%22%2F%3E%3Cpath%20d%3D%22M-4%2066%20C%2014%2050%2C%2034%2082%2C%2050%2066%20S%2084%2050%2C%20100%2066%22%20stroke%3D%22white%22%20stroke-opacity%3D%220.55%22%2F%3E%3C%2Fg%3E%3C%2Fsvg%3E)
Recibos Verdes Explained: How Freelance Tax Works in Portugal
"Recibos verdes" isn't a tax regime by itself — it's the everyday name for invoicing as a Categoria B self-employed worker. Here's what it actually means for your tax and Social Security bills.
- Tax and Social Security are calculated completely separately, on different schedules — annual IRS vs quarterly SS.
- Regime Simplificado taxes a coefficient (0.15-0.95) of your revenue, not the raw total.
- Social Security takes 21.4% of 70% of your quarterly income, with a first-12-months exemption under €5,030.
- Mandatory switch to Contabilidade Organizada above €200,000 (two years) or €240,000 (one year).
If you invoice clients as a freelancer or sole trader in Portugal, you're taxed under Categoria B of the IRS — colloquially, issuing "recibos verdes" (green receipts, from the paper receipt books this used to run on; it's all electronic now, via e-Fatura). Two separate systems take a cut: the Autoridade Tributária (income tax) and Segurança Social (social contributions) — and they're calculated completely differently.
How the tax side works: Regime Simplificado
Most freelancers fall automatically into Regime Simplificado: you haven't exceeded €200,000 in Category B revenue in the prior year, and you haven't opted into organised accounting. Instead of taxing your real profit, it applies a fixed coefficient to your gross revenue:
| Coefficient | Applies to |
|---|---|
| 0.75 | Professional activities listed in the Art. 151.º CIRS table (consultants, IT, medicine, law, engineering, and similar) |
| 0.35 | Other services not covered by the professional-activities list |
| 0.15 | Sale of goods; hospitality, restaurant, and beverage services |
| 0.95 | IP licensing, capital income tied to your activity, capital gains on business assets |
A €4,104 automatic deduction applies regardless. Above that, for the 0.75 and 0.35 coefficients, you need to justify expenses equal to 15% of your gross revenue — obligatory Social Security contributions, staff costs, business-related rent, and a slice of the taxable value of any property used for the activity all count.
Worked example: a consultant (0.75 coefficient) billing €40,000 gross has a presumed taxable income of €30,000 (€40,000 × 0.75). They need €6,000 in justifiable expenses (15% of €40,000) to keep that full deduction — if they can show it, taxable income stays at €30,000.
When you move to organised accounting
The switch to Contabilidade Organizada becomes mandatory once your gross revenue passes €200,000 in two consecutive years, or €240,000 in a single year.
How the Social Security side works
This is calculated completely separately from your tax bill, on a quarterly cycle rather than annually. Your contribution is 21.4% of your "relevant income" — which itself is 70% of your gross Category B income for the quarter, not the full amount.
- Declared quarterly, due by the 20th of the first month of the following quarter (January, April, July, October) — covering the prior quarter's income.
- Minimum contribution base: 1× IAS per month (€537.13 in 2026).
- Maximum contribution base: 12× IAS per month.
- First-12-months exemption: if your annual income stays under €5,030, you don't owe contributions during your first year of activity.
How the contribution is actually calculated
The 21.4%-of-70% shorthand is right, but the mechanics matter once your income is very low or very high, because the floor and ceiling are monthly. Each quarter you declare what you invoiced; 70% of that is your relevant income for services (20% for goods, 35% for local accommodation); one third of the quarterly figure becomes your monthly contribution base; and 21.4% of that base is what you pay each month.
Worked through: €12,000 invoiced in a quarter gives €8,400 of relevant income, a monthly base of €2,800, and €599.20 a month — €1,797.60 for the quarter. That is the same answer as 21.4% × 70% × €12,000, which is why the shorthand works.
- Monthly base ceiling: 12× IAS, €6,445.56 in 2026 — so the contribution tops out around €1,379 a month no matter how much you bill.
- You can voluntarily adjust your declared relevant income up or down in 5% steps, to a maximum of ±25% (art. 162.º CRC) — useful when the quarter you're being assessed on isn't representative of the one you're living in.
- The declaration is pre-filled from your e-Fatura invoicing, but it still has to be confirmed. An unconfirmed declaration is a missed declaration.
