how do I calculate my take home on contract base jobs

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sam_001
Posts: 48
Joined: Thu Feb 11, 2016 11:47 am

how do I calculate my take home on contract base jobs

Post by sam_001 » Thu Dec 22, 2016 12:37 pm

Suppose I am offered a 400 euro a day job and I work for 22 days a month, what will be my take home

If I was on permanant job, I could easily calculate using the tax percentage calculator but a friend told me that on contract base jobs, there are few things we have to pay ourselves. Those things are paid by employers when we are on permanant jobs

So What are those things and how exactly do I calculate those extract deductions

-Sam

how do I calculate my take home on contract base jobs

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Honest
Posts: 439
Joined: Thu Sep 05, 2013 11:28 pm

Re: how do I calculate my take home on contract base jobs

Post by Honest » Sat Dec 24, 2016 12:28 am

Tax percentage is based on your annual income.

For contract it depends what kind of contract you have.

Give more specific detail if you want a specific answer.


Rosamunda
Posts: 10608
Joined: Fri Jan 02, 2004 12:07 am

Re: how do I calculate my take home on contract base jobs

Post by Rosamunda » Sat Dec 24, 2016 1:02 am

Is the contractor your employer or are you going to invoice the contractor as a B2B (ie you are a service provider, the contractor is your customer)? Or is there a third party involved (umbrella company or agency)?

Do you have a freelance tax card?
https://www.vero.fi/en-US/Individuals/T ... come(32332)


sam_001
Posts: 48
Joined: Thu Feb 11, 2016 11:47 am

Re: how do I calculate my take home on contract base jobs

Post by sam_001 » Sat Dec 24, 2016 1:25 am

contractor is not my employer. I am going to send an invoice. The thing is that I have not yet decided what will be the most feasible option. I have an option of opening a private limited company too if that is required. I am just trying to weigh my options. What is the freelancer tax card? Can it be used when you have a contract with a company and you send invoice to them?


Rosamunda
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Joined: Fri Jan 02, 2004 12:07 am

Re: how do I calculate my take home on contract base jobs

Post by Rosamunda » Sat Dec 24, 2016 12:42 pm

sam_001 wrote:contractor is not my employer. I am going to send an invoice.

Then it is not a salary. You are working on a B2B basis. You would have to pay your own entrepreneur pension contributions and you will probably need to register for VAT.

The thing is that I have not yet decided what will be the most feasible option. I have an option of opening a private limited company too if that is required. I am just trying to weigh my options.

You could also use an umbrella company like http://www.eezy.fi/english
Most people in your situation would start with a toiminimi (sole trader) but an Oy is also an option. You would probably need a bookkeeper in both cases. There are LOTS of threads on this forum about running your own company.

What is the freelancer tax card? Can it be used when you have a contract with a company and you send invoice to them?

No, it can't. A freelancer tax card is for someone who has multiple employers paying them a salary. It only works when the holder does not have a 'main' employer. Nowadays it requires the holder to have 4-5 employers simultaneously (though I never managed to get a definite answer on what 'simultaneous' means: the same month, year...???)


Lots of answers in this guide: http://uusyrityskeskus.fi/sites/default ... _web_0.pdf or on the website: http://uusyrityskeskus.fi/fi/in-english. As a rule of thumb, net in the pocket would be around 50% of revenue (if 400e is net of VAT) but it depends on many things so it's impossible to give a precise answer.


Rosamunda
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Joined: Fri Jan 02, 2004 12:07 am

Re: how do I calculate my take home on contract base jobs

Post by Rosamunda » Tue Dec 27, 2016 11:25 am

I think your VAT calculations are wrong. Usually, when a business quotes a job rate it is WITHOUT VAT, so it would not be included in the daily rate of 400e (even if it was included in the 400e, the monthly amount would be 1703e - not 2200e). When simulating income and profits it is easier to exclude all the VAT. Those calculations are more important for cash flow.

Another problem with your calculation is the pension contribution(TyEL) which you give as 16%. The employee part is only 5.7% but the employer's part is 25.1% which I don't see in your calculations.

If the poster owns (more than 30%) of the Oy (and he is the 'manager' of the Oy) he is probably liable for YEL (not TyEL) which is 23.6% (if you are under 53 yrs age) but there is a discount for startups. More about YEL here: http://www.elo.fi/~/media/files/vakuutt ... as_en.ashx Both Vero and Kela are wary of one-man OY insofar as they may give an unfair tax advantage.


Rosamunda
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Re: how do I calculate my take home on contract base jobs

Post by Rosamunda » Wed Dec 28, 2016 7:16 pm

No. the employee also has to contribute to TyEL. But presumably in this case the entrepreneur would have to pay YEL - so I don't know how it works... it would not be necessary to pay both. But as I said above, OY are not supposed to be used for one-man shows. A toiminimi is for that purpose.


betelgeuse
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Re: how do I calculate my take home on contract base jobs

Post by betelgeuse » Thu Dec 29, 2016 12:43 am

Rosamunda wrote:No. the employee also has to contribute to TyEL. But presumably in this case the entrepreneur would have to pay YEL - so I don't know how it works... it would not be necessary to pay both. But as I said above, OY are not supposed to be used for one-man shows. A toiminimi is for that purpose.


The problem from Vero's perspective is that if it's considered salary, no legal form can be used to get around it. Maybe sole traders are less interesting to go after since they are progressively taxed. However, there's no rules that sole traders are supposed to be used over limited companies for one-man shows.


Rosamunda
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Joined: Fri Jan 02, 2004 12:07 am

Re: how do I calculate my take home on contract base jobs

Post by Rosamunda » Fri Dec 30, 2016 6:46 pm

Agreed, there are no rules. I meant 'supposed to' idiomatically rather than literally.

So, if the entrepreneur (sole owner of the share capital in the OY) pays himself a salary, he has to pay YEL (the minimum amount, presumably) and also TyEL? Does this mean that, ultimately, he gets a bigger pension? Is it actually worth paying into both? Isn't is more advantageous to pay into YEL and then pay yourself a dividend?


betelgeuse
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Joined: Thu Aug 29, 2013 1:24 am

Re: how do I calculate my take home on contract base jobs

Post by betelgeuse » Fri Dec 30, 2016 11:05 pm

Rosamunda wrote:So, if the entrepreneur (sole owner of the share capital in the OY) pays himself a salary, he has to pay YEL (the minimum amount, presumably) and also TyEL?


No. If you are under YEL, you don't pay TYEL. The law requires the YEL to level to match the salary of a person that would be hired for the job. This means that the minimum amount is not legal. However, the pension companies don't seem too active in enforcing this rule.


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