Tax residency in Bulgaria

Definition and requirements

In Bulgaria both resident and non-resident taxable persons can be employed. A resident person is someone who:

• has a permanent address in Bulgaria
• who is present within the territory of Bulgaria for a period exceeding 183 days in any twelve-month period
• who is sent abroad by the Bulgarian State, by bodies or organizations thereof, by Bulgarian enterprises, and the members of the family of any such person
• whose centre of vital interests is situated in Bulgaria

The taxation of individuals is based on their tax residency status in Bulgaria. Bulgarian tax residents must pay taxes from their international income. Non-residents pay taxes only from their income in Bulgaria, which encompasses a wide range of legal definitions. In general, this includes all the income derived as a result of economic activity (employment, entrepreneurship, etc.) throughout the whole territory of Bulgaria, or as a result of property sale in Bulgaria.

Any income earned or paid to employees or for services provided in Bulgaria is subject to Bulgarian taxation obligations, irrespective of the payment’s origin or payer. This also extends to income derived from the rental or sale of real estate property located in Bulgaria on behalf of your employees.

Days of presence

For the purposes of calculating the days of presence in Bulgaria within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure). The period of residence in Bulgaria for the sole purpose of education or medical treatment are not considered as days of presence related to tax duties.

Split tax residency

Split tax residency is acknowledged between more countries within one tax period.

Personal income tax in Bulgaria

Tax rate and tax period

• 10% is the applicable tax rate
• 1% is the applicable tax rate for any income acquired in a seafarer capacity

In Bulgaria, the tax period is the same as the calendar year.

Based on the local tax system, salaries paid in January for the work completed in December are considered as taxable income of the next calendar year.

Tax base and deductions

In general, the tax base is calculated from the gross income decreased with compulsory social and health insurance contributions withheld by the employer which are for the account of the employee, decreased by non-taxable parts of the income and tax reliefs, if applicable.

The non-taxable income from work based on an employment contract, subject to specific conditions and requirements set in the law includes the following:

• the value of the food vouchers (paper as well as electronic) – as of April 2024, the maximum monthly non-taxable amount of food vouchers for each employee is up to BGN 200
• the amount of allowance for travel and accommodation within certain limits for a business trip, documented in accordance with legislation   
• the amount of daily business trip allowances, not exceeding the double amount legally specified
• certain payments and benefits provided by the employer, in compliance with the labour code of Bulgaria

Furthermore, the following deductions are applicable:

• tax reliefs for reduced work capacity – for persons whose capacity of work is reduced by 50% or more in an employment relation, the monthly taxable income is decreased by 660 BGN
• tax reliefs for young married couples
• tax reliefs for persons who made donations during the year
• tax reliefs for employees who made personal voluntary social insurance contributions remitted during the month through an employer
• tax reliefs for employees who have children under the age of 18 (the amount depends on the number of children) – The amount of tax relief for children in 2024 is defined at BGN 6,000 for one child, BGN 12,000 for two children, BGN 18,000 for three or more children.

tax reliefs for employees who have children with disabilities – The amount of tax relief for children with disabilities in 2024 is defined at BGN 12,000.

Social security contributions in Bulgaria

Social security rates and registration

Social security is due by both the employer and employee. The aggregate rate of social security contributions is the following:

• 13.72% – 14.12% is paid by the employer (depending on the company’s economic activity, in Bulgaria there is a social security fund called Occupational Accident and Disease, which varies between 0.1 and 0.5 per cent of the employees’ insurable income. Thus, 13.72% is the minimum amount and 14.12% is maximum)
• 10.58% is paid by the employee

The national insurance contributions include both the social security and health insurance contributions.

The aggregate rate of health insurance contributions is 8%, of which:

• 4.8% is paid by the employer
• 3.2% Is paid by the employee

These rates are applicable both to Bulgarian and EU/EEA nationals subject to Bulgarian social security contributions. Under certain conditions, non-EU/EEA nationals are also subject to these contributions. In case they have a permit for long-term or permanent residence in Bulgaria, they are also subject to for health insurance contributions.

The minimum insurance base for individuals working in employment depends on their economic activity, profession and grade. The minimum base for 2022 varies between BGN 933 and BGN 1,763. The maximum monthly insurance base is maximum BGN 3,750.

Social security base calculation

Social security contributions are calculated from the income received as all kind of labour remunerations under the Bulgarian legislation with several explicit exceptions. The calculation base is multiplied by the applicable rate. The minimum calculation base is BGN 933, and the maximum is BGN 3,750, which applies to the whole income of the employee from all employees.

The social security contributions are divided and paid into several funds such as pensions, unemployment, general illness or maternity funds and others.

Payment and reporting of the social security

Contributions are paid through payment orders to specific accounts of the national social insurance office. Foreigners need a Personal Number of Foreigner (PNF) issues by the National Revenue Agency in order to conclude the payments.

Based on the Bulgarian legislation, all employers are obliged to withhold and pay the advance tax for employees on a monthly basis by the 25th day of the month, following the month in which the wage is paid. Social security contributions are also concluded on a monthly basis. The contributions payable by the employee and employer are deducted by the employer from the employee’s monthly salary and paid to the National Revenue Agency.

A1 Forms

The A1 form is issued upon request, after submitting the necessary documents. Once the submission is done, the competent authorities review the existence of a ground for issuance. If additional information is needed, additional documents may be required during the inspection. The duration of the procedure is 30 days from the submission of the request, unless the request is not submitted through the right territorial agency, in which case the deadline is 45 days. The rejection to issue the A1 form may be appealed.

The A1 form is issued for the period indicated in the request, corresponding to the period of the business trip abroad, but not more than 24 months.

Health insurance contributions in Bulgaria

Health insurance rates and registration

• 8% is the rate of health insurance in Bulgaria

The employer is obliged to deduct, pay and report these contributions on behalf of the employee from their income on a monthly basis.

Health insurance base calculation

Health insurance contributions are calculated from the income and the calculation base is multiplied by the applicable rate. The minimum calculation base is BGN 933, and the maximum is BGN 3,750, which applies to the whole income of the employee from all employees.

