Recibo Verde in Portugal for Freelancers

What is Recibo Verde?

Recibo Verde, or "Green Receipt," is Portugal’s system for self-employed individuals and freelancers to invoice clients and declare their income. It is a crucial framework for independent professionals, service providers, and small business owners operating in the country without forming a company.

How Does Recibo Verde Work?

Freelancers and independent workers registered under Recibo Verde must issue electronic invoices (faturas-recibos) through the Portuguese Tax Authority’s online platform (Portal das Finanças). The system automatically calculates taxes and social security contributions based on declared income.

Who Needs to Use Recibo Verde?

If you are providing services or selling goods as a freelancer, consultant, or independent contractor in Portugal, you are required to issue a Recibo Verde. This applies to both Portuguese residents and foreign nationals who perform taxable activities in the country.

Taxes and Social Security Contributions

Freelancers using Recibo Verde are subject to the following:

• IRS (Income Tax): Progressive tax rates apply, depending on earnings. The first €12,500 may be tax-free under certain conditions.
• VAT (IVA): If annual earnings exceed €13,500, freelancers must charge and remit VAT at applicable rates (6%, 13%, or 23%).
• Social Security (Segurança Social): Contributions of 21.4% of income apply, but there are exemptions for new freelancers during their first 12 months.

The NHR Regime and Recibo Verde

Portugal’s Non-Habitual Resident (NHR) regime previously offered tax benefits to new residents for ten years. However, as of 2024, significant changes have been made to the program.

Does NHR Apply to Freelancers in 2025?

No, as of 2025, the NHR regime no longer applies to freelancers unless they fall into specific high-value professional categories related to Portugal’s economic growth strategy. General freelance professions (such as marketing, writing, or consulting) no longer qualify for the 20% flat tax rate. Only professionals in sectors such as technology, scientific research, and innovation may still benefit from NHR.

Who Can Apply to the NHR Regime in 2025?

From 2024 onwards, the Portuguese government has reformed the NHR regime, tightening eligibility criteria. In 2025, applicants must meet one of the following conditions:

• Be highly qualified professionals in sectors such as technology, science, or research.
• Work in Portugal under employment contracts that support economic growth.
• Be individuals relocating for higher education or academic research purposes.
• Be retirees or pensioners receiving foreign income that qualifies for tax exemptions under double taxation treaties.

To apply for NHR, individuals must not have been tax residents in Portugal in the previous five years and must register with the tax authorities before March 31 of the following year after moving to Portugal.

Frequently Asked Questions (FAQs)

1. How do I open a Recibo Verde in Portugal?

You need to register as a freelancer on the Portal das Finanças (Tax Authority’s website) under the Atividade Aberta section and select the appropriate tax activity code (CAE or CIRS) for your profession.

2. Do I need a Portuguese residency to use Recibo Verde?

Yes, you must have a NIF (Número de Identificação Fiscal) and a Portuguese tax address, but you do not necessarily need permanent residency.

3. How much does it cost to use Recibo Verde?

There is no direct cost to open a Recibo Verde, but you will be required to pay IRS (income tax), social security contributions, and possibly VAT depending on your income level.

4. Can I work remotely for a foreign company using Recibo Verde?

Yes, freelancers can issue Recibo Verde invoices to foreign clients, but income is still subject to Portuguese taxation and social security contributions.

5. What happens if I don't pay social security contributions?

Failure to pay Segurança Social can lead to fines and loss of access to public health services, pensions, and other benefits.

6. Can I close my Recibo Verde if I stop freelancing?

Yes, you can close your Atividade Aberta through the Portal das Finanças, but any outstanding tax or social security obligations must be settled.

7. Do I need an accountant to manage my Recibo Verde?

While not mandatory, hiring an accountant is highly recommended, especially for handling VAT, deductions, and quarterly tax declarations.

8. How do I issue an invoice using Recibo Verde?

Log into the Portal das Finanças, navigate to the Faturas e Recibos Verdes section, and fill out the invoice details, including client information and service description.

9. Can I employ other people under Recibo Verde?

No, freelancers using Recibo Verde cannot hire employees but can contract other freelancers or service providers.

10. What are the penalties for not declaring income?

Failure to declare income can result in heavy fines and legal action by the Portuguese tax authorities.

Conclusion

Recibo Verde is an essential tool for freelancers in Portugal to manage their invoicing and tax obligations. However, the NHR regime no longer applies to most freelancers in 2025, except for those in high-value professional sectors. Understanding these systems is crucial for anyone looking to work independently in the country.