You live in Portugal and work remotely for a company abroad - in Germany, the UK, the US. Sooner or later the question lands: do you invoice them on recibos verdes, or should there be a proper employment contract?
It feels like a free choice you get to make. But in fact part of it isn’t up to you at all - and the piece almost everyone forgets is Social Security.
First, the part that isn’t a choice
If you’re a tax resident in Portugal (broadly, you spend more than 183 days here or keep your home here), Portugal taxes your worldwide income. And work you physically do from Portugal is Portuguese-source income - even if the company that pays you has no office here and never sets foot in the country (CIRS art. 18.º).
So the foreign employer being abroad doesn’t move your tax out of Portugal. You’ll declare this income here, on your annual IRS return. The only real question is how: as employment or as self-employment.
The two routes
Employment contract (Category A). You’re an employee of the foreign company. The income goes in Anexo A of your IRS. Because the employer usually has no Portuguese establishment, there’s normally no withholding at source - you receive the gross and settle the tax in the annual IRS (you can make voluntary payments on account to avoid a big bill).
Recibos verdes (Category B). You open activity at the Portal das Finanças and invoice the company as an independent contractor. Standard simplified-regime rules: the 0.75 coefficient for the professions on the art. 151.º list (0.35 for other services), the quarterly Social Security declaration (with contributions paid monthly), and the annual IRS in Anexo B.
What actually decides it
Here’s the catch: it isn’t your preference, it’s the nature of the relationship.
Genuine autonomy - you set your hours, use your own tools, ideally have more than one client - points to self-employment: recibos verdes are the clean, simple route, and for most expats who freelance, that’s exactly the case.
Genuine subordination - a single “employer”, fixed hours, their direction, full integration into their team, working as if you were staff - is really employment, even if everyone calls it freelancing.
Take Anna, a designer in Lisbon with three clients across Europe, who decides her own schedule. She’s genuinely autonomous: recibos verdes fit. Now take Mark, who works 9-to-6 exclusively for one foreign company, managed daily by their team - that’s an employment relationship wearing a freelancer’s clothes.
Social Security: the point everyone misses
This is where the surprises happen. Under EU rules (Regulation 883/2004), an employed person is covered by the social security system of the country where the work is physically done - not where the employer sits. So if you work from Portugal, your Social Security is due in Portugal, even for a German or French employer.
The narrow exceptions don’t cover the typical fully-remote-from-Portugal worker. As a rule, once you do 25% or more of your work from your country of residence, that country’s system applies - so working mostly or entirely from Portugal puts you in the Portuguese system. (Between 25% and 49% telework, an EU framework agreement can keep you in the employer’s country’s system, but only as an opt-in: both countries must be signatories and employer and worker must request it jointly.)
That leaves the foreign employer with a few ways to be compliant, so you’re not stuck:
- Register as a non-resident employer with Portuguese Social Security and run payroll here (EU rules even let employer and employee agree that you remit the contributions on the employer’s behalf, with the employer still liable).
- Use an Employer of Record (EOR) - a company that legally employs you in Portugal and handles the contract, payroll and contributions.
- Or engage you as a genuine independent contractor - and then it’s recibos verdes, and you pay your own Social Security (21.4% on 70% of what you invoice): the declaration is quarterly, but contributions are paid every month.
For a non-EU employer (post-Brexit UK, the US), the logic is similar but runs through any bilateral Social Security convention between Portugal and that country; where none applies, the contributions are generally registered and paid in Portugal. In practice, the recibos verdes route is the most common solution.
Careful: don’t dress a real job up as recibos verdes to keep it simple. If the relationship is genuinely subordinate - one employer, their hours, their direction - Portuguese labour law can presume it’s employment (Código do Trabalho art. 12.º; see false green receipts), with the burden falling on the payer. If it’s really a job, the right fix is an EOR or the employer registering here, not a monthly fatura-recibo.
A quick note on VAT: when you invoice a business client in the EU, the service is taxed in their country under the reverse-charge rule (they self-account for the VAT), not you. For a business client outside the EU, the service generally isn’t subject to Portuguese VAT either - it isn’t located here - though the client’s own country decides what applies there. Either way, since 2025 that foreign-client invoicing no longer counts towards the €15,000 art. 53.º exemption threshold, which is measured on Portuguese operations only. (If you’re a highly-qualified professional, it’s also worth checking whether the IFICI regime applies - but its scope is narrow.)
Where FIZ comes in
The recibos verdes route only feels heavy because of the recurring admin. With FIZ, you invoice your foreign clients with the right VAT treatment, and the quarterly Social Security and VAT declarations are calculated and filed automatically - so working for a company abroad stops meaning a folder of Portuguese paperwork.
In summary
- Live in Portugal, work from Portugal = taxed in Portugal, whatever country the employer is in. The choice is only how you declare it: employment (Anexo A) or recibos verdes (Anexo B).
- What decides it is autonomy vs subordination, not preference. A genuine freelancer with real independence uses recibos verdes; a disguised full-time job should be employment (EOR or the employer registering here).
- Your Social Security is due in Portugal when you work from here - a fact most foreign employers overlook, and the compliance exposure usually lands on you.
