New system for self employment taxes
Next year brings changes to the self employment income statement. A key tax reform from the Tax Office is set to affect many freelancers who will need to declare it for the first time. In short, self employed individuals may see higher tax obligations in 2025.
New framework for calculating self employment taxes
The objective prediction system is used to determine the tax base for roughly 500,000 self employed workers. The revised calculation method relies on indicators or modules that estimate the base amount. In practice, taxes are not tied to exact business income. Instead a fixed amount is applied with percentages to compute the tax for each activity, based on its category and scale.
Lowering personal income tax for self employed workers
The crisis triggered by the Ukraine conflict in 2022 prompted a set of tax reliefs to shield freelancers. A 15 percent reduction in personal income tax was established, which later decreased to 10 percent in 2023. For 2025, authorities decided to implement a further reduction to 5 percent. This means the personal income tax relief aligns with the level seen in 2009 under the objective estimation approach.
Submission of Income Tax Return
Under the new framework, the changes will affect all self employed individuals who register this year. The goal is to base contributions on actual income rather than a minimum wage level, ensuring fairness across earnings. Therefore, all self employed workers who registered in 2023 or who must file income tax returns for the remainder of the year will need to report personal income tax, regardless of income or hours worked as a freelancer. Historically, only freelancers with income above a set threshold were required to declare personal income tax benefits exceeding 1,000 euros per year.