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Fairly common among contractors. You just negotiate how many days you want to work on that client. Plenty of coworkers from Italy do it to avoid paying higher
by jokethrowaway 4y ago
Fairly common among contractors.
You just negotiate how many days you want to work on that client.
Plenty of coworkers from Italy do it to avoid paying higher taxes: they increase their hourly rate until they hit the 65k pa limit and then they just start dropping days. If they were to earn even 66k, they would start paying way more taxes and they would need to earn ~30k more to get the same salary after taxes.
- jcparkyn 4y agoIt sounds like you're saying their total after-tax income would decrease if they worked more hours? I'm not sure how, because that's definitely not how income tax works (Italian or otherwise).
- flicken 4y agoIt's an unintended consequence of the reduced (5-15% flat) taxes available via "regime forfettario"[1] which only applies to businesses with <65k income. Otherwise you have to pay much more (23%-43%) via the regular progressive tax brackets. Somewhat similarly, in the USA there is a "welfare trap"[2] where earning more income would reduce other benefits (eg housing, food) enough to result in an effective >100% tax on income. [1] https://publicnewstime.com/travel/explained-the-pros-and-cons-of-italys-five-percent-flat-tax-for-freelancers/ https://publicnewstime.com/travel/explained-the-pros-and-con... [2] https://en.m.wikipedia.org/wiki/Welfare_trap https://en.m.wikipedia.org/wiki/Welfare_trap