Portugal’s recibos verdes guide: Rules, limits, and fixes (2026 edition)

The operator’s manual for invoicing, VAT triggers, and avoiding tax audits as a freelancer in Portugal.

Introduction

The Portuguese tax system does not forgive formatting errors. For freelancers and remote workers, the recibo verde (green receipt) is the single point of failure between getting paid and triggering a tax audit.

Most newcomers assume invoicing is just paperwork. In Portugal, it is a compliance minefield. One wrong selection on the portal can accidentally trigger a 23% VAT liability you didn’t collect, or flag you for “false self-employment” penalties.

As of January 2026, the rules have tightened. The “grace period” for VAT registration is gone, and the €15,000 threshold is now a hard line with immediate consequences. This guide explains exactly how to issue compliant invoices, handle the new instant-VAT triggers, and fix mistakes before the tax authority notices.

1. The basics of the system

Every cent earned outside of an employment contract must be declared through the AT (Autoridade Tributária) website. This applies to digital nomads, local freelancers, and sole traders (empresários em nome individual).

The three document types

You must choose the correct document based on when you get paid.

• Fatura (Invoice)
  Issued when you have completed the work but have not yet received the money. It creates a legal obligation for the client to pay.
• Recibo (Receipt)
  Issued only after you receive payment for a previously issued fatura. It proves the debt is settled.
• Fatura-Recibo (Invoice-Receipt)
  The most common document for freelancers. You issue this when payment and service happen simultaneously (e.g., you receive a wire transfer and issue the document the same day).

Mandatory registration

You cannot issue a document without an active activity status. You must register your activity (início de atividade) before sending your first invoice. Issuing a receipt without active registration triggers automatic fines.

2. The €15,000 threshold and VAT rules (2026 update)

The most critical number for your operation in 2026 is €15,000. This is the annual turnover limit that dictates your VAT (IVA) status.

The Article 53 exemption

If your annual turnover is under €15,000, you are likely exempt from charging VAT under Article 53 (regime de isenção). On your invoices, you select “IVA – regime de isenção [art.º 53.º]” and charge the client €0 in tax.

The “instant VAT” trap

Since July 2025, the rules for crossing this threshold have become aggressive.

• Old rule: If you crossed the limit, you started charging VAT in January of the next year.
• Current rule (2026): If you cross €15,000 today, you lose your exemption immediately. You must register for VAT and start charging it in the month following the breach.

Example:
You earn €14,000 by May. In June, you invoice €2,000. Your total is now €16,000.
You must submit a declaration altering your activity in June and start charging VAT on all invoices issued from July 1st onward. Failing to do this means you owe the VAT out of your own pocket.

3. Withholding tax (retenção na fonte)

Withholding tax is an advance payment on your annual income tax (IRS). The government takes a slice of each invoice to ensure you don’t owe a massive lump sum at year-end.

Who must withhold

You only apply withholding tax if your client is a Portuguese entity with organized accounting (a company or a sole trader with an accountant).

• Private individuals: No withholding.
• Foreign clients: No withholding.

2026 Rates and exemptions

• Standard rate: 23% for most professional services (reduced from 25% in 2025).
• Exemption: You are exempt from withholding if your turnover in the previous year was less than €15,000.
• Small amounts: As of July 2025, any withholding amount under €25 is waived.

Note: The VAT threshold looks at current year turnover. The withholding exemption looks at previous year turnover. Do not confuse them.

4. How to issue a receipt (step-by-step)

Log in to the Portal das Finanças and search for “emitir” (issue).

1. Data de Transação (Date): Use the date you received the money.
2. Tipo de Documento: Select Fatura-Recibo for immediate payments.
3. Adquirente (Client): Enter the NIF. For foreign clients, select the country and enter their VAT number.
4. Descrição: Be specific. “Consulting services” is weak. “Software development for Project X, Jan 2026” is safe.
5. Valor Base: Enter the amount before tax.
6. Regime de IVA:
   • Portugal (exempt): “IVA – regime de isenção [art.º 53.º]”
   • EU Business: “IVA – autoliquidação [art.º 6.º, n.º 6, a)]”
   • Non-EU Client: “IVA – autoliquidação [art.º 6.º, n.º 6, a)]”
7. Retenção na Fonte: Select the rate (23%) or the exemption (Dispensa de retenção – art. 101.º-B).