Payment and reporting of the health insurance

Health insurance contributions are calculated and paid separately from the due tax. 60% of the contributions is covered by the employer and 40% by the employee. The reporting and the deposition of the whole payment is done by the employer.

If a person is employed by multiple employers, all of them are obliged to report and pay health insurance contributions unless the whole income of the employee from all employers is higher than the maximum calculation base. In that case, the employee is obliged to inform the second employer about the amount of the health insurance contributions paid by the first employer so that the other would not deposit contributions over the maximum calculation base. For example, in case the income of the employee from the first employer is higher than BGN 3,750, the second employer would not pay health insurance contributions.

The contributions are paid and reported monthly and are subject to the yearly reconciliation.

Bulgarian tax resident working in one or more other countries

Personal income tax return filing

In case the employee is a tax resident tax of Bulgaria and receives income taxable abroad, they are obliged to file an annual tax return in Bulgaria.

The tax return shall be submitted between January 10 and April 30 in the following year after the acquisition of the income. However, this due period may be extended for example when the person deceases – in that case the annual tax return may be filed by the heirs after April 30, but no later than 6 months after the death of the person.

The tax return can be filed electronically, by post or at the territorial department, personally or by an authorized person. The self-insured persons are obliged to file their tax returns only electronically. Representation by a tax adviser and power of attorney is not required.

Avoiding double taxation

If there is no double tax treaty, to avoid double taxation the provisions of the local legislation should be applicable. If there is a double tax treaty, which allows the application of a set-off method, the exemption method can be applied if it is more beneficial for the employee. For the purposes of avoiding double taxation, generally, a certificate on the paid tax or similar confirmation is required. Also, a tax return filed in other country after certified translation might be accepted.

Tax benefits and other specifics

To apply for available tax benefits, respective evidence is required. Depending on the respective tax benefit the evidence or documentation may need to be presented to the tax authorities with the tax return.

In general, provided that there is a single employer, and the employee works for them also in another country, the income is attributable to the country where the work is performed.

Tax resident of other country working and paying taxes in Bulgaria

Personal income tax return filing

The employer is obliged to report and pay tax in advance monthly and the tax is also subject to a yearly reconciliation.

The monthly tax is due till the 25th day of the month following the month in which the tax is withheld. In case the annual amount of the tax is higher than the sum of the withheld tax during the year, the employer shall pay the additional amount not later than January 31 of the following year.

If the foreign person is not a resident of Bulgaria, receives income only from an employment contract with no other income and does not use tax benefits, they are not obliged to file for an annual tax return. Employers provide to the National Revenue Agency the information on employment income accrued or paid in favour of employees who are resident persons in another EU member state.

The annual tax return shall be submitted between January 10 and April 30 of the year following the acquisition of the income. However, this period may be extended for example when the person deceases – in that case the annual tax return may be filed by the heirs after April 30, but no later than 6 months after the death of the person.

The tax return can be filed electronically, by post or at the territorial department, personally or by an authorized person. The self-insured persons are obliged to file their tax returns only electronically. Representation by a tax adviser and power of attorney is not required.

An entirely new provision in the Law for amendment and supplement of the Foreigners in the Republic of Bulgaria act introduces “Startup Visa” already in Bulgaria. With this innovation, entrepreneurs coming from countries outside the European Union to start a business in Bulgaria will have a faster opportunity to reside in the country. Whether a person meets the conditions for an entrepreneur is determined by the Expert council at the Ministry of Innovation.

To be issued a “Startup Visa“, an individual shall:

• Application form
• А copy of the identity document with the applicant’s photo and personal data;
• Business plan and presentation of the project;
• A document for a valid invention patent or a valid certificate of registration of a utility model for the EU, the USA or member states of the Organization for Economic Cooperation and Development, in connection with the project, when applicable;
• An investment contract with a specialized international equity and risk investment fund for no less than BGN 100,000, as well as a recommendation issued by the relevant fund for the applicant’s contribution to the project, when applicable;
• A contract or letter of intent for investment from a fund for equity and risk investing in the Republic of Bulgaria for no less than BGN 100,000, when applicable;
• Project quality certificate (Seal of Excellence) under the Horizon 2020 or Horizon Europe programs, when applicable;
• Proof that the project has been awarded in a specialized competition or competition in the field of innovation and entrepreneurship organized by the European Commission or the European Space Agency, when applicable;
• Proof of at least two published scientific articles in the upper quartiles Q1 or Q2 in the international databases Scopus or Web of Science, when applicable;
• A document for a completed degree of education, when applicable;
• Bank or equivalent document certifying the availability of the applicant’s personal funds for at least 30 consecutive days before the date of the application, covering the amount of at least three minimum wages in the Republic of Bulgaria;
• Information on realized sales related to the activity, product or service, proven by contracts, expense justification documents and bank statements for a minimum of BGN 100,000 for the last two years, when applicable;
• Letters of intent or partnership agreements with Bulgarian partners, when applicable.

Tax benefits and other specifics

Entitlement to tax benefits is not subject to a minimum value of income having source in Bulgaria. To apply for available tax benefits, respective evidence is required. Depending on the respective tax benefit the evidence or documentation may need to be presented to the tax authorities with the tax return.

In general, provided that there is a single employer, and the employee works for them also in another country, the income is attributable to the country where the work is performed.

