Freelancers: Benefits ‘cut’ by new tax bill

“Brake” is put on the social benefits collected by many freelancers with the new tax system that will be implemented from 2024 and will concern incomes earned this year.

According to estimates of the Ministry of National Economy and Finance, with the implementation of the new taxation system, a reduction of self-employed allowances by 100 million euros is expected.

What freelancers lose

According to the recent data presented by the financial staff, 7 out of 10 declare incomes below 10,000 euros. The low declared income led to granting benefits to 70% of professionals.

So self-employed people seem to lose the 50% reduced ENFIA as well as housing and child benefits.

And this will happen as the minimum presumptive income set by the new law amounts to 10,920 euros, an amount which is increased accordingly:

  • with the three years
  • whether they employ workers and
  • their turnover

In practice this means that many of the current beneficiaries will either have a cut or the amount of benefit they will receive will be lower.

In particular:

  • ENFIA: Today ENFIA is halved if the total taxable family income of the last tax year does not exceed 9,000 euros, increased by 1,000 euros for the spouse and each dependent member. The total area of ​​the buildings in which the person subject to income tax declaration, his or her spouse or common-law partner and the dependent children of his family have rights, taking into account the percentage of co-ownership and the type of right, does not exceed 150 sq.m. and the total value of the immovable property does not exceed the amount of 85,000 euros for a single person, 150,000 euros for a married person and his or her spouse or partner or a single-parent family with one dependent child and 200,000 euros for a married person, his or her spouse or partner and their dependent children or a single-parent family with two dependents children. This means that most professionals who were enjoying this reduction will lose it. For example, today a professional with six years of operation, declares 5,000 euros, has a reduced ENFIA by 50%. With the new system, the declared income will be at least 10,920 euros (presumed). Due to the increase in income he will lose the deduction.
  • Housing allowance: Total income cannot exceed 7,000 euros for a one-person household, increased by 3,500 euros for each additional member of the household. In the single-parent family, a surcharge of 7,000 euros is set for the first minor member of the household. In households with unprotected children, an additional 7,000 euros is set for each unprotected child. The total income cannot exceed 21,000 euros per year, regardless of the composition of the household. The amount of the housing allowance is set for the beneficiary at 70 euros per month and for each additional member of the household an additional 35 euros per month.
  • Child benefit: Child benefit is paid based on the number of dependent children, the equivalent family income and the category of the equivalent family income. The law provides for three categories of family income, namely a) the first category: up to 6,000 euros, b) the second: from 6,001 euros to 10,000 euros and c) the third: from 10,001 euros to 15,000 euros. To determine the family income category, the income reported in the statement of the current financial year is taken into account. the amount of the child allowance is monthly: a) for the first category of family income to 70 euros for the first dependent child, 70 euros for the second and 140 euros for the third and each child beyond the third, b) for the second category to 42 euros for the first dependent child, 42 euros for the second and 84 euros for the third and each child beyond the third and c) for the third category to 28 euros for the first dependent child, 28 euros for the second and 56 euros for the third and each child beyond the third.