Comparing Social Security for EU Freelancers

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1			NOTE ABOUT CORRECTIONS: Please add your suggested corrections as comments. Please leave an email address to allow for follow-up questions.	Creative Commons license: This information will be made free and publicly available for anyone to use.		http://freelancersmovement.org/fixing-social-security-freelancers/	Project coordinator: Joel Dullroy www.freelancersmovement.org joel@freelancersmovement.org	Share link:	https://docs.google.com/spreadsheets/d/1JZvaXVH9M03Tv4wlo42P9oOmoo22J7ctnPP4WG3oM68/edit#gid=0
2			Germany	United Kingdom	Italy	France	Spain	Belgium	Croatia	Greece	Netherlands	Poland	Israel	Portugal	Romania	Hungary	Denmark

3	Policy	Minimum Payments	Yes	No	No	No	Yes	Yes	No	Yes	No	Yes	No	Yes		Yes
4	Description	Fixed social contributions which freelancers must pay regardless of their income. Problem: Creates a barrier to entry, penalizes freelancers during dry spells.	200 EUR - 350 EUR a month Self-employed must pay minimums to join the health, retirement and nursing care systems (public and private). Health companies are allowed to set the minimums, based on their own estimation of average freelance earnings (currently 2073.75 a month).	No minimums for low-income earners (with small earnings exception).	In Italy Public Health care is universal and free. For pension, sickness and maternity allowance freelancers pay 27,7% of their income into the Public Social SecurityFund. Artisans and traders pay 24% of their income with a minimum yearly contribution of 3200 euros. Liberal professions (engineers, lawyers and physicians pay a minimum contribution into their professional fund.	If registered as auto-entrepreneur, contributions are charged progressively based on actual income. Same when registered as independent worker	275 EUR a month minimum regardless of income. Exceptions for new self-employed: First six months 53 EUR, scaling up to 275 EUR within 18 months.	Around 700 EUR per quarter minimum regardless of income for registered independent freelancers (around 80 EUR per quarter minimum when the freelance activity is only accessory)	There is no possibility to register as i-pro, but if registred as an artisan a minimum of 230 EUR a month is required regardless of income. Maximum yearly income in 19500 € otherwise a switch to VAT-system is required.	Starting from 240 EUR a month. Payed bi-monthly. The amount increases every three years and can go up to more than 500eur per month. A law was passed recenty (valid until 2016) that you can pay two levels lower if you don't owe any payments. - law about to be passed that can allow you to pay three levels lower Failure to pay is a criminal offence. - law about to be passed that cancels prison terms for those that owe money Registration is obligatory - you can get private insurance as extra		275 EUR a month (1100 PLN) minimum regardless of income. Exceptions for new self-employed: First 2 years 50% of the above amount But you can be a freelancer without own business (on civil law contract). In such a case you are not insured (no rights to public health care system or retirement allowance)		Freelancers are expected to pay 29,6% of their income		A simplified tax for "individual entrepreneurs" (aka freelancers) 163EUR/month covers all various necessary taxes and fees towards the state entirely, including health and social security. This thing is called KATA, abbreviation for something like Small Tax Payers Tax), and anyone can use it up to 1630 EUR / month.
5	Policy	Assumed Income	No	No	Yes	Yes	Yes	No		No			Yes
6	Description	Income is estimated forward or aggregated backwards to determine future social security contributions. Problem: Contributions cannot fluctuate with income.			The largest part of income-based social contributions for current year are paid in summer and december, and estimated on the basis of previous year income. The balance is paid with the tax return submitted the following summer. Problem: invoice are paid with great delay and often freelancers must advance the money. For freelancers and all self-employed workers the Inland Revenue makes an estimate of the average income such a worker should earn. Declaring a lower income implies the risk of an inspection and generally heavy sanctions.	In France you pay social contributions based on your income from 2 years ago. So it has this side effect of never been in sync with your real income. Hence they need to forecast your social contributions at some point and give you back some sometimes, or ask for more...	Revenues are not decisive in the share of social security to pay. You choose to share between a maximum and a minimum, whatever your income. Right now we are working to achieve social security contributions based on actual income of each self, benefiting those who earn the least.	From 1/1/2015 it is possible to make a contribution on the estimate income of the present year. The old system of backwards estimate is still possible as well.		The payments are "fixed" anyway		The obligatory payments are fixed. Freelancer can report the higher income, but it is voluntary. This part of income-based social contribution based on declaration, not on real income.	Freelancers pay 16.2% of their income, monthly, but the calculation is per year. So at the beginning of the year you get from social security a sum that you must pay every month according to your last year income, and it doesn't matter if you didn't have any income or a lower income in one or more months of the current year. You can change your assumed income in the middle of the year if needed. At the end of the year they calculate it again and demanding or giving you back the difference.
