Tax for self-employed – 5 categories

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The latest version of the bill proposes a 5-tier tax system for 730,000 freelancers, self-employed and individual entrepreneurs.

Under the new system, which applies to 2023 income that will be taxed in 2024, professionals are divided into five categories:

1st category. Professionals exempt from imputed income. This category includes:

1. New specialists during the first 3 years of their activity.
2. Farmers.
3. Those who receive a salary under a block contract and have up to 3 employers.
4. Professionals with a disability equal to or greater than 80%.

2nd category. Professionals for whom the level of sane income is reduced by 50%. This category includes:

• having disabilities from 67% to 79%.
• operating and having their main place of residence in settlements with a population of up to 500 people and on islands with a population of less than 3,100 people
• who are parents of a single-parent family with minor children
• are parents with dependent children with mental or physical retardation of at least 67%
• who are parents of large families.

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3rd category. Professionals with seasonal activities.

For types of business activities for which the law establishes temporary restrictions on work during the tax year, imputed income will be calculated based on the months the business operates, that is, in proportion to the number of working months. For example, if a business operates 6 months a year, then the minimum income will be halved.

4th category. Professionals for whom imputed income applies without abbreviations or exceptions.

The provisions of the bill establish the level of imputed income from conducting individual entrepreneurial activities. In addition, business tax is initially reduced by 50% for all self-employed persons from 2024 and abolished within two years.

At the same time, for each branch of individuals, the business tax is reduced to 300 euros from 600 euros currently in force. The minimum contribution increases depending on the length of professional activity, the total wage fund and the amount of the company’s turnover.

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When calculating tax, the following indicators are taken into account:

1. The applicable minimum wage plus 10% for every 3 years of professional activity after the first 6 years or the maximum annual wage paid by a freelancer to his employee. The larger of the two amounts is taken into account, but in any case not more than 30,000 euros.
2. the amount of business turnover. In particular, the increase is 5% of the amount by which the turnover of the person liable exceeds the average annual turnover of C.AD
3. 10% of staff costs up to a maximum of 15,000 euros.

The minimum net income is set at a maximum of 50,000 euros and is the sum of the three rates above.

5th category. Professionals who can challenge the level of sane income. Taxpayers may do this in the following cases:

1. military service,
2. imprisonment,
3. hospitalization in a hospital or clinic,
4. incapacity for work due to pregnancy or maternity in accordance with labor legislation,
5. large-scale natural disasters that completely or partially made it impossible to conduct professional or business activities,
6. revocation of permission to run your own business or carry out professional activities,
7. a ban on the activities of their establishment or other place of business or professional activity by decision of a government agency for reasons of protecting public health, or for other reasons in the public interest,
8. other force majeure circumstances preventing the implementation of business activities for a certain period.

To apply the above provisions, the taxpayer must submit to the tax administration the necessary documents confirming his requirements.

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Control

In addition to the above, the freelancer has the additional opportunity to challenge the amount resulting from the minimum remuneration amount. The prerequisite for this is to request an audit by the tax authorities to prove the accuracy of your income declaration below the estimated income.

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