Your social security as a self-employed worker
Same as a regular employee whose gross salary is docked each month, as a self-employed worker/ business owner you too are under the obligation to pay social security contributions. Enrolling with the Social Insurance Fund entitles you to various forms of welfare insurance coverage as a self-employed worker.
How your social security contributions are determined
Since 1 January 2015 social security contributions are calculated on a provisional basis, setting out from your earnings as a self-employed worker over the last three years.
Various factors are involved in determining your personal social security contributions, including:
- Your capacity – people working in self-employed status as a secondary occupation pay less in social security contributions than people working in self-employed status as a primary occupation.
- Pensioners or assisting spouses.
The social security contributions you pay for yourself in a personal capacity are considered a business expense. Which means that they are 100% deductible and are calculated over your net taxable annual earnings (gross annual earnings as a self-employed worker, net of expenditures, but before taxes).
For self-employed workers who have just started trading, an adapted scheme is in place whereby statutory minimum contributions must be paid. As the Social Insurance Fund has no idea of what your net professional earnings are at this early stage, you will be required to pay provisional contributions. These provisional contributions are based on an estimated flat rate income of € 13 550,50* for the people working in self-employed status as a primary occupation and at € 1 499,14* for those working in self-employed status as a secondary occupation.
* basic income in 2018
After two years, the Tax Administration will inform the Social Insurance Fund of your professional earnings, at which point your social security contributions will be determined to final effect. As a result, you will either be required to make up the difference between the provisional and the final contributions if you underpaid or you will get a refund in case you overpaid.
This is referred to as the ‘regularisation' of your social security contributions.
If you so wish, you can also have the amount of your social security contributions adjusted. In which case they will be determined based on your expected earnings, which means there is less of a risk that you end up having to pay a hefty extra sum after 3 years in business because your earnings are higher than the flat rate amount.
When should you pay your social security contributions?
As a self-employed worker, you will be required to pay your social security contributions every quarter - not every month. Your social security contributions need to reach the Social Insurance Fund's account by the last day of the quarter at the latest.
How to enrol with the Social Insurance Fund?
Both people working in self-employed status as a primary or as a secondary occupation can enrol with a social security fund/Social Insurance Fund. All this takes is for you to complete an enrolment form before you start trading. Click here for the form.
Why pay social security contributions?
Keeping up your social security contribution payments entitles you to certain welfare benefits such as:
- Child benefits (family allowances)
- Service vouchers for maternity help
- Health and disability insurance (only as a primary occupation)
- Bankruptcy insurance (only as a primary occupation)
- Statutory retirement pension
- Maternity insurance or maternity help
To find out more about your social security contributions, click here to view our summary of contributions