Recibo Verde or a company: what should a freelancer choose

If you plan to work for yourself legally in Portugal, there are two main paths: registering as self-employed via Recibo Verde or opening an LDA company. The choice depends on your income level, risk and scaling plans.

Recibo Verde (self-employment)

It's the simplest way to invoice clients — no share capital and minimal paperwork. Ideal for freelancers, consultants and anyone just starting out.

• Taxes: progressive IRS; under the simplified regime only part of your income is taxed (around 75% for services).
• Social contributions: the first year of activity is exempt, after which contributions are based on your taxable base.
• Liability: personal — you are liable with your own assets.
• Getting started: fast, with no capital and no mandatory accountant at the outset.

The LDA company

A separate legal entity with limited liability. Suited to scaling, partnerships, hiring a team and working on larger contracts.

• Taxes: corporate tax (IRC), with a reduced rate on the first portion of profit for small companies; dividends are taxed separately.
• Liability: limited — risk is separated from your personal assets.
• Paperwork: a mandatory accountant, reporting and more administration.
• Image: more trust from larger clients and EU partners.

How to choose

In short: if you're a freelancer with moderate income who wants to start fast, Recibo Verde is usually the better deal. If you're planning growth, hiring, partners or large contracts, it's worth considering registering a company. At a certain income level, switching to an LDA becomes tax-efficient — the exact tipping point is determined case by case.

This information is for general guidance only. Tax rates and regimes change — before deciding, get an individual calculation from a tax advisor.