Freelancer vs employee (Portugal, 2026)
What lands in your pocket on recibos verdes vs an employment contract. Or flip it around: how much you need to invoice as a freelancer to match a salary. With the 2026 IRS brackets and Social Security rules.
Contract pays it 14 times a year. Freelancer invoices it 12 times.
Annual net result
The contract wins by €2,666 / year
Contract (Cat A)
14 payments
- Gross / year
- €21,000
- Social Security
- €2,310
- IRS (income tax)
- €2,623
Net / year
€16,067
€1,147.66 / month (/14)
Freelancer (Cat B)
12 invoices
- Gross / year
- €18,000
- Social Security
- €2,696
- IRS (income tax)
- €1,903
Net / year
€13,401
€1,116.74 / month (/12)
Note: the contract includes holiday and Christmas allowances (14 payments a year). The freelancer invoices 12 months of work, with no 13th or 14th payment. The real gap also depends on VAT charged to the client (above 15,000€ of annual turnover), deductible expenses, and everything the contract gives you beyond salary: paid holidays, unemployment benefit, sick pay from Social Security.
How this comparison works
The comparison is made in annual net terms, because that is the only fair way: an employment contract pays 14 times a year (12 salaries plus holiday and Christmas allowances), while a freelancer invoices 12 months. Comparing monthly gross amounts hides that difference.
Employment contract (Category A)
Gross / year = monthly salary x 14
Social Security = 11% x gross
Taxable income = gross - IRS Jovem relief (if it applies)
- specific deduction (at least 4,104€)
Annual IRS = 2026 brackets (Art. 68 CIRS)
- 600€ x number of dependents
Net / year = gross - SS - IRSFreelancer (Category B, simplified regime)
Income / year = monthly invoicing x 12
Social Security = 21.4% x 70% x income
(exempt in the first 12 months of activity)
Taxable income = 0.75 x income - IRS Jovem relief (if it applies)
Annual IRS = 2026 brackets - 600€ x dependents
Net / year = income - SS - IRSWorked example
Maya is offered 1,500€ a month, both ways. Option one: an employment contract with a 1,500€ gross salary. Option two: invoice 1,500€ a month on recibos verdes to the same company. No dependents, over 35, not her first year of activity, services coefficient 0.75.
- Contract: 21,000€ gross (x14), minus 2,310€ SS, minus 2,623€ IRS = 16,067€ net / year
- Freelancer: 18,000€ invoiced (x12), minus 2,696€ SS, minus 1,903€ IRS = 13,401€ net / year
- The contract wins by about 2,666€ a year, before even counting paid holidays, sick pay or unemployment protection
Use the second tab of the calculator to see what Maya should actually charge: the invoicing that matches a 1,500€ contract is well above 1,500€ a month.
The 2026 IRS brackets (Art. 68 CIRS)
These are the annual brackets used in the final IRS assessment, updated for 2026 by Law 73-A/2025 (State Budget). They are not the monthly withholding tables that employees see on the payslip.
| Taxable income | Normal rate (A) | Average rate (B) |
|---|---|---|
| Up to 8,342€ | 12.50% | 12.500% |
| 8,342€ to 12,587€ | 15.70% | 13.579% |
| 12,587€ to 17,838€ | 21.20% | 15.823% |
| 17,838€ to 23,089€ | 24.10% | 17.705% |
| 23,089€ to 29,397€ | 31.10% | 20.579% |
| 29,397€ to 43,090€ | 34.90% | 25.130% |
| 43,090€ to 46,566€ | 43.10% | 26.472% |
| 46,566€ to 86,634€ | 44.60% | 34.856% |
| Above 86,634€ | 48.00% | n/a |
What this calculation does not include
- VAT: above 15,000€ of annual turnover you must charge VAT (23% standard rate) to your clients (Art. 53 VAT Code). The VAT is not your money, but it adds admin and can matter to private clients.
- Expense justification: the 0.75 coefficient presumes 25% of expenses. Part of that presumption (15% of your income) has to be backed by actual expenses or the taxable amount increases. With income up to roughly 27,360€ a year, the automatic 4,104€ deduction covers it and you do not need to justify anything.
- Labour rights: the contract brings paid holidays, holiday and Christmas allowances, sick pay, parental leave, unemployment benefit and severance. On recibos verdes your protection is much thinner and depends on your own contribution record.
- False self-employment: if you work for one single client, on their schedule, with their equipment and under their orders, the law presumes you are an employee (Art. 12 of the Labour Code), whatever the invoices say.
Your first year as a freelancer
In the first 12 months after starting your activity for the first time, you are exempt from Social Security contributions (Art. 157 of the Contributory Code). That is real oxygen while you build a client base, and the calculator has a checkbox for it. The flip side: months without contributions do not count towards your pension, sick pay or other benefits, so the exemption is a breather, not free protection.
Frequently asked questions
What are recibos verdes (green receipts) in Portugal?
It is the everyday name for working as self-employed. You open an activity with the tax office (Category B income), issue electronic invoices to your clients through the Portal das Finanças, and handle your own IRS and Social Security. It is the standard setup for freelancers, contractors and many gig workers in Portugal.
How much Social Security do I pay as a freelancer?
The rate is 21.4%, applied to 70% of your services income, which works out to roughly 15% of what you invoice. The contribution base is capped at 12 times the IAS. In your first 12 months of activity you are exempt (Art. 157 of the Contributory Code). You declare your income to Social Security every quarter.
How much income tax do I pay under the simplified regime?
Only 75% of your services income is taxable (coefficient 0.75 for the professions in the Art. 151 CIRS list; 0.35 for other services). That amount goes through the general IRS brackets, from 12.5% up to 48% in 2026. There is no automatic monthly withholding like employees have: the bill arrives with the annual IRS return.
The company offered me the same amount on recibos verdes. Good deal?
Usually not. The same monthly amount on a contract is paid 14 times a year and comes with paid holidays, sick pay, unemployment benefit and severance. On recibos verdes you invoice 12 times and carry all the risk yourself. Run the second tab of the calculator to see what you should actually charge to match the contract. And if you would work only for them, on their schedule, that is likely false self-employment.
When do I have to charge VAT?
Above 15,000€ of annual turnover. Below that you can stay in the Art. 53 exemption regime and invoice without VAT. Once you cross the threshold, you charge VAT (23% standard rate on the mainland) on top of your fees and hand it over to the tax office. Business clients usually do not mind; private clients feel it as a 23% price increase.
I only have one client. Am I really a freelancer?
Maybe not. If you work for a single client, on a schedule they set, with their equipment and under their orders, Art. 12 of the Labour Code presumes an employment contract exists. That is false self-employment, and the ACT can force the company to hire you properly. Read our guide on the 8 signs of false self-employment to check your situation.
Related tools
Go further
Guide: false self-employment, 8 signs →
One client, their schedule, their orders? Check if the law already sees you as an employee.
Guide: Social Security for the self-employed →
Quarterly declarations, what you are covered for, and what the 21.4% actually buys you.
Guide: platform work rights →
Courier or TVDE driver? The Art. 12-A presumption was written for you.
Net salary calculator →
Already on a contract? See what lands in your account each month in 2026.
Official sources
This calculator is an informative estimate. It uses the 2026 annual IRS brackets (Art. 68 CIRS) and the self-employed Social Security rule of 21.4% on 70% of income (Art. 168 of the Contributory Code). Organised accounting, mixed income categories or special VAT regimes change the numbers. For official figures, check the Portal das Finanças and Social Security. Spotted an error? ola@despacho.pt.