7	Policy	Upfront Payments	Yes	No	Yes	Yes	Yes	Yes	Yes	Yes		Yes	No
8	Description	Taxes (inc. VAT) and social security contributions must be paid in advance, rather than upon receipt of actual income. Problem: Burden on cashflow, problem when creditors pay late or not at all.	Health insurance (compulsory) and pension contributions (optional) must be paid each month in advance. VAT must be paid in the month the payment is received.	Tax and social security assessed and paid at end of financial year.	VAT must be paid in advance of receiving payment.	Not for taxes, but for social contributions, see my comment above	VAT is currently paid every 3 months regardless if you have actually received payment for invoice by then. There is a chance to split payment.	VAT must be paid at least quarterly, even when the invoice has not been paid by the client.		VAT is currently paid every 3 months (doesn't matter if you have actually received payment for invoice by then). Has to pay tax in advance up to 55% of last years income		PIT and VAT must be paid in advance of issued invoice. (Even if the real payment wasn't made)	Taxes - only after the freelancer practicly recives the payment for his work (Changed a year ago by law, Thank God!); Social Security - Assumed incone, so it doesn't matter.
9	Policy	Inequitable Costs	Yes	No	No	Not sure	No	No		Yes		Yes	No
10	Description	Differentiated charges for freelancers to access to the same social security services. Problem: Freelancer earning the same gross amount as regular worker pays a higher rate. Discrimination on basis of employment status.	Health care: Both self-employed and freelancers pay 15.5% of income, but the self-employed must pay a minimum entry price, based on an assumed average monthly earnings of €2073.75 (this amount is set by the health insurance companies and is not subject to negotiation). Retirement (voluntary): 18.5% of income, with minimum monthly payments of EUR 84-130.	Self-employed pay a lower rate for National Insurance than employed.	Social security services are not the same for freelancers and employed workers, and the same goes for SS contributions. And of course freealncers bear the full cost of their contributions, unlike employees, whose contributions are prevaingly paid by the employer.The main discrepancy, however is between the less favourable contribution-based pension system and the old salary-based pension system, still applicable to many regular workers.For freelancers another severe problem is the rules governing eligibility for sickness and maternity benefits (maximum 61 days of sickness allowance even for severe diseases like cancer, compulsory abstention from work for 5 month for maternity allowance, etc)	By and large independent workers (aka freelancers) are paying more social contributions than other workers. Roughly social contributions (including retirement) are about 35% of income. When for other workers it's between 25 to 30%		There are special programs for starters.		Employees with income up to 8.000euro (announced to increase to 12.000) are exempt from tax due to low income. Freelancers and self employed are not included.		Every year the government states the amount of social security tax base - (i.e. 60% of predicted average monthly salary. The point is, that this forcast based on statictical data colected from medium and large companies only. The secound inequitable cost is obligatory doubled of the cost for Health care system for freelacers worked in different places.	Freelancers pay for themselves both the employee and employer duty, so it comes out double than a regular worker (that the employer pays a half of his social security payments). So the burden is double, but the final sum that goes to social security is the same.
11	General Information	Social security charges:	Health care: 15.5% of income, with monthly minimum payments of between Retirement (voluntary): 18.5% of income, with minimum monthly payments of EUR 84-130. Retirement (compulsory for some liberal professions):	No National Insurace for incomes under 5885 GBP (with small earnings exception) Above 5885 GBP: National Insurance class 2: 2.75 GBP per week National Insurance class 4: 9% of income (reduced to 2% for income above 41865 GBP)	Public retirement, maternity and sickness: 27,7% of income	If registered as auto-entrepreneur (income up to 32,900 for liberal professions & artisans, 82,299 for commercial businesses): Liberal professions: 23.3% Artisans: 24.6% Commercial business: 14.1% For independent workers: around 35%	On the basis of contributions, 30% of office as social security payment applies. This payment includes the same protection as employed persons except training, wage guarantee fund and unemployment benefits. Therefore, the payout percentage of self-employed is between 5% and 9% lower.					19,52% of base amount on reetirement, 8,00% of base on annuity, from od 0,40% to 3,60% on accident allowance, 2,45% on a Labour Fund, 9,00% of base on Health care system	income less than 5,500 NIS - 9.8%; more than that - 16.2%.