Penalties in Bulgaria

Penalties related to tax

• Delayed filing of the tax return: Monetary penalty of max. BGN 500, unless subject to severe sanctions. Upon repeated violation, the penalty is max. BGN 1,000, unless subject to sever sanctions
• Delayed payment of the due tax: Monetary penalty of max. BGN 1,000, unless subject to severe sanctions. Upon repeated violation, the penalty is max. BGN 2,000, unless subject to sever sanctions
• Delayed or missing registrations at tax authorities: Any employer who within 3 days of concluding or amending the employment contract, and within 7 days of its termination, do not notify the respective territorial directorate of the National Revenue Agency, shall be punished with a sanction from BGN 1,500 to BGN 15,000, and the officer receives a fine in the amount from BGN 1,000 to 10,000, for each separate violation
• Delayed or missing report on monthly salary or withholding tax from salary: Monetary penalty of max. BGN 1,000, unless subject to severe sanctions. Upon repeated violation, the penalty is max. BGN 2,000, unless subject to sever sanctions

Penalties related to social security

• Not requesting an A1 form from the respective authorities: There is no special penalty related to A1 forms in Bulgaria. However, in case the employee is sent to perform work in another EU member state, a missing A1 form may lead to the double payment of the social insurance contributions, both in the home country and the host country
• Delayed report on social security: A fine of BGN 50 to BGN 500 for individuals who are not traders, or with a pecuniary sanction for sole traders and legal entities in the amount of BGN 500 to BGN 5,000, if not subject to a heavier penalty. For provided data with incorrect content, in order to avoid the payment of mandatory insurance contributions – a fine of BGN 50 to BGN 250 for each individual case, if not subject to a heavier penalty.
• Delayed payment of the social security contributions: There is no penalty for late social security contributions, interest is charged on the amount owed.
• Delayed or missing registrations for the purposes of social security: Any employer who within 3 days of concluding or amending the employment contract, and within 7 days of its termination, does not notify the respective territorial directorate of the National Revenue Agency, shall be punished with a sanction from BGN 1,500 to BGN 15,000, and the officer receives a fine in the amount from BGN 1,000 to 10,000, for each separate violation. An entirely new provision in the Law for amendment and supplement of the Foreigners sets out administrative penalties for non-compliance with the procedure for hiring foreigners, third-country nationals, to work in Bulgaria. If the Directorate “Migration” is not notified of the termination of employment of a foreigner, as provided by law. As well as if a foreigner who holds a valid visa but does not have a residence permit is hired, fines should be imposed as follows: BGN 1,000 fine for an employer – an individual BGN 3,000 property sanction for the employer – legal entity. In case of repeated violation, the amount of the sanction is BGN 9,000.

Penalties related to health insurance

• Delayed report on health insurance: Any officer or employer who fails to submit required information or discloses false information regarding the insurance relationship with the National Health Insurance Fund, is liable to a fine from BGN 500 to BGN 1,000 for natural persons and for sole traders. The monetary sanction for companies ranges from BGN 2,000 to BGN 4,000. Any repeated violation is punishable by a fine of BGN 2,000 for natural persons or sole traders and BGN 8,000 for companies
• Delayed payment of the health insurance contributions: Any officer or employer who fails to pay the health insurance contributions is liable to a fine ranging from BGN 2,000 to BGN 4,000 for natural persons or sole traders and from BGN 4,000 to 8,000 for companies. Any repeated violation is punishable by a fine of BGN 4,000 to BGN 8,000 or monetary sanction from BGN 10,000 to BGN 15,000
• Delayed or missing registrations for the purposes of health insurance: Any employer who within 3 days of concluding or amending the employment contract, and within 7 days of its termination, does not notify the respective territorial directorate of the National Revenue Agency, shall be punished with a sanction from BGN 1,500 to BGN 15,000, and the officer receives a fine in the amount from BGN 1,000 to 10,000, for each separate violation

Criminal acts

A person concealing mandatory contributions for public social security or health insurance in larger amounts than BGN 3,000 shall be punished by imprisonment for up to five years and given a fine of up to BGN 2,000. In case the amount of contributions exceeds BGN 12,000, the time of imprisonment ranges between two and eight years with the threat that either a part or the whole possessions of the perpetrator will be confiscated.

A person who avoids the assessment or payment of tax obligations shall be punished by imprisonment from one to six years and a fine of up to BGN 2 000, in case the size of the tax obligation is more than BGN 3.000. If the amount exceeds BGN 12,000, the time of imprisonment ranges between three and eight years with the threat that either a part or the whole possessions of the perpetrator will be confiscated.

The later reporting or payment of due tax or contributions does not avoid criminal punishment but makes it smaller. If prior to the conclusion of the judicial inquiry at the first instance court the mandatory contributions for public social security or health insurance or the undeclared and unpaid tax obligation is paid into the budget together with the interest thereon, the punishment shall be:

• deprivation of liberty for up to two years and a fine of up to BGN 500, in case the size of the contributions or the tax obligation is more than BGN 3,000
• deprivation of liberty for up to three years and a fine of up to BGN 1,000, in case the size of the contributions or the tax obligation is more than BGN 12,000

Tax residency in Cyprus

Tax residency in Egypt

Definition and requirements

Individuals are residents of Egypt if they meet any of the following conditions:

• Egypt is their place of habitual abode, i.e. the taxpayers is present in Egypt most of the year whether in an owned or leased residence or the taxpayer has a commercial, professional, or industrial place of business or any other place of business.
• Individuals residing in Egypt for a period exceeding 183 days whether continuously or non-continuously in a 12-month period.
• Egyptians who perform their services overseas and receive their income from an Egyptian treasury (public or private).

Days of presence

Residing in Egypt for more than 183 continuous or intermittent days within twelve months and any part of the day is considered as whole day in Egypt including day of arrival and day of departure.

Split tax residency

Split tax residency is acknowledged between more countries within one tax period.

Personal income tax

Tax rate and tax period

The current tax rates in Egypt are the following:

• 0% on income between EGP 0 and EGP 40,000
• 10% on income between EGP 40,001 and EGP 55,000
• 15% on income between EGP 55,001 and EGP 70,000
• 20% on income between EGP 70,001 and EGP 200,000
• 22.5% on income between EGP 200,001 and EGP 400,000
• 25% on income between EGP 400,001 and EGP 1,200,000
• 27.5% on income above EGP 1,200,000

At higher rates of annual income, the brackets cease to be applied:

• Between EGP 600,000 and EGP 700,000 no exemption on the first EGP 40,000
• Between EGP 700,001 and EPG 800,000 no 10% bracket applied
• Between EGP 800,001 and EPG 900,000 no 15% bracket applied
• Between EGP 900,001 and EPG 1,200.000 no 20% bracket applied
• Above EGP 1,200,000 no 22.5% bracket applied

The tax period is the same as the calendar year. Based on the local tax system, salaries paid in January for the work performed in December are considered as taxable income for December.

