Going freelance in Portugal — or moving here as a remote contractor — means stepping into the world of recibos verdes and the regime simplificado. It sounds bureaucratic, and there is paperwork, but the system is actually one of the more forgiving in Europe for people starting out: a generous first year, a simplified way of calculating tax, and a VAT exemption for small earners. Here’s how to set yourself up properly and stay on the right side of Finanças and Segurança Social.
Step one: register início de atividade
Before you issue a single invoice, you must register your início de atividade (start of activity) with the tax authority. This tells Finanças you’re now self-employed. You can do it free of charge at a Finanças office or online through the Portal das Finanças, and it’s genuinely quick.
When you register you’ll choose:
- Your activity code (CAE or the CIRS professional activity list) — pick the one that matches what you actually do; consultants, developers, designers and writers each have their codes.
- Your tax regime — the regime simplificado (simplified) or contabilidade organizada (organised accounting). Most freelancers start on simplificado.
- Your VAT position — whether you’re exempt under Article 53 or charging IVA from day one (more on that below).
You’ll need a NIF already in place; if you don’t have one, that’s your very first step — see the tax and NIF pillar. Non-EU nationals also need the legal right to work here, which flows from your residence permit — the visas pillar covers that side.
Recibos verdes: how you invoice
Once registered, every payment you receive is documented with a recibo verde — a “green receipt,” now issued electronically as a fatura-recibo through the Portal das Finanças. There’s no separate accounting software required; the portal generates the invoice-receipt, records it with Finanças automatically, and stamps it with the right IVA treatment. You issue one each time you get paid (or invoice and then receipt on payment).
Keep them organised. They’re the backbone of your annual IRS return, your IVA filings if you charge VAT, and your social security base.
The regime simplificado, in plain terms
The regime simplificado is the default and it’s refreshingly simple. Instead of tracking every expense, the tax authority assumes a fixed cost ratio for you. For most services income, 75% of what you invoice is treated as taxable profit, and the remaining 25% is automatically deducted as assumed expenses. That taxable profit is then added to your other income and taxed at the normal progressive IRS rates.
So if you invoice €40,000 for consulting services, roughly €30,000 is taxed and €10,000 is treated as costs — without you keeping a shoebox of receipts. (The exact coefficient varies by activity type; 0.75 is the common one for professional services, but some activities use different ratios.) The regime is available while your turnover stays under €200,000 a year.
The alternative, contabilidade organizada (organised accounting), lets you deduct your actual expenses instead of the fixed 25%. It requires a certified accountant (contabilista certificado) and more admin, but it wins when your real costs are high — think heavy equipment, travel, subcontractors or office rent. If your genuine expenses comfortably exceed a quarter of your revenue, run the numbers on switching.
The €15,000 IVA threshold
Here’s the rule that decides whether you charge VAT. Under Article 53 of the IVA code, you’re exempt from charging IVA if your turnover is €15,000 or less in the year (the 2026 threshold). Below that line you invoice without VAT, note the Article 53 exemption on your recibos verdes, and skip periodic VAT returns entirely.
Cross €15,000 and you must register for IVA and start charging it — the standard mainland rate is 23% — filing periodic returns (monthly or quarterly) and passing the VAT on to Finanças. Our IVA guide walks through rates, registration and filing in detail. Watch this threshold as your business grows; crossing it mid-year triggers obligations you don’t want to discover late.
Withholding tax on Portuguese clients
When you invoice Portuguese business clients, they typically withhold around 25% of your fee and pay it to Finanças on your behalf — an advance on your IRS that you reconcile at year-end. If your annual self-employment income is low (broadly under about €14,500), you can opt out of withholding so you’re not lending the state your cash flow all year. Invoices to foreign clients generally aren’t subject to Portuguese withholding, though other rules (like reverse-charge VAT) can apply.
Social security — and the first-year break
This is the part newcomers love. For your first 12 months of self-employed activity, you’re generally exempt from social security contributions. It’s a real runway to get established before the bills start.
After that, contributions kick in at 21.4%, but not on your full income — it’s charged on 70% of your relevant income, based on the average of the invoices you declare each quarter. You report your income to Segurança Social every three months, and they set your contribution accordingly. There’s a quarterly declaration to file even when you’re in the exempt window in some cases, so don’t ignore the Segurança Social portal. Our social security guide breaks down the NISS, the quarterly declaration and what your contributions actually buy you.
Your annual IRS return
Freelance income flows onto Anexo B of your IRS return (or Anexo C if you use organised accounting), filed in the usual window of 1 April to 30 June. The simplified-regime coefficient is applied there, your withholdings are credited, and any balance is settled. See our full IRS filing guide for the mechanics.
Common mistakes
- Invoicing before registering início de atividade — you must register first.
- Ignoring the €15,000 IVA line and failing to register for VAT after crossing it.
- Assuming the first-year social security exemption means “do nothing” — you may still need to submit declarations and you must register your NISS.
- Staying on simplificado when your real costs are high — organised accounting can save more.
- Forgetting that 75% (not 100%) of services income is taxed and over-provisioning — or forgetting the withheld 25% is only an advance.
- Not saving for the tax bill. With no employer deducting PAYE for you, discipline is on you.
Short FAQ
Do I need an accountant? Not for the simplified regime — many freelancers self-manage on the portal. Organised accounting legally requires a contabilista certificado.
When do social security contributions start? Generally after your first 12 months, then 21.4% on 70% of relevant income.
How much of my income is taxed? Under the simplified regime, about 75% of services income is taxable; 25% is an assumed cost deduction.
When must I charge IVA? Once your turnover exceeds €15,000 in the year (Article 53 threshold).
What if I only have foreign clients? You still register, issue recibos verdes and declare the income; VAT and withholding rules differ for cross-border work — get it checked.
Rules and thresholds change and your situation is unique, so use this as orientation rather than definitive advice, and confirm current figures with Finanças or an accountant.
Setting up as a freelancer and want the registration, IVA position and social security done right from day one? Explore our services — GrowIN Portugal handles the admin so you can get to work.