Current job | Ltd company | |
Annual salary | Gross: 52k Net: 31.2k | > annual profit: 600 euro x 220 days = 132000 euro > I might decide to pay myself as a limited company at the standard rate band level (i.e. €44300, I am married with joint assessment) so that I only pay standard rate income tax (20%) > Net annual salary: 37.3k |
Contributing for state pension? | Yes | Yes |
Private pension annual amount | > I have a DC scheme with my current employer (my contribution:6%, employer contribution:8%, AVC: 19%) > Annual pension contribution: €17160 euro | I then decide to contribute the balance of my profits, €87,700, into a pension. I will not pay any tax on the pension contribution, and the ltd company will now show Nil profits and will therefore not pay any corporation tax |
Hi,Hi,
Long time reader and occasional poster. Please excuse my English as I'm a foreigner.
I'm currently PAYE worker in IT (52k). I have a potential to earn 600€/day as a contractor for the same job/position. Contracts should be 12/18 months renewable.
Couple of points as an IT consultant with a ltd.
- From Revenue perspective, you don't get to choose whether you're an employee or self-employed/freelance as per their guidelines
- Executive pension contribution limits are generous but nowhere near 200% of salary, you won't be able to contribute €87k on a €44k salary
Hi,
There is a massive disparity between the permanent salary (52k) and the contract (132k) for the same job/position. Are you sure about this 600 per day rate? I could understand short-term contracts paying large premiums, but for longer term contracts (12/18 months) I would expect them to be closer to the permanent rate..
Firefly.
Thanks for the clarification. For a gross annual profit of €132,000, let's say I reverse an annual net payment of €44,000 to myself as self-employed. To make things easier, we can assume that the tax rate is roughly 50%. I would then need to substract €88,000 from the gross annual profit to reach an annual net payment of €44,000. The remaining €44,000 will contribute into an executive pension.
Conclusion: Net annual salary of 44k and Annual pension contribution of 44k
It's still a no-brainer if I compare these figures to my current salary, am I correct?
My main concern is that these French companies won't give the contract to a freelance who is based in Ireland (despite the mission being offered in full remote).
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