Green receipts: Find out if you can be exempt from withholding tax
If you are a self-employed worker, you may be exempt from withholding tax. But in which situations does this exemption apply?
In which situations does the withholding tax exemption on green receipts apply?
Withholding tax is subject to the annual turnover volume. Therefore, a worker under the simplified regime who does not have category B income exceeding 14,500 euros a year is exempt from withholding tax. However, this limit should increase to 15,000 euros annually, according to the publication of the State Budget for 2025.
"Throughout the year, the Tax Authority (AT) applies a rate, called withholding tax, on the income of non-exempt citizens, whether they are employees, self-employed workers, or pensioners. This rate functions as an advance payment that taxpayers make to the State on account of the IRS to be paid. When they submit the annual IRS declaration, the AT makes an adjustment," explains DECO PROteste, cited by Notícias ao Minuto.
In addition, workers in sectors such as hospitality, travel agencies, and catering are also covered by the exemption from withholding tax.
This means that if you are exempt, you will not have a part of your income deducted whenever you issue an invoice. However, when submitting the annual IRS declaration, you may not be entitled to a refund and, depending on the AT calculations, you may even need to pay an additional amount.
It is important to note that if you exceed the annual income limit, you will be required to withhold tax at source on the invoice issued immediately after that time.
Follow Poupança no Minuto on social media and subscribe to the weekly newsletter to stay informed about everything you need to know about your income.