Tax overview for global mobility – Part 1 | eBook

Tax residency

Definition and requirements

In Bulgaria there are resident and non-resident taxable persons. A resident person is someone who:

• has a permanent address in Bulgaria
• who is present within the territory of Bulgaria for a period exceeding 183 days in any twelve-month period
• who is sent abroad by the Bulgarian State, by bodies or organizations thereof, by Bulgarian enterprises, and the members of the family of any such person
• whose centre of vital interests is situated in Bulgaria

Any resident and non-resident person of Bulgaria shall be liable to taxes in respect of any income acquired from sources inside and outside of the Republic of Bulgaria.

Days of presence

For the purposes of calculating the days of presence in Bulgaria within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure). The period of residence in Bulgaria for the sole purpose of education or medical treatment are not considered as days of presence related to tax duties.

Split tax residency

Split tax residency is acknowledged between more countries within one tax period.

Personal income tax

Tax rate and tax period

• 10% is the applicable tax rate
• 1% is the applicable tax rate for any income acquired in a seafarer capacity

In Bulgaria, the tax period is the same as the calendar year. Based on the local tax system, salaries paid in January for the work performed in December are considered as taxable income of the next calendar year.

Tax base and deductions

In general, the tax base is calculated from the gross income decreased with compulsory social and health insurance contributions withheld by the employer which are for the account of the employee, decreased by non-taxable parts of the income and tax reliefs, if applicable.

The non-taxable value of income may be:

• the value of the food vouchers
• the value of any travel and accommodation expenses
• the value of the free food or food additives provided in kind under terms and in compliance with a normative act
• the value of work attire and uniforms provided under terms and in compliance with a normative act
• the expenses incurred by the employer of up to BGN 60 monthly for each insured person on payments for supplementary voluntary social and health insurance or life assurance and others

Furthermore, the following deductions are applicable:

• tax reliefs for persons who have lost 50% and more than 50% of their working capacity (their monthly taxable amount of income shall be decreased by BGN 660)
• tax reliefs for young married couples
• tax reliefs for persons who made donations during the year
• tax reliefs for employees who made personal voluntary social security contributions remitted during the month through an employer
• tax reliefs for employees who have children under the age of 18 (the amount depends on the number of children)
• tax reliefs for employees who have children with disabilities

Social security

Social security rates and registration

Social security is due by both the employer and employee. For example, the calculation of the social security contributions for the “Pensions” fund is formed as follows:

• 8.22% rate for the employer for the “Pensions” fund
• 6.58% rate for the employee for the “Pensions” fund

The reporting and the deposition of the whole payment is done by the employer.

In case the employee is a foreigner, they must receive a personal number from the National Revenue Agency.  In case the employee is a Bulgarian citizen, they do not need to issue the personal number. Within three days of concluding the employment contract with every employee, the employer sends notification to the respective territorial directorate of the National Revenue Agency.

A local employer does not need to register as the registration is done ex officio, but a foreign employer has to. Regardless, both must deduct and pay the social security contributions on behalf of the employee.

Social security base calculation

Social security contributions are calculated from the income received as all kind of labour remunerations under the Bulgarian legislation with several explicit exceptions. The calculation base is multiplied by the applicable rate. The minimum calculation base is BGN 610 and the maximum is BGN 3,000, which applies to the whole income of the employee from all employees.

The social security contributions are divided and paid into several funds such as pensions, unemployment, general illness or maternity funds and others.

Payment and reporting of the social security

Social security contributions are calculated and paid separately from the due tax. The contributions are paid and reported on a monthly basis and are subject to the yearly reconciliation.

If a person is employed by multiple employers, all of them are obliged to report and pay social security contributions unless the whole income of the employee from all employers is higher than the maximum calculation base. In that case, the employee is obliged to inform the second employer about the amount of the social security contributions paid by the first employer so that the other would not deposit contributions over the maximum calculation base. For example, in case the income of the employee from the first employer is higher than BGN 3,000, the second employer would not pay social security contributions.

A1 Forms

The A1 form is issued upon request, after submitting the necessary documents. Once the submission is done, the competent authorities review the existence of a ground for issuance. If additional information is needed, additional documents may be required during the inspection. The duration of the procedure is 30 days from the submission of the request, unless the request is not submitted through the right territorial agency, in which case the deadline is 45 days. The rejection to issue the A1 form may be appealed.

The A1 form is issued for the period indicated in the request, corresponding to the period of the business trip abroad, but not more than 24 months.

Health insurance

Health insurance rates and registration

• 8% is the rate of health insurance in Bulgaria

The employer is obliged to deduct, pay and report these contributions on behalf of the employee from their income on a monthly basis.

Health insurance base calculation

Health insurance contributions are calculated from the income and the calculation base is multiplied by the applicable rate. The minimum calculation base is BGN 610 and the maximum is BGN 3,000, which applies to the whole income of the employee from all employees.

Payment and reporting of the health insurance

Health insurance contributions are calculated and paid separately from the due tax. 60% of the contributions is covered by the employer and 40% by the employee. The reporting and the deposition of the whole payment is done by the employer.

If a person is employed by multiple employers, all of them are obliged to report and pay health insurance contributions unless the whole income of the employee from all employers is higher than the maximum calculation base. In that case, the employee is obliged to inform the second employer about the amount of the health insurance contributions paid by the first employer so that the other would not deposit contributions over the maximum calculation base. For example, in case the income of the employee from the first employer is higher than BGN 3,000, the second employer would not pay health insurance contributions.

The contributions are paid and reported on a monthly basis and are subject to the yearly reconciliation.

Tax residency

Definition and requirements

In Cyprus there are resident and non-resident taxable persons. A resident person is someone who:

• has a permanent address in Cyprus
• who is present within the territory of Cyprus for a period exceeding 183 days in any twelve-month period

Any resident and non-resident person of Cyprus shall be liable to taxes in respect of any income acquired from sources inside and outside of the Republic of Cyprus.