Tax base and deductions

The net taxable amount is determined based on the gross taxable income (including salary and all benefits) after deducting the following:

• Personal relief of EGP 20,000
• Employee’s share of local social insurance
• Exemption of special increases will continue to apply.
• End of services payments and pensions
• Life insurance and medical insurance to a certain extent
• Collective benefits-in-kind
• Employee’s profit share

To increase their tax base, the following deductions are allowed for employees:

• Personal relief of EGP 20,000, calculated on a prorate basis, applicable to all employees.
• Employee’s share of social insurance
• A special increase amount paid by the employer is tax-exempt within certain limits, according to a presidential decree.
• Life insurance and medical insurance – however, in case the insurance premium is paid by the employer, the payment will be treated as a taxable benefit on specific conditions.
• End of services payments and pensions are exempt from taxes provided that a number of documents should be available to the tax authority during the salary tax inspection – however, in practice this is not allowed for expats.
• Collective benefits-in-kind – based on the new tax law these are: meals for employees, collective transportation for employees or its cost, medical care, tools and uniforms for work purposes, and housing provided by the employer for all employees.
• Employee’s profit share, exempt under the Tax Law 91 for 2005.

Social security contributions in Egypt

Social security rates and registration

• 11% rate for the employer
• 18.75% rate for the employee
• 25% rate for self-employed taxpayers (at the governorates that apply the comprehensive health insurance scheme)
• 21% rate for self-employed taxpayers (at the governorates that don`t apply the comprehensive health insurance scheme)

Therefore, in Egypt the social security is paid by both the employee and employer, while the employer is obliged to register the employee under the entity name in the social insurance authority since day 1. Both local and foreign employers must register, deduct, and pay the respective contributions on behalf of the employee and the employer. However, this does not apply to foreign employers who are not operating in Egypt under a legal entity.

Social security base calculation

The minimum insurance salary for the year 2024 is EGP 2,000, increased annually by 15% till January 1, 2027, by rounding the result to the highest EGP 100. (Taking into consideration that the minimum wage in 2024 is EGP 3,500 as per the presidential decree. However, some employers are allowed to register the employees at the minimum of EGP 2,000 after submitting a request for exception of applying the minimum wage presidential decree until October 15^th, 2021)

The maximum insurance salary for the year 2024 is EGP 12,600, increased annually by 15% till January 1, 2027, by rounding the result to the highest EGP 100. It applies only to the income from the employer who is insuring the employee.

Starting from Jan 1^st, 2028, the increase will be determined according to the inflation rate at that moment.

Payment and reporting of the social security

Social security is paid both by the employee and the employer, but the reporting and payments are done by the employer monthly.

Social insurance contributions are levied only on Egyptian nationals with full-time employment, therefore in case of 2 employers only the main employer is obliged to pay the contributions, on a monthly basis.

There is no obligatory reporting monthly, however, the employer must submit separate forms for the new hires (form no. 1) and leavers (form no. 6) and another form no. 2 once annually in January of each year for the whole insured population of the company to reflect any changes in salaries or titles.

Recently, there is no need any more to buy the official forms no. 1, 6 or 2 from SI authority & it is accepted to print these forms & fill them in with the employee’s data to be presented to the SI office.

Also, it is allowed to submit form 1 & 6 through NOSI portal by using the token however, so far, not all forms can be successfully submitted & still need to be physically submitted through SI office.

Health insurance contributions in Egypt

Health insurance rates

Based on the Social Insurance law, health insurance is paid by both the employer and the employee. In the additional comprehensive health insurance scheme, it is paid only by the employee.

Currently, health insurance is included in the monthly social insurance contributions as per social insurance law. However, there is an additional Comprehensive Health Insurance Scheme under the gradual application which will be generalised on the rest of the country gradually. The additional health insurance scheme contribution is 1% of the gross salary.

Health insurance base calculation

Currently, the minimum and maximum calculation base for health insurance is based on the minimum and maximum insured salary. In the additional comprehensive health insurance scheme, it is based on the gross salary.

The maximum calculation base applies only to the income from the employer who is insuring the employee.

The due health insurance is calculated as a rate of the employee`s insured salary. In the additional comprehensive health insurance scheme, it will be a rate of the gross salary.

Payment and reporting of the health insurance

Given that health insurance is included in the monthly social insurance contributions as per social insurance law, it is paid and reported the same way.

Egyptian tax resident working in one or more other countries

Personal income tax return filing

In case the employee is a tax resident of Egypt and receives income taxable abroad, they are obliged to file an annual tax return in Egypt.

The tax return is due in January of each calendar year. It is not explicitly mentioned in the income tax law whether the due period for filing can be extended, however, an interest will be applied in case of late payment.

The tax return can be filed by hand, but an online submission system is currently under development. Representation by tax adviser is not required, but if so, a signed power of attorney is required.

Avoiding double taxation

If there is no double tax treaty, local legislation is applicable. If the income from employment was taxed in such other country, the tax credit method would be applicable.

If the income from employment was taxed in such other country and it is more beneficial to the employee, it is possible to apply the exemption method.

Tax benefits and other specifics

To apply for available tax benefits respective evidence is required.

Provided that there is a single employer, and the employee works for them also in another country, the employee is taxed on their Egyptian-source income based on the rule of 183 days.

Tax resident of other country working and paying taxes in Egypt

Personal income tax return filing

Tax on employment income is withheld from the salary on a monthly basis. The employer is required to file quarterly tax statements in January, April, July, and October of each calendar year.

If an employer or a person required to pay taxable revenue is a non-resident of Egypt or does not have a headquarters or an establishment therein, the obligation to remit the tax falls on the person entitled to such taxable revenue. The employee has to submit Form no. 5 in this case.

In case of a foreign employer, the employee has to pay the due tax on the same date when they submit Form no. 5 at the beginning of January. On the contrary, in case of local employer, tax on employment income is withheld at source on a monthly basis. The due period for filing the tax return cannot be extended.

The tax return can be filed online.

