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Withholding tax on recibos verdes: 5 rules to know how much is withheld and when you can avoid it
Step Inside Accounting · Practical guide
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1. Only clients with organised accounting withhold
The obligation to withhold lies with the client, and it only exists when the client has or should have organised accounting – in practice, almost all companies and some self-employed people. There is no withholding when the client is:
- a private individual;
- a self-employed person under the simplified regime;
- a foreign company with no head office or permanent establishment in Portugal.
Withholding is calculated on the value of the service, without VAT, and does not apply when the amount to withhold is below €25. Expenses you paid in the client’s name and on their behalf, which they reimburse to you, are not subject to withholding either.
2. Know the rate for your activity in 2026
The rate depends on the code under which you opened your activity and on where your tax residence is:
| Type of income | Mainland | Madeira | Azores |
|---|---|---|---|
| Activities in the CIRS table | 23% | 16.1% | 16.1% |
| Other services | 11.5% | 11.5% | 8.05% |
| Copyright and intellectual property | 16.5% | 16.5% | 11.6% |
| Intermediation commissions (for example, real estate brokerage) | 23% | 16.1% | 16.1% |
You are the one who enters the rate when you issue the invoice, so always check it. A rate that is too high is not lost, because it is settled in your IRS, but you receive less during the year; a rate that is too low leaves you with more tax to pay at the settlement.
3. Below €15,000 you can use the waiver
If you expect your income as a self-employed worker to stay below €15,000 in the year, you can invoice without withholding. There is no application to the Tax Authority: when you issue each invoice, you choose the withholding waiver option (dispensa de retenção) and the document carries that wording. The client pays you the full amount.
There are three limits:
- you can only use the waiver if your income did not reach €15,000 in the previous year;
- it does not apply to intermediation commissions, such as real estate brokerage, which always have withholding;
- it is optional: if you would rather not have a large bill to pay at the IRS settlement, you can let the client withhold.
4. The waiver ends when you pass the limit
The waiver stops applying in the month after the one in which you reach €15,000. From that month on, invoices to clients with organised accounting must have withholding – and, the following year, you can no longer use the waiver.
For example, if you reach €15,000 on 20 August, invoices issued from 1 September onwards carry withholding. The Portal das Finanças shows the list of all the documents you have issued, but keeping count is up to you: add up what you invoice and warn your clients before withholding comes back.
5. What was withheld is deducted from your IRS
Each withholding is IRS you have already paid. Clients report to the Tax Authority what they withheld from you and, in your annual IRS return, the total withheld is deducted from the tax for the year:
- if more was withheld than your final tax, you get the difference back as a refund;
- if less was withheld, you pay the difference.
Before you file your return, check that the withholdings shown match those on your invoices. If a client withheld and did not report it, or reported a different amount, it is up to them to correct it – and it is better to find out before you file your IRS.
Example
Pedro is an engineer (activity in the CIRS table), charges VAT and lives and works in mainland Portugal. He issues a €1,000 invoice to a company with organised accounting:
- service value: €1,000
- VAT (23%): €230
- invoice total: €1,230
- IRS withheld by the client (23% of €1,000): − €230
- amount reaching Pedro’s account: €1,000
But not all of that money is his. Of the €1,000 he receives, €230 is the VAT he has to pay to the State. What Pedro actually keeps is €770 (€1,000 − €230). The €230 withheld is not lost: it is IRS paid in advance.
- If Pedro lived and worked in Madeira, the invoice would have VAT at 22% (€220) and withholding at 16.1% (€161). €1,059 would reach his account (€1,220 − €161), of which €220 is VAT to pay: he would keep €839.
- At the end of the year, Pedro had €6,900 of withholdings in total. If his final IRS is €5,000, he gets a €1,900 refund; if it is €8,000, he pays another €1,100.
Team tip
If you use the waiver, nobody withholds anything from you – and the year’s IRS arrives all at once at the settlement. Set aside part of what you receive every month (we work out the estimate with you). When you get close to €15,000, let us know: we help you work out from which invoice withholding comes back and how to warn your clients.
Want us to handle this for you?
Companies
Monthly accounting
Bookkeeping, tax obligations and managing partners’ salaries, all in one place.
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Self-employed
Recibos verdes without the stress
Tax returns, VAT and Social Security handled by people who know the regime inside out.
from €80 + VAT / month
This article is for information only and does not replace professional advice. Figures and rules are those in force at the date of publication and may change.
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