You landed a big project — and can’t do everything yourself. Can you hire another freelancer to help?
Yes. And it works simply.
How it works in practice
The freelancer you hire issues a recibo verde (green receipt) in your name. You pay them the agreed amount. That receipt becomes your professional expense — just like any other invoice.
At year-end, that expense goes into the expense field of your Annex B income tax return, reducing your taxable income.
Example:
- You received €5,000 from a client for a project
- You subcontracted a colleague for €1,500 (they issue a recibo verde of €1,500 in your name)
- Your deductible expense: €1,500
- Net income for IRS purposes: €5,000 - €1,500 = €3,500
What the subcontractor needs to have
For the expense to be deductible, the freelancer you hire must:
- Have an active atividade on Portal das Finanças — you can’t pay a private individual without a receipt
- Issue a recibo verde (or invoice) in your name, with your NIF
- Have their own NIF active as an independent worker
If you pay someone without a recibo verde — the expense isn’t deductible and you may face issues with the tax authority.
Withholding tax: pay attention
If the subcontractor’s activity is subject to retention at source, you must apply the applicable rate (23% for Art. 151 activities) to the amount paid.
Example: You pay your colleague €1,500:
- Retention at source: €1,500 × 23% = €345
- Amount you transfer to colleague: €1,155
- The €345 goes to the tax authority on their behalf
Always check whether the subcontractor’s recibo verde states the applicable withholding rate. If it does — you must apply it and remit it to the tax authority.
The red line: false independence
The tax authority watches closely for the difference between legitimate subcontracting and disguised employment.
You may have problems if your subcontractor:
- Works exclusively for you over extended periods
- Follows a fixed schedule that you set
- Uses your tools and workspace
- Has no other clients
If the tax authority decides the relationship resembles an employment contract, it can reclassify it — with tax consequences for both parties.
Subcontracting is legitimate when it’s occasional, project-based, or when the subcontractor has real autonomy and other clients.
What to keep
For each subcontracting arrangement:
- Recibo verde or invoice issued in your name with your NIF
- Proof of payment (bank transfer)
- If applicable: proof of withholding tax remittance to the tax authority
Keep these for at least 4 years.
✅ In summary
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Hiring a freelancer is legal and the expense is deductible — provided they issue a recibo verde in your name. That amount reduces your taxable income in the IRS return.
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Always check withholding tax: if the receipt states it’s subject to a withholding rate, you must withhold that amount and remit it to the tax authority.
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With FIZ you log the subcontracting as an expense in the right category and the amount flows automatically into your Annex B — no manual calculations.