Tax benefits and other specifics

To apply for available tax benefits respective evidence is required. However, the annual personal exemption of EGP 9,000 (expected to be EGP 21,000 starting from July 1^st, 2023) is applicable to all employees to a minimum value of income.

For tax donations, the following information may be required:

• 0.05% of the net salaries to honour martyrs, victims, missing and injured in military, terrorist and security operations and their families.

Provided that there is a single employer, and the employee works for them also in another country, the employee is taxed on their Egyptian-source income based on the rule of 183 days.

Penalties

Penalties related to tax

• Delayed filing of the tax return:The fine is ranging from EGP 3,000 to EGP 50,000 for:
  • Failing to submit the tax returns of (CIT, payroll tax, VAT, and state development tax) within 60 days after the legal date of submission. After 60 days, the fine ranges from EGP 50,000 to EGP 2,000,000. In case the delayed filing is repeated within the next 3 years, the fine is doubled.
  • Including false information in the tax returns.
  • Non-cooperation during tax audits.
  • Non-compliance with the transfer pricing three-tier filing requirements.
• Not notifying the ETA of change(s) in the company’s tax registration information within a period of 30 days of such change: Penalty of EGP 20,000 up to EGP 100,000 is applicable.

Penalties related to social security

• Delayed report on social security/No reporting/Misleading salary information: The penalty for employee registration form (Form 1) ranges between EGP 30,000 and EGP 100,000. The penalty for employee deregistration delay is subject to the social insurance inspector judgment. For the filing of Form no. 2 which states all registered employees in the company, the delay filing penalty is 50% of the difference between the old and new social insurance contributions amounts up to the filing date.
• Delayed payment of the social security contributions: The penalty is 50% of the due total contribution amount for one-month delay. If the payment was delayed for more than one month, the account will be blocked so no registrations or de-registrations or printouts can be processed until the full delayed amount is paid, in addition to 50% as a delay penalty + delay interest.

Prepared by:

Fathalla Solutions | Egypt

Tax residency in Morocco

Definition and requirements

Individuals are a tax resident of Morocco if they meet any of these criteria:

• Whether they have their permanent home in Morocco.
• Whether they spend more than 183 days in Morocco in any 12-month period.
• Whether they have their center of economic interests in Morocco.

Individuals who are not considered to be tax residents of Morocco may still be liable to pay Moroccan income tax on certain types of income, such as income from employment in Morocco or income from real estate located in Morocco. This is because Morocco has entered into a number of tax treaties with other countries, which are designed to avoid double taxation. Under these treaties, the right to tax certain types of income is usually attributed to the country where the income is earned.

Agents of the State who exercise their functions or are charged with a mission abroad are considered to have their tax domicile in Morocco when they are exempt from personal income tax in the foreign country where they reside.

This is a special rule that applies to Moroccan government officials who are stationed abroad. These officials are considered to have their tax domicile in Morocco, even if they are not physically present in Morocco, because they are exempt from paying personal income tax in the foreign country where they reside.

Days of presence

To be considered a tax residence in Morocco, you must stay in stay in Morocco for more than 183 days within any 365 days. Residing in Morocco for than 183 days continuous or discontinuous within twelve months and any part of the day is considered as whole in Morocco including the day of arrival and day of departure.

Split tax residency

Split tax residence is possible if the taxpayer resides in several countries during the same tax year. The tax residency is then determined based on international agreements (treaties between countries) in the absence of treaties, the national legislation of Morocco is applied.

Personal income tax in Morocco

Tax rate and tax period

Morocco uses a progressive income tax system that vary from 0% to 38%, meaning the tax rate increases as your income rises and the current tax rates in Morocco are the following:

Rate of monthly income, the brackets to be applied:

• 0% for monthly income between MAD 0 and MAD 2,500
• 10% for monthly income between MAD 2,051 and MAD 4,166.66
• 20% for monthly income between MAD 4,166.67 and MAD 5,000
• 30% for monthly income between MAD 5,001 and MAD 6,666.66
• 34% for monthly income between MAD 6,666.67 and MAD 15,000
• 38% for monthly income above MAD 15,000

At higher rates of annual income, the brackets to be applied:

• 0% for annual income between MAD 0 and MAD 30,000
• 10% for annual income between MAD 30,001 and MAD 50,000
• 20% for annual income between MAD 50,001 and MAD 60,000
• 30% for annual income between MAD 60,001 and MAD 80,000
• 34% for annual income between MAD 80,001 and MAD 180,000
• 38% for annual income above MAD 180,000

The tax period is the same as the calendar year. Based on the Moroccan tax law, salaries paid in January for the work performed in December are considered taxable income for December. Article 73 CGI

Tax base and deductions

Generally, the tax base is calculated from the net taxable income based on the gross taxable income subtract the salary deductions (non-taxable allowance).

Here are the steps to determine the tax base:

• Net Tax = Gross tax base – tax deductions:
  Tax deductions are generally based on family expenses.
  • Set at MAD 30 per child per month.
  • Limit of six children (30 × 6 = MAD 180)
• Gross Tax = Net Taxable income * rate – deductions amount.
  The Rate and deductions on income are stated in table (1) above.
• Net Taxable Income = Gross Taxable Income – Salary deductions.
  Salary deductions may include:
  • Professional expenses: Expenses inherent in the execution of his profession calculated at the rate of 20% for all professional categories.However, there are some changes on the rate according to the CGI 2024. (25% if gross annual taxable income is more than MAD 78,000 with an increase in the deduction limit from MAD 30,000 to MAD 35,000; 35% if the gross annual taxable income is less than or equal to MAD 78,000). These changes could be found in the 2023 Finance Act (La loi de Finance 2023).
  • Social security contributions: Contributions to social welfare organizations, as well as employee social security contributions
  • Pensions and retirements : (CIMR : Caisse Interprofessionnelle Marocaine de Retraite) contribution
  • Health expenses: (AMO: Assurance Maladie Obligatoire)
  • Repayments in principal and interest of loans taken out for the constructions or the acquisition cost housing intended as a main residence.
• Gross Taxable income: Gross Salary global – Non-taxable allowances
  The non-taxable income may include:
  • Justified transport expenses
  • Family allowances and family assistance allowances
  • Severance pays
  • Meal allowances
  • Sickness and maternity benefits
    The gross global salary is the sum of:
  • Basic salary
  • Overtime pay
  • Bonuses
  • Allowances
  • Family allowances
  • Pensions and retirement

Other extensions according to the local law include the following:

Extension of the income tax exemption period for newly recruited employees until December 31, 2026:

As part of the measures to encourage and support employment and improve the competitiveness of businesses, the 2023 Finance Law (LF) has extended the duration of the income tax exemption for the monthly gross salary capped at MAD 10,000 paid by a company, association or cooperative created during the period from January 1, 2015, to December 31, 2026 and up to a limit of 10 employees.