The rate isn't always 21.4%
Three variants are worth knowing. Agricultural producers pay 25.2%. And if most of your services go to a single client, your rate rises to 28.3% — the regime treats economic dependence as closer to employment than to genuine freelancing.
That situation also creates an obligation for the client, not just for you: an entity you depend on for more than 50% of your invoicing owes its own contribution on top — 10% where the dependence is 50.1% to 80%, and 7% where it's 80.1% to 100%. Clients are frequently unaware of this until Segurança Social bills them.
The first-year exemption is not free
The 12-month exemption at the start of your activity is a cash-flow benefit with a cost attached: exempt months build no contributory career. They don't count towards the qualifying periods for sickness, parental or cessation benefits, and they don't count towards your old-age pension.
You can renounce the exemption and start contributing immediately — through Segurança Social Direta, under Trabalhador Independente. It's worth considering if you expect parental leave soon, if you're near a qualifying threshold, or if you're closer to retirement than to the start of your career. The decision is irreversible: once renounced, the exemption cannot be recovered.
If you also have a job
Employment and self-employment contributions are cumulative by default — 11% withheld from your salary and 21.4% on the freelance side, on separate bases. But there's an exemption worth checking: if your average monthly employment income is at least 4× IAS (€2,148.52 in 2026), you're exempt from contributing on the self-employed activity. Segurança Social applies it automatically after verification; you stay registered and declare quarterly, but pay nothing.
What your clients withhold, and when they stop
Separate from all of the above, clients withhold IRS on your invoices when the law requires it: 25% for the professional activities on the art. 151.º table, 11.5% for other services, 16.5% for intellectual property. That requirement disappears entirely once your prior-year Category B income was €15,000 or less (art. 101.º-B), which is why many smaller freelancers receive everything gross and settle up through payments on account instead.
What the contributions actually buy
Unlike IRS, Social Security contributions purchase entitlements: sickness benefit, parental benefit, and an old-age pension, all conditional on qualifying periods measured in months of actual contributions. There is also a cessation-of-activity benefit for freelancers, though its conditions are narrow — it requires involuntary cessation, economic dependence on a single client of at least 50%, and 720 days of contributions in the preceding 48 months, so approval rates are historically low.
Putting the two together
A useful way to think about it: the AT taxes a percentage of your revenue (via the coefficient), Segurança Social takes 21.4% of 70% of your revenue, and the two run on entirely different calendars — annual for IRS, quarterly for Social Security. Missing the quarterly Social Security declaration doesn't affect your IRS filing, and vice versa, but both are independently enforceable.
Frequently asked questions
Is "recibos verdes" a legal tax status?
Not formally — it's the everyday name for being taxed under Categoria B (self-employment income) and invoicing electronically via e-Fatura. The actual regime is Regime Simplificado (or Contabilidade Organizada above the revenue threshold).
Do I pay tax on my full invoiced amount?
No — under Regime Simplificado, a fixed coefficient (0.15 to 0.95 depending on your activity) applies to your gross revenue first, and that's what's actually taxed, not the raw total.
Are Social Security contributions calculated the same way as tax?
No — Social Security takes 21.4% of 70% of your quarterly gross income, on a completely separate quarterly cycle, independent of your annual IRS return.
Why did my Social Security rate jump to 28.3%?
Because most of your invoicing goes to one client. The regime treats economic dependence as closer to employment, and it also bills that client its own contribution — 10% or 7% depending on how concentrated the dependence is.
Should I give up the first-year exemption?
It depends on what you need soon. Exempt months build no contributory career, so they don't count towards sickness, parental or pension entitlements. Renouncing is worth it if a claim is foreseeable — and it's irreversible, so it isn't a decision to reverse later.
I have a salaried job as well. Do I pay twice?
Usually yes, on separate bases. But if your average monthly employment income is at least 4× IAS (€2,148.52 in 2026), you're exempt from contributing on the freelance side — you stay registered and declare, but pay nothing.
The quarterly declaration is already filled in. Do I still have to do anything?
Yes. It's pre-filled from e-Fatura, but an unconfirmed declaration counts as not submitted. You can also adjust the relevant income by up to ±25% in 5% steps if the assessed quarter isn't representative.
Do I owe Social Security contributions in my first year?
Not if your annual income stays under €5,030 — the first 12 months of activity carry an exemption below that threshold.