Monday , May 17 2021

New reduced contributions for experts – examples



Reduced contributions to about 250,000 self-employed workers are foreseen by a government bill, which is expected to be submitted to Parliament within a week.

This is one of the obligations of Alexis Tsipras for TIF. It will be submitted in Parliament within one week, and the reduction of contributions will come into effect on 1 January 2015.

It is estimated that the profits for the experts concerned by this account range between EUR 200-490 per year.

The basic provision on social security contributions for self-employed persons will ensure that the primary insurance premium will fall from 20% to 13,33%, with the current minimum contribution of € 117.2 per month (20% of the minimum wage).

A contribution of 13.3% is for young scientists with activity up to 5 years, while farmers will pay contributions in 2019 at 12%, in 2020 to 12.66%, in 2021 at 13% and in 2022 at 13% 3 %.

It should be noted that from 1 January 2019, the change in the basis for the calculation of social security contributions plus gross income – without deduction of contributions already paid for net taxable income – is up to 100% of the amount and this year it is not 85%.

Examples

As the ESEE points out in accordance with the current regime from 1 January 2019 to annual income (net wages + insurance contributions) of EUR 7,032, the person liable would pay the lowest annual contribution, i.e. EUR 1,895.4 (monthly minimum contribution 157, 9 euros * 12). From this amount and up to EUR 70,330, the benefit would be calculated proportionally (net salary + insurance contributions) * 26,95%, and the highest annual contribution of EUR 18,953.9 would be introduced from EUR 70,331.

With the established provision from 1 January 2015 up to the inclusion of annual income (net profit + insurance contributions) in the amount of EUR 9,346, the debtor will pay the minimum annual contribution, i.e. 1,895.4 euros (monthly minimum contribution 157.9 euros). From this amount up to € 93,462, the contribution is calculated pro rata (net salary + insurance contributions) of 20,28% (13,33% in favor of a pension + 6,95% in favor of health), while 93,463 is above the highest annual contribution in EUR 18,953.9.

From the above comparison, according to the ESEE, from the new provision, self-employed / self-employed with annual gross income (net salary + contributions) between 7,033 – 9,346 euros, whereas, according to the scheme in force in 2019, a proportional rate of 26.95% would be charged to this level of income, while the new scheme of 1/1/2019 would pay the minimum annual contribution of EUR 1,895.4 (or monthly 157.9 euros) and not a new total rate of 20.28 percent.

With the new mixed income system (net salary + contributions) of more than EUR 9346 and up to EUR 71,000, the real average contribution of medium and higher income contributions is between 22% and 24.3%.

Also, on the basis of upgraded changes for gross profit between 70,331 and 93,462 euros, proportional coefficient (20.28%), and the largest annual contribution of EUR 18,953.4 would be introduced. For the scale of this scale (€ 23,131), more will be paid for those who win more.

Please note that the expected increase in the current minimum wage (EUR 586.08 gross) from 1/1/2019 will adjust upwards the minimum monthly contribution of insurance companies for self-employed or self-employed workers. This development, depending on the course of the final rate of increase, will lead to an increase in contributions for the vast majority of self-employed persons who are currently paying the lowest contribution.

Lawyers and engineers

Lawyers and engineers are expected to benefit three times from reducing basic, complementary and flat-rate contributions. This is because the primary pension premium is reduced to 13.3% from 20%, while the ancillary and flat-rate premiums are fixed at a fixed amount calculated at 7% and 4% on the minimum wage, irrespective of income, i.e. 41 EUR for auxiliary and 23.44 for one-time.

For example, an engineer or lawyer with 20,032 euros of primary insurance earnings would have to pay 230 euros a month from the beginning of 2019. Now, with the new system, he will pay 173 euros. For a one-time payment of EUR 124 per month, you will have to pay EUR 64.5. The annual benefit of all savings is € 1,0101 (-32.96%). The health benefit remains stable at 6.95%. For annual income of € 40,000, the annual compensation is € 3,775, while for the income of € 60,000 reaches € 10,734.


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