12		Universal social security provided: (to all citizens, regardless of payments)	Unemployment class II (Hartz IV or ALG II)	Health care (GP, hospital) Retirement pension	Health care.Disability pension. Poverty pension (social pension)	Health care Retirement pension Other possible familial benefits (but needs low income)	Yes	Basic health care, pension, family benefits, income guarantee in case of incapacity to work, income guarantee during a period of twelve months in case of bankruptcy	Everyone has access to "basic" public healthcare. "Basic" = you pay a subvented "participation fee" for health services, when using them. But if you register to pay for your own pension insurance, you must also pay for your own health insurance.	people that fill certain criteria and are not insured, have free healthcare		No. Only if your life is in danger, the public hospital is obligate to rescue the life … but not treated. Healfe care system regardless the payment is open for children and pregnant woman.	All citizens must pay (hence deserve) for all services: health care, public retirement, nursing, maternity benefit, pay per kid, industrial accident, disability, terror, compensation for army service and more.
13		Optional social security provided (upon pay-in):	Health care (GP, hospital) Nursing care Retirement pension Unemployment class I (ALG I)	Private health care	none	Private heath care and retirement pension (pivately done, with help from state)		Additional contributions and/or insurance for extra medical care or in case of loss of income	There is optional "additional" insurance, which costs cca 9 EUR / month (70kn). If you have this, you're free from paying on-the-spot healthcare charges.
14		Income tax brackets:	- Umsatzsteuer (value added tax, mostly 19%, in some cases reduced to 7% or to 0%) - Einkommensteuer (14% up to 45% depending, increasing progressive with income) - Gewerbesteuer (only for traders, set by the local community, depending on legal form of company) - Körperschaftsteuer (for companies registered in the trade register) - Kirchensteuer (8% or 9% surcharge on income and other taxes, only if you are church member) - Solidaritätszuschlag (solidarity surcharge: 5,5% on income and other taxes)		different possibilities exist: 1) for young and low income earners (so long as they only do businesss with italians (!), who are under 35, have been freelancing for 5 years or less ,income below 30.000 Euros) 5% flat rate 2) for low income earners (no age restriction , so long as they only do business with italians, max 15.000 Euro brutto ) 15% flat rate and the total taxable income is reduced by 22% 3) for all others 0-15k Euro 23% (+circa 1- 2% regional+local depending on where you do business), 15k-28k 28% (+1-2% for regional/local), 28k-55k 38% (+1-2% for regional local), 55k-75k 41% (+1-2% fore regional/local), above 75k 43% (+1-2% regional local). Depending on income, a tax rebate is applied , so the effective income tax is shown in the graph below (red for freelancers- blue for employee)	- Until 9690: 0% - from 9691 to 26764 14.00% - from 26765 to 71754 30.00% - from 71755 to 151956 41,00% - beyond 151956 45%	Five sections of income is established: 0 euros to12.450 euros a tax of 20% 12.450 euros to 20.200 euros 25% 20.200 euros to 35.200 euros of 31%; 35.200 euros to 60.000 euros 39%; above 60,000 euros taxed at a rate of 47% by 2015. In 2016 back down all tranches: 19%, 24%, 30%, 37% and 45% over the amounts discussed above.	< 8.710 EUR: 25% 8.710 - 12.400 EUR: 30% 12.400 - 20.660 EUR: 40% 20.660 - 37.870 EUR: 45% > 37.870 EUR: 50%	< 26,400 kn (cca 3500 eur) / year = 12% 26,400 kn - 132,000 kn (cca 17,368 eur) / year = 25% >158,400 kn (20,842 eur) / year= 40%			2 possibilities:PIT - 19% of income (flat tax) or PIT - 18% to 85500 PLN (21500 Euro) and 32% above this amount (progressive rate). Tax-free allowance - 750 EURO (only in progressive rate not in flat rate) VAT - 23% for the most goods and services; possible exception from VAT (by revenue lower than 150.000 PLN - 37.500 EUR a year)
15		A freelancer earning €1000 brutto earns after tax & social security:			It dependes on the specific tax bracket: the average income of a freelancer is around 15.000 euros per year. Taxes (local and national) account for about 25% (some rebates for children or dependants) social security contributions 27,7% flat. Special provisions (see above, to be cancelled or heavily modificied end of this year) for young freelancers earning less than 30.000 euros							It depends With VAT or without? BRUTTO with VAT - VAT - 187 Euro, Social Security - 275 Euro. PIT - 102 Euro - Earnings netto - 436 Euro.See that the average monthly salary in Poland is 2800 PLN (app. 700 Euro)
16		A freelancer earning €2500 brutto earns after tax & social security:			In practice, however, no taxes are paid from 0 to 5000 euros per year.
17		A freelancer earning €5000 brutto earns after tax & social security:			See above
18		A freelancer earning €7500 brutto earns after tax & social security:
19		A freelancer earning €10000 brutto earns after tax & social security:
20	Contributors	Want to be named as a contributor? Enter your name and/or organization here:			ACTA		UPTA.	Fedipro	Croatian Independent Professionals Association (www.hdnp.hr)				Kinneret Yifrach			Dan Sallai
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