Changes to social security contributions from January 2018:
The changes provide for the following measures:
Reducing social security contributions in three ways
Employer taxes are greatly reduced
The taxes are mostly shifted to the employee and increased for him
From 01/01/2018 there are the following fees:
Employment insurance: 2.25% of the gross salary
Exceptions: for special working conditions: 4%, for heavy working conditions 8%.
Pension insurance: 25% of the gross salary
Health insurance: 10% of the gross salary
Conclusion: by transferring the social security obligation to the AN and by increasing the social security contributions of the AN from the current 16% to 35%, their net income decreases accordingly.
By reducing wage tax from 16% to 10% (see also point C: Change in income tax) this is partially offset.
In order to enable employees to have a constant net wage, an increase in gross wages would be necessary. Basically, an increase in the gross salary does not mean any significant additional costs for the AG, since on the other hand the AG’s taxes have been reduced.
A corresponding gross wage increase has been set by law for state employees.
In industries in which employees are exempt from wage tax (IT, research, development, seasonal work, employment for the disabled), the AG can expect a larger increase in gross wages and thus additional total costs of around 7%. According to the government, measures are being taken to compensate for this, but nothing specific has been published to date.
If a constant net salary of the MA is desired, we recommend that the AG perform a separate calculation for each individual MA, since the personal situation of the MA also affects the tax-free allowances and plays a role in the calculation, see also point C: Change of income tax.
Possible negative consequences / legal certainty:
In the event that a constant net wage is desired and a corresponding gross wage increase has been agreed, this must be decided before 01/01/2018.
The changes in the employee register of the employment office must be reported no later than December 29, 2017.
Due to the fact that these amendments were decided by an emergency regulation, it is possible that they will be confirmed, amended or even declared invalid after their entry into force.
However, if various salary increases have been agreed in the meantime with the employees, it will be difficult to change them again at a later date, especially if a reduction in gross salary will be necessary.
Various fundamental decisions have to be made in this regard. The administrative effort is also not insignificant and the period for a possible implementation is very short.
We are happy to support you in decision-making and implementation, unfortunately there is no general solution in this case, the procedure must be carefully considered for each company.
Source: Urgent Ordinance O.U.G no.79 / 2017
(Publication in the Official Journal on November 10, 2017)