How a freelancer can pay less in personal income tax thanks to insurance

We are advancing in the 2014 IRPF campaign and there are many who have already submitted their draft or their declaration electronically, which this year has also advanced its submission deadline. But there are also many who, even having made their declaration, will wait to present it, the reason that the result of it is positive.

To reverse this situation on the present statement there is no possibility, but there is to change it for next year. A special case is that of freelancers. Unlike the employed worker in which the withholding is adjusted to his income, the self-employed person has a fixed amount that will apply in each invoice that this year has passed from 21% to 19%. In addition, it will make quarterly payments of 20% of its net income (discounted expenses and withholdings). But this is sometimes not enough and depending on the volume of billing you may find that you must also pay in the annual return. But to reduce payment or get a refund, the freelancer has a great ally in insurance.

Thought of the future

Thought of the future

One of the best options to reduce the tax bill is through the Insured Pension Plans (PPAs), a life insurance savings with the guaranteed interest rate and that although it has death coverage, its main purpose is to constitute a capital or a rent to collect at the time of retirement. This point is very important for the self-employed, since generally their contribution to Social Security is low and with it their future retirement benefit. Given this main purpose, we focus on its excellent taxation. The premiums paid to the PPA may be subject to a reduction in the tax base of the personal income tax, from this year up to 8,000 euros per year, provided that this amount does not exceed 30% of the net income of work and economic activities. If so, the limit will be this.

It should not be forgotten that the maximum annual contribution is joint for all social security systems, that is, it encompasses pension plans, social security mutual funds, guaranteed social security plans, corporate social security plans and dependency insurance.

All are advantages with Health Insurance

All are advantages with Health Insurance

Health insurance is also essential for self-employed workers. The main objective when they are sick is always to recover work activity as soon as possible and therefore it is necessary to have the best medical care, quickly and avoiding the slow waiting lists of the public system.

If you also travel frequently, having excellent medical coverage including other related expenses such as moving to our country makes it very important.

To this we add another great advantage

To this we add another great advantage

The hospitalization benefits that many insurances incorporate and that suppose an additional money that complements the limited Social Security benefit. But the ones who don’t know much are the tax benefits for the self-employed. A private health insurance allows you to deduct up to 500 euros a year in the tax return, including spouse and descendant policies that are in your care.

Having covered benefits as important as health and retirement has its future prize, but also present when it comes to accountability with the Treasury.

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