Days of presence

For the purposes of calculating the days of presence in Cyprus within one or more periods, any part of the day of presence is regarded as a whole day including day of arrival but not the day of departure.

Split tax residency

Split tax residency is acknowledged between more countries within one tax period.

Personal income tax

Tax rate and tax period

• 0% is the applicable tax rate for income between EUR 0 and EUR 19,500
• 20% is the applicable tax rate for income between EUR 19,500 and EUR 28,000
• 25% is the applicable tax rate for income between EUR 28,000 and EUR 36,300
• 30% is the applicable tax rate for income between EUR 36,300 and EUR 60,000
• 35% is the applicable tax rate for income exceeding EUR 60,000

In Cyprus, the tax period is the same as the calendar year. Based on the local tax system, salaries paid in January for the work performed in December are considered as taxable income of the previous calendar year. Salaries are usually paid at the end of the month when the work has been executed.

Tax base and deductions

In general, the tax base is calculated from the gross income decreased by compulsory social and health insurance contributions withheld by the employer which are for the account of the employee, decreased by non-taxable parts of the income and tax reliefs, if applicable.

The non-taxable value of income may be:

• Transportation and reimbursement of costs incurred to perform work
• The value of any travel and accommodation expenses

Social security

Social security rates and registration

Social security is due by both the employer and employee. For example, the calculation of the social security contributions for the “Pensions” fund is formed as follows:

• 12% rate for the employer for the “Pensions” fund
• 8.3% rate for the employee for the “Pensions” fund

The reporting and the deposition of the whole payment is done by the employer.

In case the employee is a foreigner, they must receive a personal number from the Immigration Office and then become registered with the Social Insurance Office.  In case the employee is a Cyprus citizen, they do not need to issue this personal number as the registration with the Social Insurance Office takes place with the Identity Card of the employee.

A local employer does not need to register as the registration is done ex officio, but a foreign employer has to. Regardless, both must deduct and pay the social security contributions on behalf of the employee.

Social security base calculation

Social security contributions are calculated from the income received as all kind of labour remunerations under the Cypriot legislation with several explicit exceptions. The calculation base is multiplied by the applicable rate. The minimum calculation base is on the minimum wage per employee category, whereas in case of EUR 870 and the maximum threshold, the Social Security is calculated on the gross amount of EUR 4,554 which applies to the whole income of the employee from all employees.

The social security contributions are divided and paid into several funds such as pensions, unemployment, training, cohesion and redundancy.

Payment and reporting of the social security

Social security contributions are calculated and paid separately from the due tax. The contributions are paid and reported on a monthly basis and are subject to the yearly reconciliation.

If a person is employed by multiple employers, all of them are obliged to report and pay social security contributions unless the whole income of the employee from all employers is higher than the maximum calculation base. In that case, the employee is obliged to inform the second employer about the amount of the social security contributions paid by the first employer so that the other would not deposit contributions over the maximum calculation base.

A1 Forms

The A1 form is issued upon request, after submitting the necessary documents. Once the submission is done, the competent authorities review the existence of a ground for issuance. If additional information is needed, additional documents may be required during the inspection.

The A1 form is issued for the period indicated in the request, corresponding to the period of the business trip abroad, but not more than 24 months.

Health insurance

Health insurance rates and registration

• 2.65% is the rate for employees for health insurance in Cyprus
• 2.90% is the rate for employers for health insurance in Cyprus

The rates above could be subject to change.

The employer is obliged to deduct, pay and report these contributions on behalf of the employee from their income on a monthly basis.

Health insurance base calculation

Health insurance contributions are calculated from the income whereas the calculation base is multiplied by the applicable rate. The minimum calculation base is EUR 870 and the maximum is EUR 4,554 which applies to the whole income of the employee from all employees.

Payment and reporting of the health insurance

Health insurance contributions are calculated and paid separately from the due tax, whereas 2.90% of the contribution is covered by the employer and 2.65% by the employee. The reporting and the deposition of the whole payment is done by the employer.

If a person is employed by multiple employers, all of them are obliged to report and pay health insurance contributions unless the whole income of the employee from all employers is higher than the maximum calculation base. In that case, the employee is obliged to inform the second employer about the amount of the health insurance contributions paid by the first employer so that the other would not deposit contributions over the maximum calculation base. For example, in case the income of the employee from the first employer is higher than EUR 4,554, the second employer would not pay health insurance contributions.

The contributions are paid and reported on a monthly basis and are subject to the yearly reconciliation.

Tax residency

Definition and requirements

An individual is considered a Czech tax resident if:

• they have a permanent place of residence in the Czech Republic in which they intend to stay permanently or
• they stay for 183 days or more in the Czech Republic continuously or intermittently in the calendar year

Days of presence

For the purposes of calculating the days of presence in the Czech Republic within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

An individual may be considered a split tax resident if they move their permanent place of residence during the year.

Personal income tax

Tax rate and tax period

• 15% is the applicable tax rate
• 7% is a solidarity tax increase applicable on higher incomes

In the Czech Republic, the tax period is the same as the calendar year. Based on the local tax system, salaries paid in January for the work performed in December are considered as taxable income of the previous calendar year.

Tax base and deductions

The tax base in case of employment income is the super-gross salary. The super-gross salary is calculated as gross salary increased by the employer’s part of the Czech obligatory social security and health insurance contributions (real or fictive). Generally, the rate for these contributions is 33.8% from July 1, 2019 (previously it was 34%), taking into account the maximum value on social security. However, this is only applicable for employees who are subject to the Czech social security and health insurance system or third countries. If the employee is subject to another EU social security system, the actual amounts of contributions paid by the employer to the foreign system of social security have to be used.

