A generalized disruption puts the market into application of the measure to increase the minimum wage, as on the one hand there are expected to be preventive redundancies and on the other to increase the insurance contributions as well as the taxes due to a reduced tax-free limit.
Cutting the tax-free rate to € 5,685 from 2020 will lead to … annihilation of the benefit of raising the minimum wage, while thousands of self-employed and self-employed will be called upon to pay new burdens by adjusting their insurance contributions in the case of self-insurance. So thousands of professionals who are already employing employees will pay increased wages and contributions for them and for themselves!
This year, freelancers will pay increased contributions by 11%, which is also true for those who issue service receipts (“blocks”). It is noted that according to Katrugala law, the minimum contributions of professionals are calculated as a percentage of the gross salary of the unmarried unskilled laborer. For example, raising the minimum wage by 11% leads to an increase in contributions at the same rate. Thus, there will be a higher burden, and by 2020, with the reduction of the tax-free limit, all the benefits of raising the minimum wage will be lost. In fact, thousands of freelancers who currently pay contributions at the minimum wage will be burdened with the extra cost of the levy, while lowering the tax-free limit will result in a higher tax burden.
In addition, new “bite” alerts are expected in March to engineers, doctors, motorists and owners of commercial and craft businesses. That is, painful surprises are being prepared for thousands of self-employed in the private sector, and the same will be felt by employees because of a reduced tax-free limit and hence increased withholding tax.
There are Big Reversals
Several thousands of businesses will be struggling ahead, employing workers on the basis of the minimum and sub-minimum wage, and are now obliged to change … to sail so as not to jeopardize their viability.
As “P” wrote in the January 26 issue, raising wage costs would force many businesses to take preventive redundancies at the end of February and March. Following the latest developments, wage and insurance costs will be projected at € 2,000 a year per employee, resulting in a fatal change in plans by thousands of companies.
Those who are … lucky and see higher wages, then they have to wait for … the disappearance of all benefits next year due to a reduction in the tax-free limit. The implementation of this measure, linked to the achievement of the primary surplus targets, will lead to an increase in the withholding tax. Apart from the above, changes in the minimum wage and the abolition of the subchapter will lead to the strengthening of flexible forms of employment and will fuel tax evasion mainly for the self-employed.
Especially for the self-employed, there are expected to be intense … emotions, as engineers and lawyers will be subject to deductions corresponding to 38% of the income. In such a case, several thousands of self-employed people will have to pay increased amounts, even with a two-digit rate. Young professionals who pay contributions based on 70% of the new minimum wage are required from 1 February to pay in turn increased contributions. The surety is that the vast majority of the former OAEE insured will pay increased contributions, which will bring many deadlocked, and it is therefore expected that the debtors to the insurance funds and the tax office will increase, with what this implies .