Working as a freelancer
Recibos verdes and VAT: working as a freelancer in Portugal
Recibos verdes are how self-employed people invoice in Portugal. Registering takes a day; the obligations that follow (withholding, Social Security, VAT) are where most newcomers slip.
Registering your activity
Before your first invoice, you open your activity (início de atividade) on the Portal das Finanças. You choose the codes that describe your work, estimate your turnover for the year, and that estimate sets your starting VAT and IRS regimes.
- You need a NIF, a Portuguese tax address and your Portal das Finanças password.
- Most freelancers start in the simplified regime, available while turnover stays under €200,000 a year.
- In the simplified regime, 75% of income from the professional services listed in the IRS code is taxed. The other 25% covers your costs without receipts.
Issuing invoices
Every payment you receive needs a fatura-recibo, issued free on the Portal das Finanças or through certified invoicing software. Issue it when you are paid, in the client's name and with their tax number if they have one.
IRS withholding
| Your client is | What happens |
|---|---|
| A Portuguese company or self-employed person | They usually withhold 23% of the invoice for IRS and pay it to the tax office on your behalf |
| A private individual or a foreign company | No withholding; you settle the full IRS in your yearly return |
| Anyone, while your yearly turnover stays under €15,000 | You can claim exemption from withholding on the invoice |
Withholding is an advance, not the final tax. It is credited against your bill when you file your IRS return.
Social Security
- You are exempt for your first 12 months of activity.
- After that you pay 21.4% on 70% of your income, declared every quarter (January, April, July and October) on Segurança Social Direta.
- If you also have an employment contract in Portugal, you may be exempt. Check before your first declaration.
VAT
| Situation | VAT treatment |
|---|---|
| Domestic turnover up to €15,000 a year | You can use the small-business exemption (art. 53.º CIVA) and charge no VAT |
| Above €15,000 | Normal regime: charge 23% on Portuguese clients and file a VAT return every quarter |
| Services to businesses in other EU countries | Usually no Portuguese VAT; the client accounts for it (reverse charge), and you file an EU sales listing |
| Services to businesses outside the EU | Usually no Portuguese VAT |
Quarterly VAT returns are due by the 20th of the second month after the quarter. For January to March, that is 20 May.
When to think about a company
Once profit grows, a Lda can cost less in tax. Our freelancer or company guide compares both with the 2026 rates.
Frequently asked questions
Do freelancers in Portugal charge VAT?
Not while domestic turnover stays up to €15,000 a year and you use the art. 53 exemption. Above that you charge 23% to Portuguese clients and file quarterly VAT returns.
Do I pay Social Security in my first year as a freelancer?
No. You are exempt for the first 12 months of activity. After that you pay 21.4% on 70% of your income, declared every quarter.
What is the IRS withholding rate on recibos verdes?
Portuguese companies usually withhold 23%. You can claim exemption from withholding while your yearly turnover stays under €15,000.
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