Some categories of employment benefits are considered as tax-exempt income, e.g. some non-monetary benefits, pension and life insurance contributions or meal vouchers.

The following kind of deductions are allowed for employees, in order to decrease their tax base:

*Please note that in case of pension insurance / life insurance contributions paid to insurance company seated outside the Czech Republic, all related documents need to be translated into Czech (if not issued in Czech). As tax deduction can be applied contributions paid to an organization within EU.

Social security

Social security rates and registration

• 24.8% rate for the employer
• 6.5% rate for the employee

Therefore, in the Czech Republic, social security is paid by both the employee and employer, while the employer is obliged to register the employee at the local social security institute (even if it is a foreign employer).

Social security base calculation

The assessment base for the social security is the gross total taxable employment income. Although there is no minimum calculation base, but the maximum value is set to CZK 1,672,080 for 2020 (in 2019, this value was CZK 1,569,552). It is settled as an annual amount.

In case the employee works for multiple employers, the maximum assessment base for social security has to be followed by all of them, separately. If the cap is reached, the employee may ask the Czech Social Security Authority for refund of overpayment after the end of year.

Payment and reporting of the social security

The contributions are calculated and paid separately and not included in the due tax. In case the employee is employed by 2 or more employers, all employers are obliged to report and pay social security contributions.

The reporting and payments are made by the employer on a monthly basis within the payroll agenda.

A1 Forms

Upon request, the Czech authorities issue A1 forms in case of posting to other countries easily, even for a longer period (e.g. 1 or 2 years) under the Art. 12 of the EU regulation 883/2004, if the employee travels abroad regularly or often due to different activities.

Health insurance

Health insurance rates and registration

• 9% rate for the employer
• 4.5% rate for the employee

Therefore, health insurance is paid by both the employee and employer, but it is the employer’s obligation to register the employee at the local health insurance institute (even if it is a foreign employer).

Health insurance base calculation

The assessment base for health insurance is the gross total taxable employment income, with no minimum or maximum calculation base.

Payment and reporting of the health insurance

The contributions are calculated and paid separately and not included in the due tax.

In case the employee is employed by 2 or more employers, all employers are obliged to report and pay health insurance contributions on a monthly basis within the payroll agenda.

Tax residency

Definition and requirements

In Estonia, a person is regarded as a tax resident if:

• they have a permanent place of residence in Estonia
• they stay for 183 days or more in Estonia continuously or intermittently in a calendar year

The tax residency is not based on formal requirements, as the actual situation is analysed by the tax authorities. The individuals are required to register their Estonian tax residency with the tax authorities.

Days of presence

For the purposes of calculating the days of presence in Estonia within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

If there is no double tax treaty, an individual may be regarded as a tax resident of two or more countries.

Personal income tax

Tax rate and tax period

• 20% is the applicable tax rate

In Estonia, the tax period is the same as the calendar year. Based on the local tax system, salaries paid in January for the work performed in December are considered as taxable income of the next calendar year.

Tax base and deductions

The tax base is calculated from the annual income reduced by the deductions provided by the local law.

The non-taxable amount of the income is EUR 6,000 in case the annual income does not exceed EUR 14,400. Above EUR 25,200 annually, the non-taxable amount ceases.

For employees the following deductions are allowed in order to decrease their tax bases:

• Additional tax-free income of EUR 1,848 for the second child and EUR 3,048 starting from the third child
• Deductions for housing loan interest, which can be maximum EUR 300 per annum
• Deductions for special training expenses, special gifts and donations
• Deductions for contributions to voluntary funded pension – the limitation on deductions of 15% is applied, but not exceeding EUR 6,000 per annum
• Contributions to a mandatory funded pension and unemployment insurance (taken into account during a year)
• Social security payments mandatory in a foreign state

A taxpayer may deduct the housing loan interest, training expenses, gifts and donations in the total amount of EUR 1,200 but not more than 50% of the taxpayer’s income during the same period of taxation. Additional deductions may be available related to the spouse.

Social security

Social security rates and registration

• 33% rate for social security contributions

The employees are registered in the Tax and Customs Board. Therefore, their information is available for other authorities while the institution has information regarding both tax and social security at the same time. Thanks to an online administration system, the information is often exchanged automatically.

In case a local employer has not paid and declared a taxable salary, the employee has to include such income to their personal income tax return. In case of a foreign employer, if the salary is subject to taxation in Estonia, the employer is obliged to register itself as a non-resident employer and proceed the same obligations as the local employer.

Social security base calculation

The social security contributions are calculated from the gross salary and paid only by the employer in Estonia. The minimum calculation base is EUR 540 on monthly basis.

Payment and reporting of the social security

Social security is not covered by due tax, but it covers the health insurance contributions.

If the employee is employed by 2 or more companies, all employers are obliged to report and pay social security contributions on a monthly basis.

The employer (either local or non-resident) is required to transfer withheld employment-related taxes to the bank account of the Tax and Customs Board not later than by the 10th day of the month following the month during which the payment was made.

A1 Forms

A1 forms are administrated by the Social Insurance Board. As Estonia follows the principles of the EU Regulation no 883/2004., authorities may issue the A1 form for a longer period of time if the employee travels abroad regularly.

Health insurance

In Estonia, health insurance contributions are included in the social security contributions. Therefore, they have no additional rate applicable and are paid on a monthly basis within the social tax, which also includes the calculation base of the health insurance.

Tax residency

Definition and requirements

In Greece, a person is regarded a tax resident if they fulfil formal and material requirements, such as:

• they have a permanent residence or home in Greece (available place for living)
• they have a habitual stay in Greece, i.e. they stay in the country for more than 183 days, except for the purposes of studying, medical treatment or commuting to work

The tax residency is not based on formal requirements, as the actual situation is analysed by the tax authorities. The individuals are required to register their Estonian tax residency with the tax authorities.

