Recibos Verdes vs Unipessoal Lda: The Real 2026 Crossover Math

At some point every freelancer in Portugal hears the same advice: “once you earn enough, open a company — it’s cheaper.” The advice usually comes with a magic income number attached, and the number is different every time you hear it.

So we did the arithmetic properly, with 2026 rates, for both structures side by side. The result surprised us — the famous crossover income mostly doesn’t exist. But there is one scenario where the Lda genuinely wins, and it’s probably the one your accountant has in mind.

Is it cheaper to stay on recibos verdes or incorporate an Lda in Portugal?

For a freelancer who takes all their profit as personal income, recibos verdes is cheaper at essentially every income level in 2026 — the often-quoted crossover income disappears once you apply two legal rules most comparisons miss: the Social Security contribution cap and the deduction for contributions above 10% of gross. Where an Lda genuinely wins is a different scenario: when you earn meaningfully more than you spend and can leave profit inside the company, taxed at 15–19% corporate rates instead of your personal marginal rate.

The rest of this guide shows the working, because the conclusion is only as good as the assumptions behind it — and because the assumptions are exactly where your situation might differ.

How is recibos-verdes income actually taxed?

Once — under IRS Categoria B. In the simplified regime, professional services are taxed on 75% of gross (the 0.75 coefficient in article 31 of the IRS code); the other 25% is presumed to be expenses, no receipts needed. That taxable base then goes through the normal progressive IRS brackets (12.5% to 48% in 2026), plus the 2.5% solidarity surcharge on taxable income above €80,000.

Social Security is separate: 21.4% of 70% of your gross service income — about 14.98% of every euro you invoice — declared quarterly. No accountant is legally required in the simplified regime.

Two rules soften this at higher incomes, and both are routinely left out of recibos-verdes-vs-Lda comparisons:

• The contribution base is capped at 12 × IAS per month — €6,445.56/month in 2026. Your Social Security payment maxes out at €1,379.35/month (€16,552/year) no matter how much more you invoice. The cap starts binding at roughly €9,200/month of gross income (≈€110,000/year).
• Contributions above 10% of gross are deductible. Article 31(2) of the IRS code lets you deduct the part of your mandatory Social Security contributions that exceeds 10% of gross income from your taxable base. Since contributions run at ~15% of gross, that’s a real deduction worth having every year.

How is money taxed when it comes out of a Portuguese Lda?

Twice. First the company pays IRC on its profit — in 2026 that’s 15% on the first €50,000 of taxable profit for qualifying small companies and 19% above (the general rate falls to 18% in 2027 and 17% in 2028). Then the money is taxed again when it reaches you personally, through one of two doors:

• Pro-labore (manager’s salary): taxed as normal employment income through the IRS brackets, plus 34.75% combined Social Security (23.75% company + 11% you) — the managing-partner rate, much heavier than the freelancer’s effective ~15%. Even an unpaid gerente owes contributions on a minimum base of 1 IAS (€537.13/month), unless already covered by another job at that level. Salary and its Social Security are deductible company expenses.
• Dividends: a flat 28% withholding, final, no further filing needed (19.6% in Madeira and the Azores). But dividends are paid from after-IRC profit — so every euro that leaves as a dividend was already taxed at 15–19% first.

The standard tax-minimizing structure is a minimum pro-labore plus maximum dividends — full mechanics in how to pay yourself from a Portuguese Lda. That structure is what we model below.

At what income does incorporating actually start to pay off?

Under the pure tax math, with all profit distributed to you — it doesn’t. Here is the full comparison, methodology disclosed below the table:

Gross income	Recibos verdes (IRS + SS)	Unipessoal Lda (all-in, incl. accountant)	Difference
€30,000	€8,080 (26.9%)	€12,486 (41.6%)	RV wins by €4,406
€50,000	€15,499 (31.0%)	€20,246 (40.5%)	RV wins by €4,747
€80,000	€28,525 (35.7%)	€32,451 (40.6%)	RV wins by €3,926
€100,000	€37,767 (37.8%)	€40,787 (40.8%)	RV wins by €3,020
€120,000	€46,356 (38.6%)	€49,123 (40.9%)	RV wins by €2,767
€150,000	€59,194 (39.5%)	€61,627 (41.1%)	RV wins by €2,433

The gap narrows through the €80,000–€110,000 range — recibos verdes’ marginal rate there is roughly 53% (48% IRS on 75% of gross, plus solidarity, plus ~15% Social Security), worse than the Lda’s ~42% (19% IRC, then 28% on what’s left). If those marginal rates continued, the lines would cross somewhere around €110,000–€120,000 — which is where most comparisons you’ll read place the famous crossover.

