When occasional services are carried out for an amount higher than € 5,000 (gross) per year, social security contributions must be paid. The obligation to contribute to the INPS Gestione Separata scheme is split between the client (2/3) and the service provider (1/3).
Occasional self-employment relationships are characterized by the following requirements:
- The performance of professional activity;
- Performed in complete autonomy about the time and manner of performance;
- With mere instantaneous execution, that is, for a contingent, eventual and episodic fact.
Essentially, therefore, it must be a relationship whose interest of the parties is limited to the achievement of the established result.
Occasional services do not require regularity. Therefore, when the relationship is characterized by an abiding interest of the employee or the client to carry out or receive, respectively, one or more services, even periodical ones, over time, the form of occasional services cannot be used. In these cases, on the contrary, it is compulsory to open a VAT number or to start an employment relationship.
When the occasional self-employed worker exceeds the threshold of €5,000 gross per year, he/she is obliged to make compulsory social security contributions. These are contributions due to the INPS separate account.
The provision of occasional self-employment
It is a work service in which the service provider undertakes to perform a service on the client’s commission. Hence, the use of occasional services, regardless of the amount of compensation agreed, but must always respect the constraint of the infrequent nature of the service.
Self-employed work, carried out through several operations by the provider, cannot be regarded as ‘occasional’ work.
This is because the same performance is repeated several times over time.
The same consideration must be given to all those activities that require service for specific periods of the year.
If, however, even after some time, the person is called to perform the same activity, even by a different client, it can no longer fall into the case of occasional work. It is easy to understand that the periodic nature is replaced by the repetitiveness of the service performed in this case.
In this case, it is mandatory to open a VAT number. The provider, in fact, for the mere fact of having organized to receive a second call in the future, through advertising, word of mouth, or ads in newspapers or on the web, is scheduled to perform in a “professional” (and therefore no longer “occasional”) the activity.
Income from occasional self-employment
Income deriving from occasional self-employment falls into the category of so-called “other income” for income tax purposes, governed by article 67 of Presidential Decree no. 917/86.
The category of miscellaneous income includes all those types of income that cannot be classified in the other income categories provided for in Article 6 of Presidential Decree 917/86.
The gross tax thus determined will then be subtracted from the withholding taxes incurred in the occasional self-employment (and possibly other withholding taxes incurred). In this way, the net tax to be paid is determined.
Social security contributions in occasional self-employment
For individuals who perform occasional services, the obligation to pay contributions is triggered when the gross income received through this activity exceeds €5,000. INPS provides that, when the gross annual remuneration received with occasional services exceeds the threshold of € 5,000, the subject is obliged to enroll in the separate management of INPS.
It is good to reiterate, therefore, that the income of €. 5,000 is an exemption band: contributions are due only on the portion of income exceeding €. 5,000.
Social security contributions to the separate management
The separate management of INPS is compulsory social security management to which self-employed workers who do not belong to another professional association are obliged to enroll, which provides for precise contribution obligations.
Contributions are due at different rates depending on whether the occasional worker has no other mandatory social security protection.
For example, if the casual worker is subject to other contribution obligations or is already in receipt of a direct pension (seniority, old age, or invalidity), the contributions due are applied at a reduced rate.
Otherwise, the social security contributions to the separate management are due at the total rate.
Birth of the obligation to contribute
From a legal point of view, the social security relationship between occasional self-employment and INPS begins in the month when the income of €5,000 is exceeded.
Once the limit has been exceeded, therefore, the workers must enroll in the separate management scheme.
In the presence of more than one relationship, it will be the worker himself who will have to inform the various clients about the fact that the exemption ceiling has been exceeded. For this reason, it is essential to always keep under control the volume of income received concerning social security contributions.
Method of payment of social security contributions
The payment of the social security contributions due is charged to the principal. Once the exemption band of €. 5,000 is exceeded, regarding each calendar year, the principal or the principals concerned must pay the contributions on the further emoluments paid by them in the year mentioned above.
Expenses charged to the client
It follows that in the presence of expenses to be charged to the client, the taxable base on which to apply the withholding tax and the social security tax would be different:
- The fiscal one is represented by the total amount charged to the client (including expenses);
- The social security one is instead represented only by the remuneration referred to the work service, therefore net of expenses.
Finally, it should be noted that the part of the contribution to be borne by the employee (equal to one third), even if it represents a shared deductible from income, should not be recognized by the principal when applying the tax withholding in the same way as for coordinated and continuous collaborators in general.
In any case, the contribution withheld by the principal can be deducted in the R.P. panel when filling out the Income P.F. model or in the E panel of the 730.
Occasional performance: obligation to VAT registration exceeded the limit of 5,000 euros?
One of the many false information on the web wants that to exceed the threshold of exemption is necessary to open VAT.
Well, that is incorrect information.
As said, the obligation linked to the VAT number does not arise with income limits. Instead, this obligation is connected to the exercise of activity continuously and habitually over time.
It is necessary to consider that the 15% substitute tax provided by the flat-rate regime is undoubtedly more convenient than the application of the 20% withholding tax. You are withholding tax for occasional services. In addition, even in the area of social security contributions, you can check the possibility of asking for a reduction in contributions to INPS.
Social security contributions and occasional work: conclusions
When preparing a receipt for occasional services, particular attention must be paid to social security contributions.
When the gross amount of € 5,000 is exceeded, the service provider must inform all his clients about applying for the social security deduction. Once the threshold has been exceeded, the clients must withhold 1/3 of the social security contributions from the service provider.
This social security deduction must be shown on the receipt issued by the service provider to the client.
The mistake most often made in these cases is forgetting one’s threshold of remuneration received. The consequence is the failure to notify the clients who are unable to apply the social security withholdings.
If you find yourself in this situation, the only solution available to you is to regularize your position by filling in the “R.R.” box of the “Redditi PF” model. This panel, concerning social security contributions, must be filled in for the total payment of your contributions. In this case, all contributions remain the responsibility of the lender.