Days of presence

For the purposes of calculation of the days of presence in Greece within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

Split tax residency is not acknowledged between more countries within one tax period.

Personal income tax

Tax rate and tax period

• 9 – 44% is the range of the applicable tax rates, based on the tax base

In Greece, the tax period is the same as the calendar year. Based on the local tax system, salaries paid in January for the work performed in December are considered as taxable income of the previous calendar year. However, a salary paid after January is regarded as taxable income of the next year, even if it concerns the previous year.

Tax base and deductions

Generally, the tax base is calculated from the gross income (money and in-kind), which is decreased by social and health contributions paid by the employee decreased by the non-taxable parts of the income, if applicable.

Incomes are taxable from the first euro, but there are some tax credits based on the value of income (ceasing with high incomes) and the number of children.

In order to decrease the tax base, the following deductions are allowed:

• Social and health contributions
• Tax deduction of at least EUR 777 for an annual income of EUR 50,000
• Tax bonus on children, in which case the tax deduction of EUR 777 is being increased for each child

Social security

Social security rates and registration

• 24.81% rate for the employer
• 15.75% rate for the employee

Employees must be registered after their very first employment. Also, the employee needs to register as an insured person for health insurance.

A local employer is obliged to register the employee, then deduct and pay the respective contributions on behalf of the employee and the employer´s part. When it comes to foreign employers, only the employment relationship is registered, while the employee is responsible for the payments to the social authorities.

Social security base calculation

Social security is calculated from the gross taxable income without accord to social and health contributions decreasing the tax base, whereby a maximum base is applicable. It is calculated on the monthly basis, from the monthly salary.

The maximum calculation base depends on average salary in Greece. Currently in 2020, the amount is EUR 6,500 per month. It is applicable to the whole income of the employee, from all employers.

Payment and reporting of the social security

Social security contributions are calculated and paid separately from the due tax, as they are separate systems from tax. Although the contributions are paid both by the employee and the employers, the reporting and payment is done by the employer on a monthly basis. In case there are more employers, all of them are obliged to report and pay.

A1 Forms

A1 forms for purposes of the Art. 12 of the EU regulation 883/2004 are generally issued only for the duration of each respective posting. A1 forms for purposes of the Art. 13 or 16 of the EU regulation 883/2004 may be issued for period of 1 to 2 years. Greek authorities do a thorough check of documents and conditions before issuing A1 form. Therefore, it may be lengthy process.

Health insurance

The health insurance contributions are covered by the social security contributions. However, employees must register for health insurance as an insured person.

Health insurance contributions are calculated from the gross taxable income (in-kind included). The same maximum calculation base is applicable as in the case of social security, i.e. EUR 6,500 per month.

Although the contributions are paid both by the employee and the employers, the reporting and payment is done by the employer on a monthly basis.

Tax residency

Definition and requirements

In Hungary, a tax resident is:

• a person who is a citizen of Hungary (except dual citizens), as formal criteria
• a citizen of the European Union who spends more than 183 days per calendar year in Hungary
• a third-country citizen with permanent residence status, whose vital interest is in Hungary
• a third-country citizen who has a permanent home (habitually residing in the country) or habitual stay in Hungary (where they stay for more than 3 months without the intention to leave)

Days of presence

For the purposes of calculation of days of presence in Hungary within one or more periods, any part of the day of presence is regarded as whole day (including day of arrival and day of departure).

Split tax residency

Split tax residency is acknowledged between more countries within one tax period. Although according to the Hungarian law and OECD treaties, in a certain point of time the person can be resident in only one place, but the residency can be changed within a tax period. In lack of a double tax treaty, dual residency may occur.

Personal income tax

Tax rate and tax period

• 15% is the applicable tax rate without threshold

The tax period is the same as the calendar year. Based on the local tax system, salaries paid till January 10 for the work performed in December are considered as taxable income of the previous calendar year. If paid after the 10th day, even if it concerns the previous year, the salary is regarded as a taxable income of the following year.

Tax base and deductions

The tax base is calculated from all the revenue (money and in-kind) decreased by costs and non-taxable parts of the income, if applicable – such as tax base allowances based on family status. Other possible deductions are allowances for newlyweds, allowances granted to mothers raising four or more children, personal allowance for handicapped private individuals, etc.

Social security

Social security rates and registration

• 17% rate for the employee (together with the pension and health care contribution)
• 17.5% rate for the employer

The registration of the employee including any other further changes and the payments of contributions of the employee and the employer´s part is done by the employer. This applies also to foreign employers.

Social security base calculation

The social security base is calculated on a monthly basis, from the monthly salary. The salary should be not less than minimum wage or guaranteed minimum wage, in case of full-time employment.

Payment and reporting of the social security

Social insurance contributions in Hungary are not covered by due tax, therefore they are calculated and paid separately on a monthly basis. The reporting and payment of the contributions are done by the employer, including foreign employer. If the employee is employed by 2 or more employers, all of them are obliged to report and pay the contributions.

In case the employee is under a foreign social security, the social contribution tax is not payable by the employer, neither are the health care and pension contributions payable by the employee.

A1 Forms

A1 forms for purposes of the Art. 12 of the EU regulation 883/2004 are generally issued only for the duration of each respective posting. A1s form for purposes of the Art. 13 or 16 of the EU regulation 883/2004 may be issued for period of 1 to 2 years or even longer.

The Hungarian authorities do a thorough check of documents and conditions before issuing A1 form. Therefore, it may be lengthy process.

Health insurance

Health insurance rates and registration

• 7% is the rate of health insurance in Hungary

For health insurance the employee needs to register as insured person at the National Health Insurance Fund of Hungary. Consequently, the local and foreign employers deduct and pay the respective contributions on behalf of the employee and the employer´s part.