But right at that income the Social Security cap kicks in. Above roughly €110,000, the recibos-verdes marginal rate drops to ~38% — below the Lda’s — and the gap starts widening again in the freelancer’s favor. The two curves brush past each other around €110,000 without meaningfully crossing.

Our tax optimization guide has long flagged incorporating as something that only makes sense for high earners — this is the worked-out version of that advice, and it turns out to be even more conservative than we thought.

Why do accountants still say “incorporate above €5,000/month”?

Because the table above answers a question most high earners aren’t actually asking. It assumes you distribute everything — and someone invoicing €10,000/month usually doesn’t need €10,000/month to live on.

The Lda’s real advantage is retained profit. Money you leave inside the company is taxed only at IRC rates — 15% on the first €50,000 of profit, 19% above — and the 28% dividend layer applies only if and when you take it out. Worked example at €120,000 gross, needing about €40,000/year personally:

• Recibos verdes: ~€46,400 total tax — every euro is taxed as your personal income, whether you spend it or not.
• Lda (minimum pro-labore + dividends only for what you need): ~€36,800 in current-year tax — roughly €9,600 less — with about €44,000 of after-IRC profit retained in the company for reinvestment, equipment, or future distribution.

That retained profit isn’t tax-free — the 28% is deferred, not cancelled. But deferral has real value: the money compounds inside the company, and you control the timing of distributions.

A Lisbon accountant’s standard advice to new arrivals, which one of them gave us directly, matches this logic: year 1, always recibos verdes — harvest the once-per-lifetime first-year benefits, which a gerente salary doesn’t qualify for — then from year 2, open the unipessoal Lda if monthly income exceeds about €5,000. Interesting detail: €5,000/month is almost exactly where recibos verdes’ marginal rate starts to badly exceed the Lda’s, and where most people start having surplus above their lifestyle. The practitioner heuristic and the arithmetic agree — provided the “retain profit” assumption holds for you.

Two more cases that strengthen the Lda’s side:

• Real expenses above 25% of gross. The simplified regime presumes 25% expenses; the Lda deducts actual costs. Heavy spenders on subcontractors, travel, or equipment can beat the presumption.
• NHR / IFICI at 20%. If you hold IFICI status, your eligible income is taxed at a flat 20% instead of the progressive brackets — which changes both sides of this comparison enough that none of the numbers above apply as written. Model your case separately.

What does an Lda cost beyond the tax difference?

A mandatory Contabilista Certificado — commonly €100–€300+/month depending on volume — plus real double-entry bookkeeping, annual accounts, and IRC filings. A recibos-verdes freelancer in the simplified regime carries none of that: no accountant is legally required at all.

Add the Social Security floor (contributions on at least 1 IAS/month for the gerente even in a bad year, versus a freelancer whose contributions simply fall with income), incorporation costs, and a permanently higher administration load. These fixed costs are exactly why the Lda’s effective rate in the table never drops below 40% even at low incomes — at €30,000 the Lda structure costs over €4,400/year more than staying put.

Are there reasons to incorporate before the math says so?

Yes — two common ones, neither of them about tax:

• Limited liability. On recibos verdes, business debts are your personal debts. An Lda’s obligations stay with the company (with exceptions — personal guarantees, unpaid taxes and Social Security). For freelancers with real professional-liability exposure, that alone can justify the cost.
• Clients that require a company. Some corporate clients — larger agencies and platforms especially — contractually require invoicing from a registered company. If your best contract demands an Lda, the comparison table is moot.

Can I go back to recibos verdes if incorporating doesn’t work out?

You can — reopening freelance activity is a free online declaration on the Finanças portal, done in minutes. Closing the company is the hard part. Winding up an Lda (dissolução e liquidação) is a formal legal process: dissolution, liquidation of assets and accounts, commercial registry filings, and final tax and Social Security declarations. Practitioners typically quote 30–90 days and costs from around €350 in registry fees to €1,000+ all-in once accounting work and final filings are counted.

And one asymmetry to know before you leap: the first-year benefits you used on recibos verdes do not reset. The 12-month Social Security exemption is once per lifetime, and the coefficient discount needs a 5-year gap since your last activity. Closing a company and reopening activity puts you back on plain year-3 treatment — which, as the table shows, is still usually the better deal.

The practical takeaway: the decision is reversible, but with €1,000+ and a couple of months of friction in one direction and none in the other. Which is itself an argument for the accountant’s sequencing — start on recibos verdes, and incorporate only once the retained-profit case clearly applies to you.