Portugal Freelancer Tax Guide 2025 — Recibos Verdes & Simplified Regime
The description on this page previously had the two simplified-regime coefficients the wrong way round. Corrected: 75% of services revenue is taxable (a 25% presumed-expense deduction), while only 15% of revenue from selling goods is taxable (an 85% presumed-expense deduction) — the opposite pattern from "75% deducted for services."
Recibos verdes — what the term actually means
A recibo verde ("green receipt") is simply the invoice/receipt a self-employed person in Portugal issues for services or goods, generated through the Portal das Finanças. Being "a recibos verdes worker" is shorthand for being registered as self-employed (trabalhador independente) under Categoria B of the IRS, rather than a distinct legal status of its own.
The simplified regime and its two coefficients
Most freelancers below €200,000 in annual turnover fall under the regime simplificado (simplified regime), which applies a fixed coefficient to gross revenue instead of requiring receipts for every expense. Under Article 31 of the CIRS:
| Activity | Coefficient | Taxable share of revenue |
|---|---|---|
| Professional/services activities listed in Article 151's table (most liberal professions — IT, consulting, design, and similar) | 0.75 | 75% |
| Sale of goods and products, most crypto-asset operations, and restaurant/beverage/hotel services | 0.15 | 15% |
A consultant invoicing €40,000 for the year has a taxable base of €40,000 × 0.75 = €30,000, before personal allowances and IRS bands are applied. A freelancer selling €40,000 of physical goods instead has a taxable base of only €40,000 × 0.15 = €6,000 — the same revenue, a very different tax base, because goods sales are presumed to carry far higher costs than a service invoice does.
VAT — the €15,000 threshold
Under Article 53 of the VAT Code (Código do IVA), a freelancer invoicing Portuguese clients under €15,000 a year is exempt from charging VAT and from filing periodic VAT returns, provided they are not conducting import/export operations. Crossing the threshold mid-year requires switching to the normal VAT regime, generally within a short window after the threshold is exceeded — this is not a grace period you can defer into the following year.
Social Security
Self-employed Social Security contributions are charged at 21.4% of "relevant income" (rendimento relevante) — which is 70% of gross service revenue, averaged over recent quarters, not the full invoiced amount. New freelancers are exempt from Social Security contributions for the first 12 months of activity, with the obligation to contribute starting from month 12 after registration — a meaningful early-stage saving on top of the income tax coefficients above.
Withholding tax on each invoice
Most recibo verde invoices to Portuguese business clients carry IRS withholding at source, most commonly 25% of the invoiced amount (some professional categories were reduced to 23% from 1 January 2025, and lower rates such as 20%, 16.5% or 11.5% apply in specific circumstances). Withheld tax is a payment on account, reconciled against your actual annual liability when you file the Modelo 3 — it is not itself the final tax bill, and freelancers below certain income levels can request exemption from withholding altogether on each invoice.
Worked example
A freelance graphic designer invoices €35,000 in services during the year, entirely to Portuguese business clients who withhold 23% on each invoice.
- Withheld during the year: €35,000 × 23% = €8,050, paid across the year as invoices are issued
- Taxable base under the simplified regime: €35,000 × 0.75 = €26,250
- Social Security due (after the first 12 months' exemption ends): 21.4% × (70% × €35,000) = 21.4% × €24,500 = €5,243
The €8,050 already withheld is then reconciled at year-end against the actual IRS due on the €26,250 taxable base — if the withheld amount exceeds the final liability, the difference is refunded; if it falls short, the balance is payable.
FAQ
Q: Do I need to register for VAT immediately when I start as a freelancer? A: No — if you expect to invoice under €15,000 to Portuguese clients, you can operate under the Article 53 VAT exemption from the start, and only need to switch regimes if you cross the threshold.
Q: Does the 12-month Social Security exemption also cover income tax? A: No, the exemption is specific to Social Security contributions. IRS withholding and the annual Modelo 3 filing apply from your first invoice, regardless of the Social Security exemption.
Q: I sell both a physical product and consulting services. Which coefficient applies? A: Each stream is coefficiented separately according to its own nature — goods sales at 0.15, consulting/professional services at 0.75 — rather than one blended rate for the whole business.
Sources
Figures verified as of 30 July 2026:
- Código do IRS, Artigo 31.º ("Regime simplificado") (0.75 coefficient for Article 151 professional activities, 0.15 coefficient for goods sales, most crypto-asset operations, and restaurant/hospitality services)
- Código do IVA, Artigo 53.º (€15,000 VAT exemption threshold for Portuguese-client revenue)
- Segurança Social — self-employed contribution rules (21.4% rate on relevant income defined as 70% of gross service revenue; 12-month exemption for new registrations)
- Ordem dos Contabilistas Certificados / Autoridade Tributária withholding guidance (25% standard withholding rate, reduced to 23% for certain categories from 1 January 2025; withholding as a payment on account reconciled at annual filing)