Health insurance base calculation

The base of the health insurance is calculated from the taxable income (salary), with no maximum base. However, the minimum base is, in case of employment, the minimum wage or guaranteed minimum wage.

Payment and reporting of the health insurance

Social insurance contributions in Hungary are not covered by due tax, therefore they are calculated and paid separately on a monthly basis. In case the employee is employed by 2 or more employers, all of them are obliged to report and pay health insurance contributions.

The health insurance contributions are reported and paid by the local or foreign employee on a monthly basis.

Tax residency

Definition and requirements

In Italy, tax resident is a person who fulfils the formal or material criteria, such as:

• for the greater part of the tax year, the person is registered with the Office of Record of resident population
• the person has a permanent home (available place for living) in Italy
• the person stays for more than 183 days in Italy

Days of presence

For the purposes of calculation of the days of presence in Italy within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

Generally, split tax residency is not acknowledged, but a few countries fall under exception, such as Germany and Switzerland.

Personal income tax

Tax rate and tax period

• 23 – 43% is the range of the applicable tax rates, based on the tax base

Additional regional tax is applicable with a rate up to 1.79% and a municipal tax with a rate up to 0.8%, based on the place of residency.

The tax period is the same as the calendar year. Based on the local tax system, salaries paid till January 12 for the work performed in December are considered as taxable income of the previous calendar year. Otherwise, if paid later, it is considered as a taxable income of the new calendar year.

Tax base and deductions

Generally, the tax base is calculated from the gross taxable income (including cash and taxable benefit-in-kind) reduced by the social and pension contributions paid by the employee.

According to the Italian tax law, there is no non-taxable part of income, but the following deductions are allowed:

• Mandatory social and pension contributions at the employee’s expenses
• Employment deduction and dependant deduction
• Private pension contribution paid (up to EUR 5,164.57)

When it comes to tax benefits, generally the 19% of a wide group of expenses (e.g. medical expenses, mortgage interest for the purchase of the habitual dwelling etc.) are allowed as tax deductions, with particular limits, depending on the kind of expenses.

Social security

Social security rates and registration

• 24% rate for the employee
• 10.19% rate for the employer

The registration of the employee is done by the local employer, who is also obliged to deduct and pay the contributions on behalf of the employee and the employer’s part. When it comes to foreign employers, it they are based in a country that has no social security agreement with Italy, they are obliged to appoint a social security representative in Italy and pay the respective contributions on behalf of the employee and the employer´s part. otherwise, such appointment is not needed when a certificate of coverage can be obtained in the foreign country.

Social security base calculation

The social security base is calculated from the gross income based on the applicable rate. The minimum calculation base is EUR 1,273.18 per month while the maximum calculation base for individual who started to pay social security and pension contribution after January 1, 1996 is EUR 103,055 in 2020 (it varies annually).

The maximum calculation base applies to the whole income received from all employers, but each employer pays the pro-rata contributions.

Payment and reporting of the social security

Social security contributions are not included in the due tax, and therefore they are paid and reported separately, on a monthly basis both by the employer and the employee. If there are more employers, all of them are obliged to pay and report the contributions.

A1 Forms

A1 forms for the purposes of the Art. 12 of the EU regulation 883/2004 are generally issued only for the duration of each respective posting.

A1 forms for the purposes of the Art. 13 or 16 of the EU regulation 883/2004 may be issued for period of 1 to 2 years or even longer.

Italian authorities issue the A1 forms in case of posting employees to other countries easily, since there is an electronic procedure available.

Health insurance

The mandatory health insurance in Italy is part of the income tax system. In case they are paid in a foreign country, the employee can deduct them from the tax base.

The contributions are calculated from the gross taxable income (cash and taxable benefit-in-kind) reduced by the social security contributions paid by the employee.

Tax residency

Definition and requirements

In Norway, an expatriate becomes a tax resident if:

• the person stays for more than 183 days in Norway

In case the days are split between two income years, the employee becomes a tax resident from January 1 of the second year.

Days of presence

For the purposes of calculation of the days of presence in Norway within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

Split tax residency is acknowledged in Norway.

Personal income tax

Tax rate and tax period

• 22% is the applicable tax rate

Bracket tax is a percentage share which changes according to earnings and it is calculated from the employee’s income as an additional tax.

The tax period is the same as the calendar year. Based on the local tax system, salaries are usually paid in the current month, not in arrears. Therefore, the salary paid in January is taxable in the ongoing calendar year.

Tax base and deductions

The tax base is calculated from the general income, which is the total income of the employee after the deductions. The amount of tax the employee must pay will depend on the income. People on a low income pay proportionately less tax than those with a high income.

In general, there is no non-taxable part of the income, but the following deductions can be made:

• Personal allowance
• Deduction for commuters
• Deduction for interest on debt
• Child-care deduction

Social security

Social security rates and registration

• 14.1% is the rate of social security contributions

A foreign national working in Norway must apply for an identification card and a tax card. In order to do so, the employee must personally go to one of the tax offices.

Both local and foreign employers are obliged to register and then deduct and pay the respective contributions on behalf of the employee and the employer´s part.

Social security base calculation

The social security is paid by the employer as 14.1% of the income on top of the salary and all taxable benefits.

Payment and reporting of the social security

Social security contributions are calculated and paid separately, as they are separate systems from tax.

In Norway, the public social insurance scheme is known as ‘folketrygden’ (National Insurance Scheme). Among other things, this scheme covers benefits from NAV and health services. In order to receive benefits under the National Insurance Act, the employee must be a member of the Norwegian National Insurance Scheme. If the employee is a member of the National Insurance Scheme in Norway, the employee must pay national insurance contributions. If the employee is not a member of the scheme, the employee can be granted an exemption from the obligation to pay national insurance contributions.

National insurance contributions are calculated from the employee’s personal gross income before deductions, paid bi-monthly and reported monthly by the employer. In case of multiple employers, all of them are obliged to report and pay the contributions.

