Santa traditionally arrives in Greece on New Year’s Eve and brings joy to kids and adults alike. This year, Santa is mean and grim and arrived earlier than expected in form of the Greek finance minister. A circular outlining the new social security contributions for self-employed and freelancers was issued late on Thursday, just three days before it goes into effect.
And shocks!
Social security contributions will be calculated according to earnings of previous years – irrespectively of whether the earning remain the same or not.
The basis for the social contributions calculation is a bit deliberate with the monthly minimum contribution to be determined as €158 and the maximum as €1,580!
The general calculation formula is 20% of net earnings for main pension and 6.95% for medical care.
If one adds the 26% taxes from the first euro, no tax breaks and additional trade fees… one should think twice to continue running a business in Greece.
Contributions will have to be paid even if there is zero income or deficits.
The new system will go into effect as of 1.1.2017, basis for the calculation of social contributions for the first months of the new year will be the tax declaration of 2015. By spring or summer time, the contributions will change as the tax declarations for 2016 will be taken into account.
As the calculation is based on the net earning for the previous year, if at the end of the running year there is a difference in addition to more taxes also more social contributions will have to be paid.
Example:
A self-employed who declared 30,000 euros net income in 2015 will have to pay 500 euros per month.
Freelances with parallel job as employee will have to pay double social contributions: The legal 16.5% from the monthly salary plus a 20% of the earnings as freelancer. A total 36.5% in social contributions alone.
Example
Social contribution of €128 for monthly salary €800 gross plus 20% for 200 euro earnings as freelancer. Given the fact that taxes for this combined professional activity are 29%, paying the state will swallow the bag and leave the professional one or two peanuts.
Winners of the new system are sole self-employed or freelancers with annual net earnings below 12,000 euros. with the new system they will pay €3,234 per year or 270 per month and not €4,024/335 per month as with the old system.
The highest cap of net earnings will be 70,000 euro per year.
However, the calculation for the social contributions is based also in other criteria like the years of activity.
To make the long story short: it is another complicated and very bureaucratic system that will make the life of self-employed and freelancers more confusing and without perspective of planning in advance. it is another blow to small and medium business in Greece.
Ahead of the new system, tens of thousands of freelancers rushed to tax officers and ended their business activities during the last months of 2016.
So far, I did not read any provision about the social contributions to be paid by self-employed and freelancers who will start their business activity in 2017.
As jobs remain rare and if they exist it is mostly part-time contracts on the basis of minimum wage of €586 gross, no wonder the brain drain will continue also next year.
PS at the end of 2016, I came to realize that both the German Finance Minister and the Greek Prime Minister have a common goal. Wolfgang Schaeuble wants to impoverish Greeks, Alexis Tsipras wants to implement the entrepreneurship model of good old socialism, the model of cooperatives where all participants earn a modest wage.
The difference between the socialism models and the neo-liberal practices is that in socialism there was a welfare state and all people were happily poor and equal (:P)
This is yet another catastrophe for the Greek economy and Greek people. Tsipras should bow his head in shame.
He has no shame left dear Guest. The deal with the 4th Reich demanded him and his buddies to surrender their shame in exchange for a fistful of dollars somewhere in the offshore lands.
Not to mention the minimum, almost completely untaxed 8k per month for ordinary MPs and triple that for PM, for Cabinet members and for their technocrat appointees aka their friends & families.
Yeah, we pay for them. This is before their offshore sweetheart accounts.
The plan has two arms.
1.to impoverish the Greek thus creating an army of low wage/underpaid workers
2. In the process achieve an uncostly transfer of real estate,both government or privately owned, to the few and powerful in Greece, but more so abroad.
The target of the Alex-Wolfie strategy is the same: destroy, loot and rob social groups one at a time, using non income-based methods.
They started with property owners and the famous tax (nothing to do with real earnings); they continued with certain cars (irrespective of earnings again), also forcing owners to sell cheaply and buy new ones, i.e. paying the 4th Reich factories again; they continue now by eliminating freelancers and the self-employed, again based on non-current earnings. If this is not deliberate destruction of the fabric and morale of a society, then what is it?
And what role do those who so happily vote for and enforce these Nazi-inspired directives play? Maybe they are on somebody’s payroll?
What idiot dreams these things up ? Are they completely mad ?????
I suppose they must be.
They are not mad Andy. They just serve their German masters (for a price) and implement the demolition plan.
harsh! here in the US the self-employed pay 33% of the previous year’s income four times per year. and if you don’t pay taxes, you eventually lose everything and go to jail…it is harsh most EVERYWHERE in the world.
greece was a magical place for many years where few taxes were ever paid, and life still seemed to go on normally…
the problem in greece is that citizens will see no benefit from the monies payed in taxes as the money will either go to the banks or politicians’ pockets…
This post is nonsense. The US tax system — like all developed countries — allows for the self-employed a complete tax write-off for acceptable expenses, and the provisional tax paid is calculated on past earning and adjusted when the actual profits are officially calculated. This is not the case in Greece: there are no allowances for expenses, there are no arrangements for adjustments according to actual income, and there is no exemption from VAT for small businesses that want to opt out. Essentially, the Greek taxes now are worse than in Scandinavian countries without any of the benefits of those countries. There is no comparison at all with the USA — complete garbage.
you are correct about the write-off, but if you think most peoples’ write offs make a substantial difference, then you are dreaming…
i have always advocated greece leaving the monitary union – but the great majority of people willingly continue to delude themselves that ‘staying the course’ is the only hope.
on a personal note – you would go a lot farther in your arguments without words like ‘nonsense’, or ‘complete garbage’…you sound like a real piece of work!
do you believe the Greek debt will be written off once GR exists the eurozone?
initially, of course the debt will not be forgiven…
with a new currency, new, innovative thoughtful light industries and agricultural production – greece will write its own future instead of living under diktat.
i have many relatives and friends who are ready, but the majority of people are fearful and remain sheeple…
add: new currency devaluation 40-50% and plan is perfect
Indeed. We could anticipate a large increase in unemployment, collapsed living standards to about 60% of where they are now, further deterioration of all public services (hospitals, schools, fire service, rubbish collection, etc) and an inability of the state to pay pensions and wages. Greece would collapse to Third World standards, and there would be mass emigration for survival.
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Wonderful plan.
For a short time, I was self employed in the UK. I prepared my own accounts and offset my tax liabilities with legitimate expenses. I paid very little in taxes for several years, and was also granted a low rate of national insurance costs, and of course did not pay VAT. The difference with Greece is like the difference between night and day.
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Sorry that I was so rude about your post, but I call things as I see them.
You miss the point that this is only ONE of the taxes. Add to that the salaries are super-low and not comparable to northern Europe. While cost of living is the same.
What you say has little to do with what happens here. For freelancers we are talking about 26.5% of everything for social insurance only and on top of this a minimum 33% of what is left. Plus added payment of 100% of the resulting tax, as a prepayment of the …next year’s tax. The 33% you mention looks like a paradise compared to this looting.
As I have said before, they are not interested in revenue for the state but in stealing citizens’ property and in destroying the country and its people.