How many words of English do you know for ordering a coffee at Starbucks? Double shot, extra foam, caramel drizzle… Probably more than 15.
Here is the thing: the complete vocabulary of finances for independent workers in Portugal has exactly 15 words. That is it. Not a bookkeeping course, not a tax law degree — just 15 words that, once you understand them, mean you never panic again when you open the Finance Portal.
One word at a time, explained as if we were having a coffee together.
1. NIF — your tax identity number
Your NIF is your taxpayer identification number — the 9-digit number you give when requesting a receipt at the supermarket. Without a NIF, you do not exist for the tax authorities. It is the first thing you need to work as a freelancer.
Example: Ana just finished her design degree and wants to go freelance. First step: confirm she has a NIF and open her business activity.
2. Atividade — what you tell the state you do
Opening your atividade means telling the state: “Hello, I’m going to work independently doing this.” You choose an activity code (CAE) — for example, 74100 for design or 62010 for software development. You do this on the Finance Portal or in person at a tax office.
3. Recibo verde — the freelancer’s invoice
Forget the green paper forms from the 1990s. Today, recibo verde simply means any electronic invoice you issue as an independent worker. It must be issued through the Finance Portal or certified software. It includes the client’s NIF, service description, amount, and VAT (or exemption).
4. IVA — the tax you charge (or don’t) clients
IVA (VAT) is the value-added tax. If you are not exempt, you add 23% to your invoice and pass it on to the state. If you are exempt — because your annual turnover is under €15,000 — you charge 0% VAT and indicate the exemption reason: Article 53 of the CIVA.
Example: João builds websites and charges €1,000 per project. If he is not VAT-exempt, the invoice is for €1,230 (€1,000 + €230 VAT). The €230 belongs to the state, not João.
5. IRS — the tax on what you earn
IRS is the personal income tax on your annual earnings. You pay according to the bracket your income falls into — the more you earn, the higher the percentage. The annual IRS declaration is filed between April and June of the following year.
6. Segurança Social — your retirement and protection
As an independent worker, you pay your own Social Security contributions. They are calculated quarterly based on your income from the previous quarter. In the first year of activity, you are exempt from contributions.
7. Regime simplificado — the straightforward way to pay tax
The simplified regime (regime simplificado) uses coefficients to calculate your taxable income rather than requiring you to submit all actual expenses. The state assumes a certain portion of your income represents costs, and you only pay tax on the rest.
Important: “Simplified” does not mean the state handles everything for you. You are still responsible for filing all your declarations. “Simplified” refers only to how your tax is calculated.
8. Retenção na fonte — when your client pays part of your tax upfront
Some companies withhold a percentage of your invoice and pay it directly to the tax authority as an advance on your IRS. You receive less immediately, but the withheld amount is credited when you file your annual IRS declaration.
9. Coeficiente — the percentage your tax is actually calculated on
In the simplified regime, the coefficient determines what proportion of your invoiced income is considered taxable:
- 0.75 — for most liberal professions listed under Article 151 of the CIRS (designers, programmers, consultants, etc.): you pay tax on 75% of what you invoice
- 0.35 — for other services not listed in Article 151
- 0.15 — for the sale of products: you pay tax on only 15%
10. Categoria B — your tax category
Independent workers fall under Categoria B in the Portuguese IRS system. This is different from Categoria A (employees). Whenever you fill in official forms, Categoria B is always the right choice.
11. Declaração trimestral — the quarterly filing
Every quarter you may need to file:
- A quarterly VAT return (if you are VAT-registered)
- A quarterly Social Security declaration (from your second year of activity onwards)
These are separate filings with separate deadlines. The right software submits both automatically.
12. Nota de honorários — another name for recibo verde
These are the same thing. Some clients ask for a nota de honorários, others ask for a recibo verde, others just say fatura. It is all the same document — proof of the service you provided.
13. Isenção — when you do not pay certain taxes
You may be exempt from VAT (if your annual turnover is under €15,000) or from Social Security (in your first year of activity). Exemptions are not applied automatically — you must declare them correctly on each invoice.
14. Coima — the fine for missing a deadline or filing incorrectly
Missed a declaration deadline? Coima. Filed incorrect values? Coima. The amounts vary depending on the type of infraction and the delay. Check the AT’s penalty tables for current amounts.
15. Ato isolado — when you do just one piece of work
If you do not have an open activity but have completed a one-off piece of work, you can issue an ato isolado — like a recibo verde but without formally opening your activity. There are limits: you cannot do this regularly or above certain thresholds without opening a full activity.
How these 15 words work in practice
Sofia is a graphic designer. She opened her atividade in January with the correct CAE, has her NIF, and is on the regime simplificado. When she creates a logo for a client, she issues a recibo verde with 0% IVA because she is exempt — her annual turnover is under €15,000.
As a designer (listed under Article 151 CIRS), the coeficiente of 0.75 applies — the state considers 75% of her income as taxable. The annual IRS declaration goes in during spring of the following year, under Categoria B.
Each quarter, she files the declaração trimestral for Social Security. In her first year, she was exempt from those contributions.
Straightforward.
✅ In summary
-
There are only 15 words — NIF, atividade, recibo verde, IVA, IRS, Segurança Social, regime simplificado, retenção na fonte, coeficiente, Categoria B, declaração trimestral, nota de honorários, isenção, coima, and ato isolado. Master these and you have everything you need.
-
“Simplified” is not the same as “automatic” — the simplified regime makes tax calculation easier, but you are always responsible for filing your declarations on time.
-
With FIZ invoicing is certified and quarterly declarations are filed automatically — so you can focus on work without memorising deadlines or navigating the Finance Portal.
