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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.
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.
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.