknowledges payment of an invoice already issued.

When do I fill in the IRS withholding?

Only when the client keeps organised accounts and the income is for services. The rate is 23% for professions in the article 151 CIRS table, 11.5% for other services and 16.5% for intellectual property.

Can I waive withholding tax?

Yes, if you expect to earn less than €15,000 in the year and did not reach that amount the previous year, by writing «Sem retenção, nos termos do n.º 1 do artigo 101.º-B do Código do IRS.» on the document. There is also no withholding when the amount would be below €25.

I made a mistake on a recibo verde. How do I fix it?

If the error is in the amount or the VAT, issue a credit note. If it is in another detail, such as the client's tax number, cancel the document under Consultar and issue a new one.

What is the deadline to issue a recibo verde?

An invoice must be issued by the 5th business day after the service is performed. When payment is received before or at the time of the service, the document is issued on the date of payment.