Working as a freelancer in Portugal: recibos verdes, taxes and social security

Portugal makes it fairly easy to work for yourself. You don't need a company: you register as a trabalhador independente (self-employed worker), invoice your clients online and declare the income in your yearly IRS return. The hard part is the set of rules that run alongside it: IRS (personal income tax), VAT (IVA), withholding tax and social security. This guide explains how each one works in 2026, and the mistakes foreigners often make.

Before you start: what you need

• A NIF (número de identificação fiscal, your Portuguese tax number). See how to get a NIF.
• Your Portal das Finanças password, which is posted to your registered address, or the Chave Móvel Digital (Portugal's digital ID login).
• An up-to-date tax address. If you live in Portugal, your NIF should show your Portuguese address and resident status. If you live outside the EU/EEA, you'll also need a fiscal representative or electronic notifications.
• Your activity code. This is the item that most affects how much tax you pay (see below).

Step 1: Open activity (início de atividade)

You must file the declaração de início de atividade (declaration of start of activity) no later than the day you start working. Filing is free and you can do it online.

1. Log in to the Portal das Finanças.
2. Search for "Início de Atividade" and choose Entregar declaração.
3. Enter your activity code, your expected turnover for the year and your VAT details (see below).
4. Choose your accounting regime: simplified (the default for most freelancers) or organised accounting.
5. Submit and keep the confirmation.

You can also file in person at a tax office.

Choosing your activity code

Service providers usually pick a CIRS code from the table in article 151.º of the IRS Code, the official list of professional activities (for example, 1332 – programadores informáticos, software developers). If your work isn't on that list, or you sell goods, you use a CAE code (the Portuguese classification of economic activities) instead.

The code is more than a label. It decides whether your taxable share is 75% or 35% of your income, and whether clients withhold 23% or 11.5%. Choose the most specific code that genuinely describes what you do. If in doubt, check with an accountant before you file.

Social security registration is automatic

The tax authority passes your details to Segurança Social (social security), which registers you as self-employed and writes to tell you. If you don't have a NISS (social security number) yet, it is created as part of this process.

Step 2: Invoice with recibos verdes

Recibos verdes ("green receipts") is what everyone calls the invoices freelancers issue for free on the Portal das Finanças, under Faturas e Recibos Verdes. The document you'll normally use is the fatura-recibo (invoice-receipt), issued when you get paid. You can also issue a fatura (invoice) first and a recibo (receipt) later.

Each document records:

• the client's name, country and tax/VAT number;
• a description of the service and the amount;
• the VAT treatment: VAT charged, the article 53.º exemption, or reverse charge;
• IRS withholding, if it applies.

Every document goes straight to the tax authority. You can also use certified invoicing software if you prefer.

Step 3: Income tax under the simplified regime

Most freelancers are taxed under the regime simplificado (simplified regime). It applies if your gross self-employed income in the previous year was €200,000 or less. You're only moved out of it if you go over that figure two years in a row, or over it by more than 25% in a single year.

You don't calculate a profit. Instead, the tax authority applies a coefficient to your gross income, and the result is added to your other income and taxed at the normal progressive IRS rates.

The 15% expense rule

For the 0.75 and 0.35 coefficients, part of the built-in deduction depends on real expenses. You need documented costs equal to at least 15% of your gross service income. Anything short of that is added back to your taxable income. The following count towards the 15%:

• a standard deduction set by law (the same allowance employees get), or your actual compulsory social security contributions if those are higher;
• staff costs, rent for business premises and other business expenses on invoices issued to your NIF;
• expenses used only partly for the business, which are counted at 25%.

Expense invoices must be marked as business expenses on the e-fatura system by the end of February of the following year.

Illustration: if you invoice €60,000 as a software developer, 75% (€45,000) is taxable. You then need €9,000 of qualifying costs (15% of €60,000). If the standard deduction plus your expense invoices come to €7,000, €2,000 is added back.

Relief in your first two years

If you are starting activity, the 0.75, 0.35 and 0.10 coefficients are cut by 50% in your first tax year and by 25% in the second. This means about 37.5% of professional-service income is taxable in year one. Two conditions apply: you must have no employment or pension income (categories A and H) in those years, and you must not have closed a previous activity in the last five years.

You declare the income on Anexo B of the annual IRS return (Modelo 3), filed between 1 April and 30 June of the following year. See filing your IRS return.