This benefit is granted, subject to compliance with certain conditions:

• The exemption from income tax for a period of 24 months, from the date of recruitment of the employee.
• The employee benefiting from the exemption is recruited under a permanent contract.

Extension of the duration of the income tax exemption for salaries paid for the first recruitments of young people until December 31, 2026, regardless of the date of creation of the company:

In order to continue the action of encouraging the integration of young people into working life, who have not yet held a job, the Financial act of 2023 has extended the duration of the application of the income tax exemption, the salary paid by a company, association or cooperative, regardless of the date of its creation, to an employee on the occasion of his first recruitment, and this, during the first thirty-six (36) months from the date of said recruitment.

This exemption is granted under the following conditions:

• The employee must be recruited under a permanent employment contract, concluded during the period from January 1, 2021, to December 31, 2026.
• The employee must not be older than 35 years at the date of conclusion of his first employment contract.

There is tax reduction for certain investments and exemption for income.

Social security contributions in Morocco

Social security rates and registration

Social security is paid by both the employee and the employer.

The employer is responsible for deducting the employee’s portion from their salary and paying both employee and employer contributions to the CNSS (National Social Security Fund).

It is mandatory for both the employer and the employee to register with the CNSS (National Social Security Fund).

Local employers: Required to register and pay contributions for all employees.

Foreign employers: Required to register and pay contributions for all employees residing in Morocco.

Social security base calculation

The CNSS (Caisse Nationale de Sécurité Sociale) is the Moroccan national social security fund. It provides a range of benefits, including pensions, healthcare, and unemployment benefits. The base amount for calculating social security contributions is the employee’s gross salary, including basic salary, bonuses, allowances, and benefits in cash or kind.

The rates to be applied when calculating your contributions are determined by law. Each of the major categories of social benefits is characterized by its own contribution rate. The table below shows the rates for each category, regardless of its activity, except for fishermen:

Table (3): Calculation of the social security contributions

Benefits Category	Calculation Base	Employer Contribution Rate	Employee Contribution Rate	Total Rate
1. Family Benefits	Total actual salaries for the period (month/quarter)	6.40%	–	6.40%
2. Short-term social benefits	Total capped salaries (each capped at MAD 6,000)	1.05%	0.52%	1.57%
3. Long-term social benefits	Total capped salaries (each capped at MAD 6,000)	7.93%	3.96%	11.89%
4. Compulsory Health Insurance (AMO)	Total actual salaries for the period (month/quarter)	4.11%	2.26%	6.37%
5. Vocational Training Tax	Total actual salaries for the period (month/quarter)	1.60%	–	1.60%

 

In case an employee works for several employers, the maximum base amount applies to each employer individually, not to the employee’s total income from all employers.

Special Case: Foreign Employers:

Foreign employers may be subject to international social security agreements.

In such cases, contributions may be due in the employer’s home country.

Payment and reporting of the social security

All employers are required to report and pay social security and health insurance contributions for the employee, regardless of the work duration or number of employers.

Contributions are paid monthly by the employer to the National Social Security Fund (CNSS).

• Employer: Must report salaries and social contributions monthly to the CNSS through the “Electronic Salary Declaration” (DES) system.
• Employee: Must provide the employer with necessary documents for the declaration (social security certificate, etc.).

Social security is calculated and paid separately from income tax.

• International Agreements: International agreements exist with some countries. These may exempt employees from paying social security contributions in Morocco or reduce the amount.
• Special Regime: A special social security regime exists for employees on temporary assignment in Morocco.

A1 Forms

Authorities issue A1 forms for secondments to other countries, subject to meeting the requirements. The A1 form is issued by the CNSS.

• The maximum duration of the A1 form is typically 24 months.
• Exceptions may exist for specific situations, like long-term projects.
• There is a possibility of issuance for a longer period (1 to 2 years) for frequent travel abroad.

Health insurance contributions in Morocco

Health insurance rates and registration

The health insurance is not separate from the social security in Morocco and it is under the supervision of the CNSS.

Both employer and employee typically contribute to health insurance.

• The employer is generally responsible for registering the employee with the social security system.
• The employee may also register themself in some cases.

The local employer typically needs to register and pay contributions on behalf of both the employee and employer.

The foreign employer may be required to register and pay contributions in certain cases, such as for seconded workers.

Calculation of the health insurance base

The health insurance contribution base is generally the employee’s gross salary.

In case an employee works for several employers, the maximum base amount applies to each employer individually, not to the employee’s total income from all employers.

Payment and reporting of the health insurance

Each employer is obliged to register the employee with the CNSS. As the health Insurance deduction is included in the social security contributions, it is paid and reported the same way.

Contributions are generally paid monthly. Reporting is obligatory on monthly basis.

Health insurance is generally calculated and paid separately from income tax.

Moroccan tax resident working in one or more other countries

Personal income tax return filing

In the absence of treaty with the country, the national law regarding filling is applied. 

• Employees can file their own income tax return.
• Employers can also, under certain conditions, declare and pay the tax on behalf of the employee through the “Déclaration Patronale des Salaires” (DPS) system.

The income tax return filing deadline is generally 15 days following the filling month.

Generally, the extension of filing deadline is not possible. However, it can be extended in certain cases, such as for residents abroad and to request an extension, one has to contact the DGI and justify the reason for the request.

