The Ministry of Finance announced that it will increase the minimum tax exempt from personal income tax withholding above the current amount of 15,000 euros, in order to avoid the excessive impact of the payment due to tax on the new minimum interprofessional salary (SMI). This will reach €15,876 per year (€1,134 for 14 payments) in 2024; Compared to 15,120 euros in 2023.
What is the minimum amount exempt from withholding tax?
It is the gross annual salary amount that the employer cannot exceed. have to detain for income tax reasons.
What is the current limit?
Salary deduction is determined as follows: personal and family circumstances The number of each worker (especially if he/she has children, if his/her spouse earns less than 1,500 Euros, if he/she is retired) and annual salary amount: The higher the salary, the higher the retention percentage (range 19% to 47%).
There is in every situation a special rule For annual wages below 35,200 euros. It was established for these A fixed amount below which the employer does not need to withhold.
The minimum limit for exemption from withholding tax in 2023 was generally determined as follows: 15,000 euros (The part of the salary below this amount was not subject to withholding tax). This amount, which is exempt from withholding tax, can reach 19,241 Euros if the annual income of a worker with two or more children and his/her spouse is below 1,500 Euros.
How does it affect the interprofessional minimum wage?
In 2023, in the case of a single taxpayer without children, the minimum interprofessional salary of 15,120 euros is withheld only for the 120 euros in excess of the exemption minimum of 15,000 euros. In practice, SMI was subject to an annual withholding tax of €39.31 for the entire year (€2.8 less in each of the year’s 14 payments).
What will happen in 2024?
HE interprofessional minimum wage In 2024 it will reach 15,876 euros per year (1,134 euros for 14 payments), compared to 15,120 euros in 2023. If the minimum amount of the exemption is maintained at 15,000 euros, a total of 876 euros will be subject to withholding tax on personal income tax. 325.46 euros. This will mean removing €23.25 from each month’s payslip and will ‘eat up’ almost half of the €54 increase in this year’s SMI.
In any case, a higher tax-free minimum Benefits all salaries below 35,200 euro per year.
A fixed minimum amount exempt from withholding tax does not apply to salaries exceeding this amount. In these cases, withholding tax is determined according to the more complex rules of the income tax return, taking into account the worker’s personal, family, economic and even regional circumstances.
What will the Treasury do?
The ministry announced its intention to increase the current minimum amount exempt from withholding tax to 15,000 euros to prevent the excessive impact of income tax. The Treasury maintains that the Government has acted in this way and has always increased the SMI, but has not explained to what extent this exemption minimum will increase. PP advocates increasing this figure to the same amount as SMI (15,876 euros). New regulations regarding the adaptation of personal income tax withholding to the minimum wage increase are expected to be approved in the same period. minister council Where SMI rises. Then, changes will probably be required to the draft personal income tax regulations. General State Budgets for 2024.
What consequences will the increase in the exempt minimum amount have?
If the new minimum amount exempt from withholding tax is increased to the same annual amount of 15,876 euros for SMI for 2024, it will result in the minimum wage not being subject to any withholding tax this year. For example, if the minimum amount of the exemption is increased from €15,000 to €15,500, this means that SMI is only storage object For the excess of 376 euros, approximately 158 euros per year (approximately 11 euros short on each of 14 payments).
How is retirement affected?
The rules of the game regarding the tax-free minimum wage are the same for pensions as for salaries. According to PP calculations, for a pensioner who receives €15,600 (€1,115 for 14 payments) and whose pension is increased by 3.8%, he will have to accept withholding tax of 42% for the amount exceeding €15,000 (if he is not exempt). The minimum wage will be increased), which will lead to a deduction of 35 euros from each monthly payroll.
Is the minimum exemption from withholding tax the same as the declaration obligation?
No. One of the problems is the amount of income subject to withholding tax (usually exceeding 15,000 euros in 2023). Another question is who has to file an income tax return (usually taxpayers whose full income from work is over 22,000 euros per year).