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% (Article 168(1) of the Contributory Code) on the monthly base — one third of the relevant income of the quarter (Article 163(1)), relevant income being 70% of service fees (Article 162)
• VAT exemption threshold: €15,000/year (Art. 53 VAT Code)
• Withholding tax: 23% (Article 151 professions) or 11.5% (other services) when the client has organised accounting
• Social Security exemption: 12 months on first activity opening
• Simplified regime coefficient: 0.75 for Article 151 professions and 0.35 for other services

IRS Regimes for Freelancers in Portugal

Simplified Regime (Regime Simplificado)

Automatic for freelancers with gross revenue below €200,000. A coefficient sets taxable income (75% of gross income for Article 151 professions, 35% for other services), taxed at progressive rates (12.5%–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 what the coefficient presumes, 25% of revenue at 0.75 or 65% at 0.35 (e.g., you have significant subcontracting costs, rent, or equipment expenses).

VAT Rules for Green Receipt Workers

If your annual revenue stays below €15,000, 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 €15,000, 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 75% of income for Article 151 professions start to make a limited company (Lda.) taxed at 15% IRC SME rate (Law 64/2025) 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, 75% of gross revenue is taxable for IRS for Article 151 professions and 35% for other services. Social Security is 21.4% (Article 168(1) of the Contributory Code) on a monthly base equal to one third of the relevant income of the quarter (Article 163(1)); relevant income is 70% of service fees (Article 162). A client with organised accounting withholds 23% (Article 151 professions) or 11.5% (other services).

What is the VAT threshold for green receipts in Portugal?

Freelancers earning under €15,000/year are exempt from VAT. Above this threshold, 23% VAT applies to most services.

Is Social Security mandatory for green receipt workers?

Yes. The rate is 21.4% (Article 168(1) of the Contributory Code), applied to a monthly base equal to one third of the relevant income of the quarter (Article 163(1)); relevant income is 70% of quarterly service invoicing (Article 162). Registration in the regime only takes effect on the first day of the 12th month after activity starts (Article 145(1)) — a deferred start rather than an exemption.

When should I switch from green receipts to a company?

Generally at €30,000–€50,000+ annual revenue, where a Lda. taxed at 15% IRC SME rate (Law 64/2025) becomes more efficient than progressive IRS rates on individual income.