Recibos Verdes – What are they?

I often get asked ‘What are recibos verdes?’ Well, this phrase is translatable as ‘green receipt’ is the Portuguese equivalent of a US 1099 tax form, are issued by employers to their employees. It’s basically a green receipt that a freelancer issues when working for themselves in Portugal.

The purpose is to inform the IRS and the Social Security office that such employment exists. The benefits at stake include Social Security payments, unemployment compensation, as well as other federal/state government assistance programs.

However, as a general rule, the IRS does not attempt to match 1099 forms with tax returns.

As taxpayers are entitled to deduct up to 10 percent of their income for “business expenses,” it is possible that some recipients of recibos verdes may receive more money back than they paid in taxes — even though they do not file tax returns.

It is possible to use a recibo verde for rent if the employer assumes a full month’s rent.

Do I need to register for Recibos verdes?

If you have income from a job and do not currently receive any other form of compensation (e.g., Social Security, unemployment), it is highly recommended that you register for “Recibos verdes.”

All forms and documents required can be located on the website of your State’s Department of Labor (or its local equivalent).

If you already receive some other form of compensation besides income from a job, it may or may not be advisable to register for “Recibos verdes.”

You should consult with an accountant or tax advisor who is familiar with this situation.

How to register for Recibos Verdes

To register online, request an access code (in advance) by creating a new account in the Portal das Finanças. The code is sent to your address and takes a few business days to arrive. Once you have received the code by post you need to login and activate it. Then you can register for Recibos Verdes and issue them online.

If you enjoyed this article you might also like to read about Freelancing in Portugal

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