Organised accounting: when it applies

Under contabilidade organizada (organised accounting) you're taxed on your actual profit, meaning income minus real expenses, instead of a coefficient. It applies if:

• you exceed the €200,000 limit as described above; or
• you choose it, which can make sense when your real costs are high (equipment, staff, subcontractors, travel).

Organised accounting must be kept by a contabilista certificado (certified accountant registered with the OCC, the Order of Certified Accountants), who signs off on the books. It costs more to run, but you are taxed on your real profit. At the point where organised accounting becomes worthwhile, many freelancers also think about setting up a company (Lda.).

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VAT (IVA)

The small-business exemption (article 53.º)

Since 1 July 2025, you can use the article 53.º exemption if your turnover in Portugal was €15,000 or less in the previous calendar year and you don't export. While you're exempt you don't charge VAT, you don't file periodic VAT returns and you can't recover VAT on your costs.

• If you exceed €15,000 in a year, you move to the normal VAT regime from 1 January of the next year.
• If you exceed €18,750 (€15,000 + 25%) during the year, you leave the exemption immediately. VAT is due from the invoice that took you over the limit.
• In either case, you file a declaration of changes (declaração de alterações) within 15 working days.

The normal VAT regime

Once you're in the normal regime, you charge 23% on the mainland (lower standard rates apply in Madeira and the Azores). Freelancers with turnover under €650,000 file quarterly:

Clients abroad

• Business clients in another EU country: check their VAT number on the EU's VIES database. Services are usually taxed in the client's country under the reverse charge: you don't add Portuguese VAT, and the invoice must say "IVA – autoliquidação". If you're in the normal regime, you report these sales on your VAT return and in a recapitulative statement (declaração recapitulativa). If you're exempt under article 53.º, ask your accountant which filings still apply to you.
• Business clients outside the EU: services are generally outside Portuguese VAT.
• Private individuals: the rules depend on the type of service, so check them before you invoice.

Withholding tax (retenção na fonte)

When a client in Portugal that keeps organised accounting pays you (in practice, almost every Portuguese company), it must withhold IRS from your invoice and pay it to the tax authority for you:

• 23% for professions on the article 151.º list;
• 11.5% for other self-employed income.

This is an advance on your annual IRS, not an extra tax. Foreign clients don't withhold.

You can opt out of withholding (article 101.º-B) if you expect your self-employed income for the year to stay below the article 53.º VAT threshold, currently €15,000. You choose this on each invoice. If your income goes over the limit, withholding starts again. Commissions for arranging contracts can't use the waiver.

Social security (Segurança Social)

Illustration: €3,000 of service income a month gives a base of €2,100 (70%) and a contribution of about €449 (21.4%).

• First 12 months free: if this is your first time as self-employed, your registration only takes effect on the first day of the 12th month after you start. Until then you file no declarations and pay nothing. You can choose to start earlier through a quarterly declaration.
• Adjusting your base: in each quarterly declaration you can raise or lower the base by up to 25%, in 5% steps.
• If you're also employed: you may be exempt on freelance income below four times the IAS (Indexante dos Apoios Sociais, a benchmark index updated each year), as long as your job meets the conditions.
• If you use organised accounting: your base is normally worked out from the previous year's taxable profit.
• Coming from another EU country: if you work for clients in several countries or keep cover at home, an A1 certificate may decide which country you pay into.

Common pitfalls for newcomers

• Invoicing before opening activity, or getting paid into a foreign account without declaring the income.
• Choosing the wrong activity code, which can mean the wrong coefficient, the wrong withholding rate and back taxes later.
• Not marking business expenses in e-fatura by February, which pushes up your taxable income through the 15% rule.
• Missing the €18,750 VAT trigger in a year when your income grows quickly.
• Forgetting the quarterly social security declaration after the free first year. A missed declaration is a fineable offence.
• Assuming the IFICI regime ("NHR 2.0") covers you. It applies only to certain qualifying activities, so check before you rely on it.

When to get an accountant

Plenty of freelancers in the simplified regime who invoice only Portuguese clients and stay VAT-exempt manage on their own. An accountant earns their fee when:

• you're near the €15,000 VAT threshold or already charging VAT;
• you invoice EU or international clients;
• you're unsure which activity code to use;
• you're weighing organised accounting against the simplified regime, or thinking about forming a company;
• you have foreign income or a mid-year move to declare.

Organised accounting can't be done without a certified accountant. Read how to choose an accountant, or compare certified accountants who specialise in VAT and returns on Accountants Hub.