Key facts at a glance
Taxable share of revenue
75%
Regime simplificado, services
Social Security rate
21.4%
On 70% of relevant income
Retention at €55K revenue
69.4%
vs 64.7% agency-employee equivalent
On €55,000 of invoiced revenue, a recibos verdes freelancer under the regime simplificado keeps €38,175 (69.4%), while the same revenue paid through an agency as an employee-equivalent nets €35,560 (64.7%). At €88,000, the gap widens to nearly six points: 64.8% against 58.9%.
The reason isn't a lower tax rate, both structures run through the identical IRS escalões. It's the taxable base: recibos verdes only taxes 75% of revenue under the regime simplificado's statutory notional-expense allowance, while an employee's much smaller flat dedução específica shrinks proportionally as income rises.
Model your own day rate under both structures side by side.
Open the Portugal calculatorHow the two structures actually differ
An agency/umbrella-paid contractor is a direct passthrough of the standard employee mechanic: full IRS escalões (12.5% to 48%) applied after the flat €4,587.09 dedução específica, plus 11% Social Security on the full gross. It's the same math covered in our IRS + Social Security explainer.
Recibos verdes under the regime simplificado is genuinely different on both sides. IRS applies to only 75% of gross revenue, so a smaller base runs through the same escalões. Social Security applies a different rate entirely, 21.4%, but on only 70% of relevant income, assessed and paid quarterly based on the income declared two quarters earlier rather than monthly. Both differences push in the same direction, more revenue survives as net pay, and both are what the freelance mode of PayMetric Labs' Portugal contractor calculator models directly.
Recibos verdes vs agency-employee, three day rates
All scenarios assume 220 billable days a year, no business expenses beyond the built-in allowance, and no agency fee.
| Day rate | Revenue | Freelance net | Freelance % | Agency net | Agency % |
|---|---|---|---|---|---|
| €150/day | €33,000 | €24,674 | 74.8% | €23,626 | 71.6% |
| €250/day | €55,000 | €38,175 | 69.4% | €35,560 | 64.7% |
| €400/day | €88,000 | €57,061 | 64.8% | €51,831 | 58.9% |
Computed via PayMetric Labs' Portugal contractor calculator engine (both structures), 220 billable days/year, 2026 IRS escalões and Social Security rates.
Recibos verdes has real downsides that don't show up in the net figure
No employer-side Social Security contribution is being made on your behalf (as a freelancer, there is no employer), no paid holiday or sick pay accrues automatically, and Social Security is billed quarterly in arrears, on income from two quarters earlier, which catches out anyone whose invoicing has slowed down since then. None of that shows up in a single-year net-pay comparison, but it's the real trade-off behind the higher retention percentages above.
If you're weighing a permanent offer against a recibos verdes contract at similar headline pay, factor in the value of holiday pay, sick pay, and the 14-month subsídios structure a permanent role includes, see our 14-month pay explainer for what that's actually worth.
Run your own day rate through both structures
The Portugal calculator's contractor mode compares recibos verdes and agency structures directly at your own rate and billable days.
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Frequently asked questions
What exactly are recibos verdes, and who uses them?
Recibos verdes ("green receipts", named after the old paper invoice colour) is the everyday name for Portugal's self-employed / trabalhador independente tax status, Categoria B under the Código do IRS. Freelancers, IT contractors, consultants, and anyone invoicing clients directly instead of being on a company payroll operate under recibos verdes. Most working under it use the regime simplificado, the simplified regime this article and the freelance mode of PayMetric Labs' contractor calculator both model.
How is the 75% taxable-income rule actually calculated?
Under the regime simplificado, only 75% of your gross services revenue counts as taxable profit for IRS, the other 25% is a statutory notional-expense allowance, deducted automatically whether or not you actually spent that much. On €55,000 of invoiced revenue, that means €41,250 is run through the IRS escalões, not the full €55,000. This is structurally different from employment, where the much smaller flat dedução específica (€4,587.09 for 2026) is subtracted instead, and it's the main reason recibos verdes at the same revenue keeps more than an equivalent employee salary keeps.
Why is recibos verdes Social Security calculated so differently from an employee's?
An employee pays a flat 11% of full gross salary, no cap, straightforward. A recibos verdes freelancer under the simplified regime pays 21.4%, but only on 70% of relevant income (broadly, invoiced services revenue), and contributions are assessed and paid quarterly based on income from two quarters prior, not monthly like an employee's. On €55,000 of revenue, that works out to €8,239 in Social Security for the freelancer versus €6,050 for an equivalent-revenue agency employee, a higher absolute Social Security bill that the lower IRS base more than offsets in the worked figures below.
So does recibos verdes actually keep more than being paid through an agency?
In every scenario modelled here, yes, and the gap widens with revenue. At €33,000 revenue, recibos verdes retains 74.8% against an agency-employee equivalent's 71.6%. At €88,000, it's 64.8% against 58.9%, a gap of nearly six percentage points. The reason it grows: recibos verdes' 25% notional-expense allowance shields a fixed proportion of revenue at every income level, while the agency employee's flat dedução específica becomes proportionally smaller as revenue rises and more income gets pushed into IRS's higher escalões.
Is there a first-year Social Security exemption for new recibos verdes freelancers?
Portugal does offer a reduced-contribution period for genuinely new independent workers in their first 12 months of activity, but this calculator and the figures in this article intentionally model an established freelancer's ongoing regime, the same convention PayMetric Labs uses for Spain's autónomo tarifa plana and the Netherlands' ZZP starter deduction. If you're in your first year, expect your actual Social Security bill to run below the figures shown here.
What happens to income above the simplified regime's threshold?
The regime simplificado applies up to an annual revenue ceiling; freelancers who invoice above it, or who choose to, must use the regime de contabilidade organizada (organized accounting), where actual documented expenses are deducted instead of the flat 25% allowance. That regime needs a certified accountant and real bookkeeping, and isn't modelled by this calculator, if your invoiced revenue is approaching the ceiling, that's the point to get proper local accounting advice rather than relying on the simplified-regime figures here.
Does the freelance mode account for VAT (IVA)?
No. Most services freelancers in Portugal must charge 23% IVA on invoices to business clients (with exemptions for very low annual turnover), but IVA is collected and passed through to the state, it isn't personal income and doesn't affect the IRS/Social Security take-home figures modelled here. Budget separately for IVA compliance if your invoicing requires it.
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