A1 Forms

The Norwegian authorities issue the A1 forms in case of posting to other countries easily. As a rule, a person working in the EEA area should be covered by social security legislation in the country of work. Employees who are sent out to work temporarily in another EEA country must, under certain conditions, still be covered by social security legislation in the country where they usually work.

Health insurance

Health insurance rates and registration

• 8.2% is the rate of health insurance contributions

Registration for health insurance is necessary.

Health insurance base calculation

The health insurance base is calculated from the income of the employee, from which 8.2% represents the contributions. In case the income of the employee was lower than NOK 54,650 in 2018 and 2019, they do not have to pay national insurance contributions.

Payment and reporting of the health insurance

Health insurance contributions are calculated, paid and reported by the employer separately from due tax, as they are a separate system from tax. In case of multiple employers, all of them are obliged to report and pay the contributions.

Tax residency

Definition and requirements

In Poland, tax residents are natural persons, who:

• stay on Polish territory for more than 183 days in a tax year
• have a centre of personal or economic interests (centre of vital interests) on the territory of Poland

Days of presence

For the purposes of calculation of days of presence in Poland within one or more periods, any part of the day of presence is regarded as whole day (including day of arrival and day of departure).

Moreover, there should be excluded days spent in the given country travelling between two places outside the country (transit).

Besides this, any full day spent outside the given country, whether on holiday, business or any other reason, should not be taken into account.

Split tax residency

Split tax residency is acknowledged between more countries within one tax period.

Personal income tax

Tax rate and tax period

• 17% is the applicable tax rate up to PLN 85,528
• 32% is the applicable tax rate above the threshold PLN 85,528

The tax period is the same as the calendar year. Based on the local tax system, salaries paid till January 10 for the work performed in December are considered as taxable income of the previous calendar year.

Tax base and deductions

The tax base is calculated from the remuneration, which is decreased by the statutory cost (provided in the legislation) and additional allowances.

The non-taxable values of income are the following:

• for revenues up to PLN 8,000, the tax-exempt amount is PLN 1,360
• for revenues between PLN 8,000 and PLN 13,000, the tax-exempt amount is calculated the following way: 1,360 – (834,88 × (tax basis – 800) ÷ 500)
• for revenues between PLN 13,000 and PLN 85,528, the tax-exempt amount is PLN 525.12
• for revenues between PLN 85,528 and PLN 127,000, the tax-exempt amount is calculated the following way: 525.12 – (525.12 × (tax basis – 85,528) ÷ 41,428)

What kind of deductions are allowed for employees, in order to decrease their tax base?

There is a variety of allowances, such as:

• PLN 3,000 yearly for one agreement, PLN 4,500 yearly for multiple agreements – this may be increased in case the employee has to travel to work
• child allowance, where the value depends on the number of children
• payments to the Individual Retirement Security Account

Furthermore, 1% of the personal income tax can be dedicated for charity.

Among others, the Polish tax benefits are the following:

• The income of employees aged under 16 are exempt from tax
• Costs for internet are partially tax deductible
• Disabled employees are granted a special allowance, etc.

Social security

Social security rates and registration

• 20.48% rate for the employer
• 13.71% rate for the employee

The rate covered by the employer is distributed the following way:

• 76% stands for retirement
• 5% stands for disability
• 67% stands for accidents
• 45% stands for FP
• 01% stands for FGSP pension from the employee’s salary.

The due social security paid by the employer is calculated from the gross salary, where:

• 76% stands for retirement
• 5% for disability
• 45% for sickness pension from the employee’s salary

Each employee has to be registered in the Polish Social Insurance Institute (ZUS) via Pałtnik, a special program dedicated for ZUS communication.

A local employer is obliged to register and deduct or pay the respective contributions on behalf of the employee, while foreign employers are recommended to do so, otherwise the employee has to register themselves as the employer in ZUS and sign special documents with the employer. This procedure is more complicated for the employee.

Social security base calculation

The base of the social security contributions is calculated from the gross salary of the employee, or from the total income which is a base for social security received each month.

The maximum calculation base for social security is the annual limitation for retirement and disability pension insurance for 2020, in the amount of PLN 156,810.

Payment and reporting of the social security

The social insurance contributions are calculated separately, from the employee’ gross salary, but together with the due tax.

In case the employee is employed by 2 or more employers, all employers are obliged to report and pay the health insurance contributions on a monthly basis.

A1 Forms

Upon fulfilling some formalities, the authorities issue the A1 forms in case of posting to other countries easily. Under the Art. 12 of the EU regulation 883/2004, the authorities issue the form only for a maximum of 12 months, if the employee travels abroad regularly or frequently due to various work-related activities.

Health insurance

Health insurance rates and registration

• 9% is the rate of health insurance in Poland

The contribution is calculated the following way: 9% of the gross salary deducted by the social security contributions.

Payment and reporting of the health insurance

The health insurance contributions are calculated separately, from the employee’ gross salary, but together with the due tax.

In case the employee is employed by 2 or more employers, all employers are obliged to report and pay the health insurance contributions on a monthly basis.

Tax residency

Definition and requirements

In Portugal, a person is considered as a tax resident upon fulfilling either formal or material requirements, such as:

• having a permanent home in the country
• staying in the country for longer than 183 days within a period of 12 months

Upon arrival, the employee must declare their address of stay to the local tax office.

Days of presence

For the purposes of calculation of the days of presence in Portugal within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

Split tax residency is acknowledged within one tax period.

Personal income tax

Tax rate and tax period

• 14.5 – 48% is the range of the applicable tax rates, based on the tax base

The tax period is the same as the calendar year. Based on the local tax system, salaries are paid at the end of the month (not in arrears), therefore salaries paid in January are considered as taxable income of the ongoing calendar year.

