In Portugal, freelancers and consultants work under what is known as recibos verdes (green receipts). You register your activity with the Tax Authority and issue an electronic invoice-receipt on the Portal das Finanças each time you are paid. It is the simplest way to start working on your own, for clients in Portugal or abroad.
Opening your activity
You open your activity (início de atividade) on the Portal das Finanças, choosing the code that best describes what you do and stating your expected turnover. These choices set your VAT and income tax treatment, so it is worth getting them right from the start. You will need a NIF and access to the Portal das Finanças.
VAT and income tax
If your turnover stays below €15,000 a year, you can usually be exempt from VAT; above that, you charge VAT on your invoices, and clients abroad follow their own rules. For income tax, most freelancers fall under the simplified regime (up to €200,000 a year), where for most professional services 75% of what you invoice counts as taxable income. Portuguese companies with organised accounting may withhold part of each payment as an advance on your tax.
Social Security
If it is your first time registering as self-employed, you are exempt from contributions for the first 12 months. After that, you file a quarterly declaration and pay 21.4% on 70% of your income from services. Contributions give you sickness and parental cover and count towards your pension.