# Social Security Payments



## Verinia

Please does anyone know the formula for social security payments for self employed workers?

I'd like a rough idea of how much the monthly payments would be on 10000 euros gross per annum.

Thanks


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## canoeman

Currently appox 29.6%, you get 1st year free subsequent years payments are based on the income you declare for that 1st year in your IRS return, S/S decide on band your in, payments are monthly, should your income drop I believe now you can ask for a reduction.
Like UK S/S amount paid is declared in IRS returns so reduces tax liability so although it sounds high it does affect taxation, although Portuguese Pensions aren't as high as UK you also qaulify for Pension etc


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## Verinia

canoeman said:


> Currently appox 29.6%, you get 1st year free subsequent years payments are based on the income you declare for that 1st year in your IRS return, S/S decide on band your in, payments are monthly, should your income drop I believe now you can ask for a reduction.
> Like UK S/S amount paid is declared in IRS returns so reduces tax liability so although it sounds high it does affect taxation, although Portuguese Pensions aren't as high as UK you also qaulify for Pension etc


But 29.6 percent of total earnings....ie 2960 a year? Blimey!


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## canoeman

Yes Portugal S/S is expensive but in real terms your figure would still be offset against tax, but it really isn't quite as simple as that, lots of other factors affect what you pay, exactly how you're employed or registered, if your earnings as a self employed person are less than 6 times the National Min Wage, whether you receive a state pension here or from another EU country or pay S/S in another EU country.

Just as a simple example, *if* I've got this right you let a cottage as holiday accommodation
You register with Financas as a Sole Trader and the Simplified Tax Regime
You register with Social Security
Year 1 your total income from rental is 20,000€ 
Your taxed income would be 20,000€ x 20% = 4,000€
Social Security contribution for year 2 would be NIL as "earnings" below Nat Min Wage 

The important thing is to get the correct advice and check it against other sources from day 1 not after you start working or trading


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## quelfesgirl

my husband and I both pay €124.09 social security, he earns less than 10k, I earn more. 

We have an accountant who set this up and she does our tax returns each year (which we get a good amount back) and they only charge us €300 a year.

You do not have to have an accountant but personally I think they are worth having especially if you are working.


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## canoeman

quelfesgirl said:


> my husband and I both pay €124.09 social security, he earns less than 10k, I earn more.
> 
> We have an accountant who set this up and she does our tax returns each year (which we get a good amount back) and they only charge us €300 a year.
> 
> You do not have to have an accountant but personally I think they are worth having especially if you are working.


You need to supply more information than that for it to be helpful without knowing how the accountant set up your employment & S/S status, it's difficult for anyone to gauge what their S/S contributions might be


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## quelfesgirl

canoeman said:


> You need to supply more information than that for it to be helpful without knowing how the accountant set up your employment & S/S status, it's difficult for anyone to gauge what their S/S contributions might be


More than happy to do that Canoeman but I don´t know if it will help as you are quite right everyone is different, I have a friend who pays double my social security. This is why I suggest seeing an accountant, they can then set you up under the right regimes for both tax and social security. In my opinion my accountant is well worth the money as she will inform me if any of my regimes need changing. Some people may want to do it themselves but I just feel have the security of knowing, as best I can, that I am paying the correct amount of money to our friends in the government.


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## canoeman

I agree getting the correct advice from outset is important but as I said earlier it's how you're employed, registered with Financas & Social Security that has the major impact, as for 2nd year it's S/S who base your contributions on declared income for previous year not you.


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## notlongnow

That's true, but my accountant managed to go back after SS had set my contribution level and argue for an exemption on the grounds that I only put a small amount through on green receipts and that I already pay NI in the UK. 

Apparently, both are reasons to request a full or partial exemption, yet very few accountants seem to know how to do it.


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## canoeman

Then a lot of _accountants_ here are more like bookkeepers and if you deviate from the norm are totally lost last year i had to teach one how to do a CGT return and what could be claimed or not claimed, eventually standing over his shoulder making certain he took into account the expenses I knew I could claim after he'd cocked up two previous filings which would have resulted in paying more CGT than necessary, problem is we depend on them for advice!


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## notlongnow

Tell me about it - it took us a full year, a LOT of stress and experiences with two terrible accountants before we found one that could truly help us. 

One of our disaster accountants was actually one of the "big name" firms who basically charged us a couple of hundred Euros to tell us to stay under the radar. Shameful!


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## Verinia

Thankyou very much everyone for the helpful advice. I really am very grateful.


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## Amy000

quelfesgirl said:


> my husband and I both pay €124.09 social security, he earns less than 10k, I earn more.
> 
> We have an accountant who set this up and she does our tax returns each year (which we get a good amount back) and they only charge us €300 a year.
> 
> You do not have to have an accountant but personally I think they are worth having especially if you are working.



quelfesgirl: Please could you share the contacts of the accountant, privately or in this forum. I'm planning to be self employed and really struggling to find a decent accountant. Local ones are not willing to put effort in any tiny bit more complicated cases. Thanks!


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