Informed Employer Uses Tax Benefits
The state has established tax incentives in order to motivate employers to employ persons with decreased capacity for work.
To receive social tax incentive, the following conditions have to be met: the employer is a company, non-profit association, foundation or sole proprietor; the employee has partial or no capacity for work or at least 40 percent permanent incapacity for work; employee works at an employer on the basis of an employment contract. The state does not pay social tax for the person with decreased capacity for work who receives pay on the basis of the employment or authorisation agreement or any other contract under the Law of Obligations.
The monthly rate that is the basis for the minimum social tax obligation is 470 euros in 2018, i.e. the minimum social tax obligation for the employer is 155.10 euros per month.
The employer pays social tax for the employee with decreased capacity for work on the part of the salary that exceeds the monthly rate. If the actual salary of an employee is less than the monthly rate (e.g. the person is employed on part-time basis), the state will pay the social tax on that person as calculated on the basis of the monthly rate.
On 1 July 2016, the procedure for the state’s compensation for the social tax for employees with decreased capacity for work changed. Instead of the need to submit monthly applications as before, the application has to be submitted only once for each employee with decreased capacity for work. As compared to the previously applicable procedure, the amendment will make the use of the incentive less time-consuming for employers.
The law does not state the obligation to inform employer of the decreased capacity for work and unfortunately the people tend not to do it when concluding the employment contract. However, employers themselves have no possibility to obtain such information from elsewhere.
At the same time, the employees with the decreased capacity for work can get a 7-day additional holiday, the costs of which will be covered by the state. Therefore we encourage people to share information to the employer regarding their health condition and use the additional benefits.
More information on the homepage of the Unemployment Insurance Fund. Use your opportunities smartly!