Tax base and deductions

Generally, the tax base is calculated from the gross taxable income, including benefit-in-kind.

The annual tax base below EUR 8,500 is not subject to tax. Other non-taxable parts of income are:

• Meal allowance
• Children allowance
• Cash responsibility allowance, until certain limits

The tax base can be further reduced by expenses related to family, health and health insurances, education, house mortgage or rental, among others. Other tax benefits include saving investments for retirement pensions or tax benefit for demanding invoices to suppliers.

Social security

Social security rates and registration

• 23.75% rate for the employer
• 11% rate for the employee

The total rate, therefore, is 34.75%.

The employee needs to register in Portugal for social security, while local and foreign employers must also register and then deduct and pay the respective contributions on behalf of the employee and the employer´s part.

Social security base calculation

The calculation base for social security is calculated monthly from the gross taxable income.

Payment and reporting of the social security

Social security is covered by due tax in Portugal, deducted, reported and paid by both local and foreign employer on a monthly basis.

A1 Forms

A1 forms for purposes of the Art. 12 of the EU regulation 883/2004 are generally issued only for the duration of each respective posting.

A1 forms for purposes of the Art. 13 or 16 of the EU regulation 883/2004 may be issued for period of 1 to 2 years or even longer.

Health insurance

Health insurance is covered by the social security contributions, but it is not mandatory. However, insurance for working accidents is mandatory, usually costing between 0.5% and 1% of the calculation base. It is paid by the employer on a monthly, quarterly or yearly basis, calculated from the gross income.

The employee needs to register in Portugal for this insurance, while local and foreign employers must also register and then deduct and pay the respective contributions on behalf of the employee and the employer´s part.

Tax residency

Definition and requirements

A person is a tax resident if:

• has a permanent home in Romania
• is present in Romania for a period (or more periods) exceeding a total of 183 days, during any 12 consecutive months, ending in the current calendar year
• is a Romanian citizen working abroad, as an official or employee of Romania in a foreign state
• has centre of vital interests is in Romania

Days of presence

For the purposes of the calculation of days of presence in Romania within one or more periods, any part of the day of presence is regarded as whole day (including day of arrival and day of departure).

Split tax residency

Split tax residency is not acknowledged between more countries within one tax period.

Personal income tax

Tax rate and tax period

• 10% is the applicable tax rate

The tax period is the same as the calendar year. Based on the local tax system, salaries paid till the end of January for the work performed in December are considered as taxable income of the previous calendar year. However, the taxes are paid to the state budget till February 25.

Tax base and deductions

Generally, the tax base is calculated from the gross taxable income (money and in-kind) decreased by social and health contributions paid by the employee, further decreased by non-taxable parts of the income, if applicable.

The non-taxable values of income, among others, are the following:

• aid for extraordinary cases
• optional pensions in limit of EUR 400 per year
• gifts for specific events up to RON 150 per event
• value of safety equipment
• value of training
• stock options plan
• expenses related to food, phone and car, in certain conditions

There are multiple possibilities for deductions, however, they depend on the income, family situation and tax residence.

Social security

Social security rates and registration

• 25 – 33% is the range of the applicable rates for social security, depending on the work conditions

In Romania, social security is paid by the employer from the income of the employee. It is also the obligation of the employer to register the employee.

Social security base calculation

The monthly basis for calculating the social insurance contribution, in the case of individuals who make income from wages, represents the gross income realized from wages, in the country and in other states. Based on that, the calculation base is multiplied by the applicable rate. There is no minimum or maximum calculation base applicable.

Payment and reporting of the social security

The contributions are calculated and paid separately and not included in the due tax. In case the employee is employed by 2 or more employers, all employers are obliged to report and pay social security contributions. The reporting and payments are made by the employer on a monthly basis within the payroll agenda.

A1 Forms

The process of issuing A1 forms can be lengthy, as the authorities require a lot of information and documents which are then carefully revised.

Health insurance

Health insurance rates and registration

• 10% is the rate of health insurance in Romania

In Romania, it is the obligation of the employer to register the employee.

Health insurance base calculation

The monthly basis for calculating the contribution of health insurance in the gross profit, in the case of individuals who make income from wages, at home and abroad, in compliance with the provisions of the European legislation and the system of Romania. Based on that, the calculation base is multiplied by the applicable rate. There is no minimum or maximum calculation base applicable.

Payment and reporting of the health insurance

The contributions are calculated and paid separately and not included in the due tax. In case the employee is employed by 2 or more employers, all employers are obliged to report and pay health insurance contributions.

The reporting and payments are made by the employer on a monthly basis.

Tax residency

Definition and requirements

In Slovakia, tax residency is based on fulfilling either formal or material criteria, such as:

• having a registered permanent residence in Slovakia
• staying in Slovakia for more than 183 days, except for purposes of study, medical treatment, commuting to work

Days of presence

For the purposes of calculation of the days of presence in Slovakia within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

In Slovakia, split tax residency between more countries within one tax period is acknowledged.

Personal income tax

Tax rate and tax period

• 19% is the applicable tax rate below the threshold of EUR 37,163.36 in 2020
• 25% is the applicable tax rate above the threshold of EUR 37,163.36 in 2020

The tax period is the same as the calendar year. The threshold for the tax rate changes every year in Slovakia. Based on the local tax system, salaries paid in January for the work performed in December are considered as taxable income of the previous calendar year. Income from employment concerning a previous year but paid after January is regarded as taxable income of the year in which it is paid.

Tax base and deductions

The tax base is calculated from the gross taxable income, including monetary income and benefits in-kind, decreased by the:

• social and health contributions paid by the employee
• non-taxable parts of the income, if applicable, which depend on the income, family situation and tax residence

To decrease the tax base, other tax benefits may be applicable (subject to different requirements and limitations):

• non-taxable part of the income on the spouse
• payments to the supplementary pension savings
• health spa costs
• tax bonus on child
• home loan interests

Social security

Social security rates and registration

• 25.2% rate for the employer
• 9.4% rate for the employee

If the employee is subject to the Slovak social security, the employer must register them. Both local and foreign employers must register, deduct and pay the respective contributions on behalf of the employee and the employer.

