15% (and 7%) Withholding Tax on Professional Invoices: A Practical Guide to Form 111

When a self-employed professional or a company provides professional services to another business or freelancer, the invoice isn’t paid in full: part of it is “withheld” and the payer sends that amount directly to the tax office on account of the invoice issuer’s income tax. It’s one of the areas that raises the most questions, because the percentage changes depending on who issues the invoice and how long they’ve been registered as active, and because the obligations differ for the party who gets paid and the party who pays. This guide walks through the applicable rates, how to declare them, and what happens if the withholding never reaches the tax office.

Withholding tax on professional activities applies when the recipient of an invoice from a freelancer or professional (lawyer, consultant, architect, trainer, sales agent, etc.) is itself a business, professional, or company required to withhold. Between private individuals, for instance, no such obligation exists. The general rate in 2026 remains 15% of the invoice base (excluding VAT), calculated on gross income and deducted by the payer before transferring the amount.

When does the 7% rate apply instead of 15%?

A reduced 7% rate exists for those just starting out: it applies in the year the professional registers on the census of economic activities and for the following two years, provided they hadn’t carried out any professional activity in the year before starting. In other words, it’s not enough to be “new to invoicing this particular client” — what counts is the actual registration date with the tax authorities, not seniority as an employee or how long you’ve worked with a given client.

Applying the 7% rate doesn’t require any request to the tax agency: it’s up to the professional to notify their client in writing (usually on the invoice itself or through a prior notice) stating that they meet the requirements. If no notice is given, the client will apply the default 15%, which isn’t a serious error — the excess can still be recovered in the annual income tax return — but it does mean less cash flow during those early years. Once that grace period ends (registration plus the following two years), the rate automatically reverts to 15%, with no further notice needed.

What if the client doesn’t pay the withholding to the tax office?

This is where the most common question comes up — and also the most reassuring answer. If the client withheld the amount on the invoice (meaning they paid less because the document reflected it that way) but never paid it to the tax office, the professional who issued the invoice doesn’t lose that right. They can still deduct that withholding on their income tax return, because what matters is that the amount was withheld, not that the payer later fulfilled their obligation to remit it. Responsibility for paying the withheld amount lies solely with the payer, and it’s the payer the tax office will pursue, with surcharges and interest if applicable.

It’s a different story if the client simply didn’t apply any withholding on the invoice or deduct it from the payment: in that case, there’s nothing to deduct, because nothing was withheld. That’s why it’s always worth checking that the invoice received (or issued) clearly shows the base, the rate applied, and the amount withheld, and keeping that documentation on file in case the tax office later requests proof for the deduction.

At Zythos Business, we work with freelancers and small businesses every quarter so these details — correct rates, Form 111 and Form 190 deadlines, matching withholdings against what’s actually been collected — never turn into surprises or money lost along the way. We review invoicing before filing, flag when the 7% start-up rate applies, and make sure what’s withheld and what’s declared always match, so the tax side stops being one more thing to worry about in the day-to-day of running a business.