The income tax return can be filed online, by mail, or in person at the tax office.

• A tax advisor can represent the employee with a power of attorney.
• The power of attorney must be signed by both the employee and the tax advisor.
• It should specify the powers granted to the tax advisor.

Avoiding double taxation

If there is no double tax treaty, these methods for double taxation avoidance can be applied:

• Exemption Method: This method allows exempting income taxed in the other country.
• Tax Credit Method: This method allows deducting the tax paid in the other country from the tax owed in Morocco.

If there is a double tax treaty, which allows the application of set-off method:

• The employee can choose the exemption method if it’s more advantageous than the credit method.
• Certain conditions must be met to apply the exemption method, such as tax residency in the other country.

To apply a double taxation avoidance method, the employee needs to provide documents and evidence, such as a tax residency certificate and a tax return from the other country.

Tax benefits and other specifics

To obtain available tax benefits, the employee needs to provide documents and information, such as expense receipts.

• Tax Donations: Morocco offers tax incentives for donations to charities.
• There is a limit among allowed and the Association/Organisation benefiting from the donation must be registered under the authority.

If the employee has one employer and also works for them in another country, the source attribution rules depend on the applicable tax treaty between the two countries. Paid leave, public holidays, sick leave, bonuses, and benefits in kind are generally considered income sourced from Morocco.

Tax resident of other country working and paying taxes in Morocco

Personal income tax return filing

Both the employee or the employer are required to declare and pay tax monthly, and the deadline is generally 15 days after the end of the month.

The DPS system allows the employer to declare and pay tax on behalf of the employee.

The income tax return filing deadline is generally 15 days following the filling month.

Generally, the extension of filing deadline is not possible. Unless there is a double tax treaty with the employee‘s country of residence.

The income tax return can be filed online, by mail, or in person at the tax office.

• A tax advisor can represent the employee with a power of attorney.
• The power of attorney must be signed by both the employee and the tax advisor.
• It should specify the powers granted to the tax advisor.

Tax benefits and other specifics

To obtain available tax benefits, the employee needs to provide documents and information, such as expense receipts.

• Tax Donations: Morocco offers tax incentives for donations to charities.
• There is a limit among allowed and the Association/Organisation benefiting from the donation must be registered under the authority.

Penalties

Penalties related to tax

• Delayed filing of the tax return: The penalty for the delayed filing of the tax return is 15% increase to the amount of the tax due.
• Delayed payment of the due tax: Tax penalties provided by the CGI for delayed payment of tax is 10% penalty, 5% increase for the first month of delay and 0.5% for each additional month or fraction of a month. Article 208 of the CGI
• Delayed or missing registrations at tax authorities: Tax penalties provided by the CGI for delayed payment of tax is MAD 500 for either party.
• Delayed or missing report on monthly salary or withholding tax from salary: Tax penalties provided by the CGI for delayed payment of tax is 10% penalty, 5% increase for the first month of delay and 0.5% for each additional month or fraction of a month. Article 208 of the CGI.

Penalties related to social security

• Not requesting an A1 form from the respective authorities: MAD 500 per fiscal year
• Delayed report on social security: 5% of the amount of unpaid contributions and 0.5% per month of delay.
• Delayed payment of the social security contributions
  • For the general scheme: 3% of the amount of contributions for the first month or fraction of a month of delay and 1% per additional month.
  • For the AMO scheme: 1% for each month of delay.

Penalties related to health insurance

• Delayed payment of the health insurance contributions: MAD 500 per month

Criminal acts

The incorrect reporting of due tax, social security or health insurance contributions, their later reporting or missing payment is not regarded as criminal act but requires correcting the situation and paying penalties and payment interest.

Prepared by

FINACS | Morocco

Tax residency in Norway

Definition and requirements

In Norway, an expatriate becomes a tax resident if:

• the person stays for more than 183 days in Norway

In case the days are split between two income years, the employee becomes a tax resident from January 1 of the second year.

Days of presence

For the purposes of calculation of the days of presence in Norway within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

Split tax residency is acknowledged in Norway.

Personal income tax in Norway

Tax rate and tax period

• 22% is the applicable tax rate

The tax period is the same as the calendar year.

The Norwegian tax system has two bases of income. The ordinary income base is a net base. The tax on ordinary income is 22% for 2022. In addition, there is also the personal income base, which is a gross base for taxation. The bracket tax and the social security contributions for employees are based on this. Bracket tax is a progressive tax on gross salary and other personal income. The employee’s social security contribution is 7.8% of the gross income.

Bracket tax is a percentage share which changes according to earnings, and it is calculated from the employee’s income as an additional tax.

Based on the local tax system, salaries are usually paid in the current month, not in arrears. Therefore, the salary paid in January is taxable in the ongoing calendar year.

Tax base and deductions

The tax base is calculated from the general income, which is the total income of the employee after the deductions. The amount of tax the employee must pay will depend on the income. People on a low income pay proportionately less tax than those with a high income.

In general, there is no non-taxable part of the income, but the following deductions can be made:

• Personal allowance
• Deduction for commuters
• Deduction for interest on debt
• Child-care deduction

Social security contributions in Norway

Social security rates and registration

• 14.1% is the rate of social security contributions paid by the employer. Employers must pay an extra 5 % of social security contributions when employees exceeding NOK 850 000 in a yearly salary.
• 7.8% is the rate of social security contributions paid by the employee

A foreign national working in Norway must apply for an identification card and a tax card. In order to do so, the employee must personally go to one of the tax offices.

Both local and foreign employers are obliged to register and then deduct and pay the respective contributions on behalf of the employee and the employer´s part.

Social security base calculation

The social security paid by the employer is 14.1% of the income on top of the salary and all taxable benefits. When employees exceeding NOK 850 000 in a yearly salary there is additional 5 % in social security cost for the employer.

The social security paid by the employee is calculated as 7.8% from the income. In case the income of the employee was lower than NOK 60 000 in 2022, they do not have to pay national insurance contributions.

Payment and reporting of the social security

Employee’s social security contribution are calculated, paid and reported by the employer separately from due tax, as they are a separate system from tax. In case of multiple employers, all of them are obliged to report and pay the contributions.

