3 ms·

It's considered OK by system in most, if not all european countries. Some rules apply, some places are more restrictive than others, but at the end, this is all

It's considered OK by system in most, if not all european countries. Some rules apply, some places are more restrictive than others, but at the end, this is all legal and supported by law. So yes, there is legally nothing dodgy or wrong there. Quite large parts of populations are employed in this way. More work, more reward. Now why people need to resort to these practices to get more fair share of their brutto income is completely different topic, something around "voting with your taxes" about how public cash is spent (usually pretty badly). FYI, I don't do it anymore, got a perm job, but when I was doing consulting this way, I had all the possible support of my local tax office when something was unclear.

_delirium 11y ago
Some European countries handle this by allowing it to be legal, but designing the tax rates so that you pay the same tax either way, so it's not really a tax dodge. In Denmark, for example: marginal income tax rate on salary/wages for higher earners is around 55% (including all the payroll taxes and such). Marginal rate if you pay yourself dividends instead: 23.5% corporate income tax up front, plus 42% personal dividend tax on the paid-out amount, or effectively... 55% again. In fact I believe the dividend tax level was chosen precisely to make it come out the same overall. (The story comes out similarly if you look at effective instead of marginal tax rates, e.g. for $100k income, it's about 40% effective tax either way.)