Beating contribution evasion

Beating contribution evasion

The government is set to make the payment of social security contributions compulsory upon the issue of payment documents for services rendered.

A clause by the Labor Ministry to be included in the bill on auxiliary pensions will provide a definitive solution to the problem of contribution evasion by those paid through service documents; it will provide for a 20.28% share of the net value of the payment to go toward social security, but with a monthly ceiling of 210 euros per insured professional. That will be broken down into 13.33% that will go to the main social security provider and another 6.95% toward healthcare.

The contributions will be covered by the insured professional in their entirety, but the obligation for withholding them and paying them will belong to the issuer of the payment, in the same way as contributions are withheld and paid into social security funds’ coffers for regular salary workers.

The obligation for the payment of contributions will not concern payments on copyright, patent use concession and one-off sales of personal assets that do not constitute a professional activity.

The new regulations will concern payment documents issued since January 1, 2020, but for any documents to be issued based on written contracts drafted before February 1, 2019, the new provisions will start applying on September 1, 2021.

The clause will be incorporated in the bill that Deputy Minister Panos Tsakloglou and his team have processed regarding the pay-as-you-earn system of auxiliary social security. It will put an end to the uncertainty after the voting of the so-called Katrougalos law in 2016 that often made the payment invoices a substitute for salaried labor relations. It should also put an end to contribution evasion, which is one of the biggest problems of the local social security system.

The contribution withheld may not rise above the level of the top category of social security toward the main pension, which provides for €155 per month plus €55 per month toward healthcare. Contributions must be declared to the Single Social Security Entity (EFKA) by the following month’s end.

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