Social security base calculation

The social security base is calculated on a monthly basis from the monthly salary, more precisely from the gross taxable income without accord to social and health contributions decreasing the tax base.

There is no minimum base applicable for the calculation, only a maximum base, which depends on the average salary in Slovakia. Currently, in 2020, the maximum base equals to EUR 7,091 per month. The maximum base applies to the whole income of the employee from all employers. On the side of the employer, there are some minor social contributions without maximum limitation, while the maximum base is applicable to each employer separately, not jointly.

The due social security is calculated as:

• Calculation base multiplied by the applicable rate
• Example for an employee: EUR 6,678 * 9.4% = EUR 627.73

Payment and reporting of the social security

Social security contributions are not covered by the due tax, and therefore are calculated and paid separately, on a monthly basis.

The employer is obliged to file monthly reports to the social security institution, which automatically exchanges information with the tax authorities.

If the employee is employed by 2 or more employers, all employers are obliged to report and pay the social security contributions, including foreign employers.

A1 Forms

A1 forms for purposes of the Art. 12 of the EU regulation 883/2004 are generally issued only for the duration of each respective posting. A1 forms for purposes of the Art. 13 or 16 of the EU regulation 883/2004 may be issued for period of 1 to 2 years or even longer.

Slovak authorities do a thorough check of documents and conditions before issuing A1 form. Therefore, it may be lengthy process.

Health insurance

Health insurance rates and registration

• 10% rate for the employer
• 4% rate for the employee

For health insurance, the employee needs to register as an insured person at the selected health insurance institution. Both local and foreign employers must register, deduct and pay the respective contributions on behalf of the employee.

Health insurance base calculation

The health insurance base is calculated from the gross taxable income; including also other types of income (not just income from employment). Contributions are paid on a monthly basis, as advances, whereby a reconciliation of the whole income and health insurance premium is done each year, on the basis of reported taxable incomes.

There is no minimum base applicable for the calculation, however, for low income employees there may be a deductible part decreasing the applicable calculation base. There is no maximum calculation base for the employee nor the employer.

The due health insurance is calculated as:

• Calculation base multiplied by the applicable rate
• Example for an employee: EUR 10,000 * 4% = EUR 400

Payment and reporting of the health insurance

Health insurance contributions are not covered by the due tax, and therefore are calculated and paid separately on a monthly basis, while they are also subject to a yearly reconciliation.

The employer is obliged to file monthly reports to the health insurance institutions.

If the employee is employed by 2 or more employers, all employers are obliged to report and pay the health insurance contributions, including foreign employers.

Tax residency

Definition and requirements

In order to be considered as a tax resident in Turkey, a person must fulfil both material and formal criteria. They are the following:

• the person has a permanent residence, permanent home or habitual stay in Turkey (working in Turkey and/or staying with family in Turkey)
• the person stays in Turkey continuously for more than 183 days in a calendar year (temporary departures are not considered as interruption)

Days of presence

For the purposes of calculation of the days of presence in Turkey within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and departure).

Split tax residency

In Turkey, split tax residency between more countries within one tax period is acknowledged.

Personal income tax

Tax rate and tax period

• 15 – 40% is the range of the applicable tax rates, based on the tax base

The tax period is the same as the calendar year. In Turkey, the salary income becomes taxable once the full associated economic and legal rights are entitled. Salaries are not paid in arrears, therefore the salaries for December would be taxable in the twelfth month and included in the payroll in December. However, retrospective payments can be exceptions, such as bonuses.

Tax base and deductions

In general, the tax base is calculated from the gross taxable income (including salary and all benefits) decreased by social security contributions paid by the employee, further decreased by the non-taxable parts of the income, if applicable. The non-taxable part depends on the value of income, family situation and tax residence.

In order to decrease the tax base, the following items can be deducted:

• Social and health contributions
• Non-taxable value of the income on the taxpayer, on the spouse, on the supplementary pension savings, on the health spa costs; subject to income and tax residency requirements

Social security

Social security rates and registration

• 21.5% rate for the employer
• 15% rate for the employee

The employee is registered by the local employer on the online Social security portal. The employer then deducts and pays the respective contributions on behalf of the employee and the employer´s part. The registration does not apply to foreign employers.

Social security base calculation

Basically, the gross income is the calculation base for social security, which is subject to a cap, i.e. maximum amount. It is calculated on the monthly basis, from the monthly salary and multiplied with the rate. The minimum calculation wage equals the minimum wage. In case the employee has multiple employers, the maximum calculation base applies to each salary, separately on every employer.

Payment and reporting of the social security

In Turkey, the social security institution and tax authority are separate systems. However, they automatically exchange information.

Social security is paid both by the employee and the employer, but the reporting and payment are done by the employer on a monthly basis. In case there are multiple employers, all of them are obliged to pay and report.

A1 Forms

Instead of A1 forms, the Turkish Social Security authority issue a certificate under the bilateral agreements between the countries. It may be a time-consuming process, as the authorities would check the documents and conditions before issuing the form.

Health insurance

In Turkey, health insurance is included in the social security premiums. Therefore, the same applies to them as to social security contributions.

*The applicable rate for income acquired in a seafarer capacity is 1%; **There is a solidarity 7% tax increase on higher incomes; ***Depends on the tax base; ****Additional bracket tax is paid based on the income; *****Above the threshold of PLN 85,528 the rate is 32%; ******Above the threshold of EUR 37,163.36 the rate is 25%

*Pension funds; **Depends on work conditions