5. The foreign client trap

Invoicing clients outside Portugal is where most errors happen. The portal does not automatically validate foreign tax rules.

EU Clients (B2B)

If your client is a business in the EU with a valid VIES VAT number, you do not charge Portuguese VAT.

• Selection: “IVA – autoliquidação” (Reverse Charge).
• Requirement: You must file a Recap Statement (Declaração Recapitulativa) periodically.

Non-EU Clients (US, UK, Brazil)

Services provided to non-EU clients are generally not subject to Portuguese VAT because the “location of service” is outside Portugal.

• Selection: “IVA – autoliquidação” (rules vary slightly by service type, but this is the standard category for exports).

The “Cannot Annul” Bug

This is a critical system flaw. You cannot annul (anular) a receipt issued to a non-Portuguese NIF through the portal. The button simply does not exist.
If you make a mistake on a foreign invoice, you must:

1. Issue a new, correct document (Replacement Receipt).
2. Write in the description: “This replaces invoice no. X due to error.”
3. Send a message via e-balcão to the tax authority explaining the duplication so they don’t tax you twice.

6. Common traps (and how to avoid them)

• Issuing without active registration
→ Leads to immediate fines. Always check your activity status on the portal before clicking “emitir.”

• Crossing €15k and waiting until next year
→ The “next year” rule is dead. You must charge VAT the month after you cross the line. Track your cumulative total weekly.

• Using the wrong VAT code for foreign clients
→ Selecting “Exempt (Art 53)” for a foreign client is technically wrong if the reason is export rules. Use “Autoliquidação” (Reverse Charge) to keep your records clean.

• Ignoring the Recap Statement (Modelo 8)
→ If you invoice EU clients, you must submit this separate declaration. Missing it triggers automatic penalties.

• Submitting expenses after February 25
→ You must validate your own business expenses on e-fatura by Feb 25. If you miss this, you lose the deductions for your IRS return.

Bottom Line

The recibos verdes system is unforgiving of ignorance. In 2026, the margin for error is zero: the €15,000 threshold triggers immediate VAT changes, and foreign invoice errors require manual intervention to fix. Do not guess. If your turnover is approaching the limit, or if you work with clients outside Portugal, verify your settings before you issue the document. A five-minute check prevents a twelve-month audit.

FAQ

What is the VAT exemption limit for 2026?
The limit is €15,000 in annual turnover. If you exceed this amount, you lose the Article 53 exemption and must start charging VAT the following month.

Can I cancel a green receipt issued to a foreign client?
No, the portal does not allow annulment for non-Portuguese NIFs. You must issue a replacement receipt and notify the tax authority via e-balcão to correct the record.

Do I need to charge VAT to US or UK clients?
Generally, no. For B2B services provided to non-EU clients, the VAT regime is usually “Autoliquidação” (not subject to Portuguese VAT). However, you must still issue the receipt correctly.

When do I have to issue the receipt?
You must issue the invoice or receipt within 5 days of the service being rendered or payment being received. You must communicate it to the tax authority by the 5th of the following month.

What is the withholding tax rate for 2026?
The standard withholding rate for professional services (like consultants, designers, engineers) is 23%.

What happens if I forget to register for VAT after crossing €15,000?
You will be liable for the VAT you failed to collect. The tax authority will demand the 23% from you personally, plus interest and fines for non-compliance.

Do I need to issue receipts for Upwork or Fiverr income?
Yes. The platform is your client. You must issue a receipt for the total amount paid out, typically using the platform’s VAT number and headquarters location (often US or EU).