Set-up
Freelancer or company? Recibos verdes vs a Lda
Most people start as freelancers because it takes a day. A company takes more work but can cost less in tax once profits grow. Here is how they compare in 2026.
Side by side
| Freelancer (simplified regime) | Company (Unipessoal Lda) | |
|---|---|---|
| Set-up | Register online at Finanças, same day | Incorporation, bank account, share capital from €1 |
| Income tax | IRS on 75% of service income for most professions, at progressive rates (or 20% under IFICI) | IRC at 15% on the first €50,000 of profit for SMEs, 19% above, plus a municipal surcharge of up to 1.5% |
| Taking money out | All profit is yours | Salary (IRS and Social Security) or dividends (28%) |
| Social Security | 21.4% on 70% of income; first 12 months exempt | On the manager's salary, if any |
| VAT | Exempt up to €15,000 of domestic turnover (art. 53.º CIVA) | Normal VAT regime |
| Accounting | Not required in the simplified regime | Certified Accountant required |
When freelancing makes sense
- You are testing the move or your income is still uncertain.
- Your yearly turnover is moderate and your expenses are low.
- You qualify for IFICI as a freelancer, so your rate is already 20%.
When a company makes sense
- Profit is high enough that IRC plus dividend tax beats the top IRS rates. For many of our clients this starts somewhere around €50,000 to €70,000 of yearly profit, depending on expenses.
- You want to keep profit in the business, hire, or bring in partners.
- Clients prefer to contract with a company.
Switching later
Many people start as freelancers and move to a Lda in their second or third year. Closing the freelance activity and opening a company is routine, but time it at the start of a tax year to keep the paperwork simple.
Frequently asked questions
At what profit does a Lda make sense in Portugal?
For many of our clients it starts somewhere around €50,000 to €70,000 of yearly profit. The break-even depends on your expenses, whether IFICI applies and how you take money out.
Can I start as a freelancer and switch to a company later?
Yes. Many people start with recibos verdes and move to a Lda in their second or third year, ideally at the start of a tax year.
Do I need an accountant as a freelancer?
Not in the simplified regime. A company always needs a Certified Accountant.
Ask a specialist
Tell us where you are in the move. A Certified Accountant replies within two working days. Questions about visas, housing or insurance go to a vetted partner, only with your OK.