Green receipts (recibos verdes) are Portugal's invoicing system for self-employed individuals and freelancers. If you work as a consultant, designer, developer, therapist, or any other independent professional in Portugal, you issue green receipts for your services. This guide covers the key tax rates, VAT rules, Social Security obligations and when it makes sense to switch to a limited company.

Key Numbers for 2026

• Social Security rate: 21.4% on 70% of quarterly income
• VAT exemption threshold: €14,500/year (Art. 53 VAT Code)
• Withholding tax: 25% when client is a company
• Social Security exemption: 12 months on first activity opening
• Simplified regime coefficient: 75% (only 25% of income is taxable)

IRS Regimes for Freelancers in Portugal

Simplified Regime (Regime Simplificado)

Automatic for freelancers with gross revenue below €200,000. A 75% expense coefficient is applied — only 25% of gross income is subject to IRS at progressive rates (13.25%–53%). No need to track actual expenses. Quarterly Social Security payments apply.

Organised Accounting (Contabilidade Organizada)

Required above €200,000; optional below. A certified accountant tracks all income and real expenses. More advantageous when your actual deductible costs exceed 75% of revenue (e.g., you have significant subcontracting costs, rent, or equipment expenses).

VAT Rules for Green Receipt Workers

If your annual revenue stays below €14,500, you are VAT-exempt under Article 53 of the Portuguese VAT Code. You do not charge VAT and do not file VAT returns.

Once you exceed €14,500, you must register for VAT, charge 23% (standard rate) on most services, and file quarterly VAT returns (declaração periódica do IVA).

Monthly Obligations for Freelancers

• Issue receipts: every service must be invoiced via Portal das Finanças immediately
• Social Security: quarterly payment by the 20th of January, April, July, October
• IRS advance payments: July, September, December (if above thresholds)
• VAT returns: quarterly if VAT-registered
• Annual IRS return: April–June for the previous tax year
• Invoicing communication: SAF-T file submission if required

When to Switch from Green Receipts to a Company

For most freelancers, the tipping point is around €30,000–€50,000 annual revenue. At that level, progressive IRS rates (up to 53%) on 25% of income start to make a limited company (Lda.) taxed at 17% IRC significantly more efficient.

Use our Freelancer vs Company Simulator to find your exact breakeven point.

Frequently Asked Questions

What are green receipts (recibos verdes) in Portugal?

Green receipts are the invoicing system used by self-employed individuals and freelancers in Portugal. They are issued electronically through the Tax Authority portal for each service rendered.

How much tax do freelancers pay in Portugal with green receipts?

Under the simplified regime, only 25% of gross revenue is taxable for IRS. Social Security is 21.4% on 70% of income. A 25% withholding applies if your client is a company.

What is the VAT threshold for green receipts in Portugal?

Freelancers earning under €14,500/year are exempt from VAT. Above this threshold, 23% VAT applies to most services.

Is Social Security mandatory for green receipt workers?

Yes. 21.4% on 70% of quarterly invoicing. New activity openings benefit from a 12-month exemption.

When should I switch from green receipts to a company?

Generally at €30,000–€50,000+ annual revenue, where a Lda. taxed at 17% IRC becomes more efficient than progressive IRS rates on individual income.