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Hundreds of thousands of private sector workers will receive from January 2021 monthly wages increased from 1.45% to 10.43%.
The new increase in net compensation will be the result of the implementation of measures to reduce deductions for insurance contributions and the elimination of deductions for special solidarity contributions, which have already been legislated by the government.
What is changing
Specifically, from January 2021, two very important measures announced by the Prime Minister will come into force. Kyriakos Mitsotakis last September since the “passage” of the TIF and that have already been included in a law of the Greek state:
1 The reduction of three percentage points in insurance contributions for private sector employees, at a budgetary cost of 816 million euros.
2 The suspension of the imposition of a special solidarity contribution to private sector wage earners with a gross monthly salary of more than 1,000 euros in 2021 and to small and medium-sized companies, self-employed, other self-employed, wage earners and farmers with annual incomes above 12,000 euros in 2020. This measure will have a budgetary cost of 767 million euros. Applied in conjunction with the reduction of insurance contributions, it will have the effect of increasing the net monthly salaries of those private employees who receive gross amounts above 1,000 euros per month from January 2021.
Changes
The amounts and percentages of the increases that private sector employees will receive starting next year are reflected in a table with detailed examples presented today by “ET”. The table shows the changes in insurance and tax deductions on the gross (gross) monthly salaries of private sector employees that will be caused by reductions in insurance contributions and the temporary abolition of the special solidarity contribution as of from January 1, 2021. From the examples in the table, which refer to employees without dependent children, it appears that from 1-1-2021:
– The monthly withholdings for insurance contributions will be reduced from 8 to 78 euros for employees with a gross monthly salary of 650 to 6,500 euros.
– Monthly income tax deductions will remain null for employees with gross monthly income of 650 to 780 euros and will increase from 0.80 to 34.32 euros for employees with gross monthly income greater than 780 and up to 6,500 euros. These small increases in income tax deductions will be due to the fact that, due to the reduction in insurance contributions from 1-1-2021, the monthly taxable profits will increase, that is, those that will remain after the deduction of the insurance deductions. Therefore, income tax deductions will be calculated as of 1-1-2021 on the increase in taxable monthly earnings resulting in an increase.
– The monthly withholdings of the special solidarity contribution will continue to be zero for those employees who receive a gross salary of up to 1,000 euros per month and will now be zero for those who receive a gross salary greater than 1,000 euros, due to the temporary suppression of this contribution for 2021 wages in the private sector. . At this point, it should be clarified that the special solidarity contribution is imposed on the annual taxable income of salaries above 12,000 euros, which correspond to the monthly tax bases of salaries above 858 euros in the private sector. The monthly taxable bases of salaries above 858 euros in the private sector will correspond from 1-1-2021 to gross amounts (gross) of salaries greater than 1,000 euros, given that from this level of gross income and above, the monthly deductions from insurance contributions. from 141 euros. Therefore, the temporary suppression of the monthly deductions of the special solidarity contribution from the salaries of the private sector will only benefit those employees who receive gross remuneration (salary amounts before deductions from insurance contributions, income tax and special solidarity contribution of 1,000 € monthly or more). Taxable amounts of earnings greater than 858 euros per month. Employees in these cases will benefit from the temporary elimination of the monthly deductions of the special solidarity contribution that will start from 1.07 euros per month for those with a gross salary of 1,070 euros per month and will reach up to 306.15 euros for those with gross income of 6,500 euros per month.
– Finally, private sector employees with gross monthly income of 650 to 6,500 euros, which currently corresponds to net monthly income of 550 to 3,354.67 euros (after deducting the monthly deductions for insurance contributions, income tax and special solidarity contribution), will receive increases on their net monthly salary that will range between 1.45% and 10.43% and in amounts from 8 to 349.83 euros. Therefore, as of January 2021, your net monthly earnings will now range between € 558 and € 3,794.49.
“Net salary” means that resulting from the insurance deduction and tax deductions from the gross salary.
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