In Norway, the public social insurance scheme is known as ‘folketrygden’ (National Insurance Scheme). Among other things, this scheme covers benefits from NAV and health services. In order to receive benefits under the National Insurance Act, the employee must be a member of the Norwegian National Insurance Scheme. If the employee is a member of the National Insurance Scheme in Norway, the employee must pay national insurance contributions. If the employee is not a member of the scheme, the employee can be granted an exemption from the obligation to pay national insurance contributions.

National insurance contributions are calculated from the employee’s personal gross income before deductions, paid bi-monthly and reported monthly by the employer. In case of multiple employers, all of them are obliged to report and pay the contributions.

A1 Forms

The Norwegian authorities issue the A1 forms in case of posting to other countries easily. As a rule, a person working in the EEA area should be covered by social security legislation in the country of work. Employees who are sent out to work temporarily in another EEA country must, under certain conditions, still be covered by social security legislation in the country where they usually work.

Health insurance contributions in Norway

Health insurance contributions are included in the social security contributions.

Norwegian tax resident working in one or more other countries

Personal income tax return filing

In case an employee is a tax resident of Norway, they are liable to pay tax in Norway on all income earned from the country or abroad. Therefore, filing of the tax return is mandatory.

The deadline for filing the tax return is April 30 every year. The extension of the deadline is not granted beyond 30 days. However, if the extension is granted, the employee cannot expect to receive the tax settlement in June.

The tax return can be filed online or by post. Representation by a tax adviser is voluntary, but it requires a signed power of attorney.

Avoiding double taxation

If there is no double tax treaty applicable and the employee paid tax abroad on the same income that is liable for tax in Norway, they can claim a deduction from the Norwegian tax for the foreign tax. The employee must include this in the tax return.

If a double tax treaty is applicable, it may limit the right of Norway to tax the income of the employee from abroad. Therefore, the employee must ask to be considered as a resident in the other country under the tax treaty. In that case, they must present the confirmation of their residence from the tax authorities in the other country.

Tax benefits and other specifics

To apply for available tax benefits respective evidence is required. Depending on the respective tax benefit the evidence or documentation may need to be presented to the tax authorities with the tax return.

Employees can claim a deduction from the taxable income for monetary donations to institutions which carry on scientific research with the involvement of the state. If employees have given a monetary donation of at least NOK 500 to a voluntary organisation or religious or belief-based community, they can get a deduction for them.

When it comes to the attribution of the income, individual parts of the income may need individual evaluation and attribution ratio as they may concern different time periods or situations.

Tax resident of other country working and paying taxes in Norway

Personal income tax return filing

Starting with the first day of the work of an employee in Norway, the legal employer is obliged to pay income tax for such employee in Norway, irrespective of the existence of a permanent establishment or the 183-day principle. Thus, income tax has to be withheld on a monthly basis. Only if the company applies for an exemption for the individual employee the legal employer has no withholding obligation.

If all the information is correct in the tax return and no changes are made, the employee does not have to do anything. Employees are responsible for ensuring that the information given in the tax return is correct. They must also check the information and correct any errors and add any missing information. In case of a local employer, the employer can file the tax return with Power of Attorney from the employee.

The deadline for filing the tax return is April 30 every year. The extension of the deadline is not granted beyond 30 days. However, if the extension is granted, the employee cannot expect to receive the tax settlement in June.

The tax return can be filed online or by post. Representation by a tax adviser is voluntary, but it requires a signed power of attorney.

Most foreign workers who are new in Norway will automatically become part of a voluntary tax scheme called PAYE (Pay As You Earn) when they apply for a tax deduction card. Under this scheme, you’re taxed at a fixed percentage that your employer deducts from your salary. If you’re part of the PAYE scheme, your tax is completed after your salary has been paid to you. You do not submit a tax return, nor do you receive a tax assessment notice. Instead, you’ll receive a receipt for PAYE tax, which shows how much salary and tax your employer has reported to the Tax Administration for the work you did last year. If you’re in the PAYE scheme, you’re taxed at a fixed percentage every month, no matter how much or little you earn. You’ll receive a tax receipt in August that shows how much salary and tax your employer has reported to the Tax Administration for the work you did last year.

Tax benefits and other specifics

To apply for available tax benefits, employees usually do not need to provide any documentation, but depending on the respective tax benefit the evidence or documentation may need to be presented to the tax authorities with the tax return upon their demand.

Employees can claim a deduction from the taxable income for monetary donations to institutions which carry on scientific research with the involvement of the state. If employees have given a monetary donation of at least NOK 500 to a voluntary organisation or religious or belief-based community, they can get a deduction for them. When it comes to the attribution of the income, individual parts of the income may need individual evaluation and attribution ratio as they may concern different time periods or situations.

Penalties

Penalties related to tax

• Delayed filing of the tax return: The additional tax rate is 20% of the tax advantage. In serious cases, the additional tax rate can increase up to 60%
• Delayed payment of the due tax: 10% is the currently applicable interest
• Delayed or missing registrations at tax authorities: The fine is NOK 127 per day for each recipient of the income. The penalty fee can be maximum NOK 1,277,000
• Delayed or missing report on monthly salary or withholding tax from salary: The fine is NOK 127 per day for each recipient of the income. The penalty fee can be maximum NOK 1,277,000

Penalties related to social security

• Not requesting an A1 form from the respective authorities: As a penalty, the employer has to pay social security contributions (14.1%) on top of the reported salary
• Delayed report on social security: There is a penalty fee for each day
• Delayed payment of the social security contributions: 10% is the currently applicable interest
• Delayed or missing registrations for the purposes of social security: The fine is NOK 127 per day for each recipient of the income. The penalty fee can be maximum NOK 1,277,000

Health insurance is reported together with withholding taxes and social security taxes.

Criminal acts

The incorrect reporting of due tax, social security or health insurance contributions or their missing payment results in an additional tax rate of 20% on the tax advantage. In serious cases the additional tax rate can increase up to 60%. Also, imprisonment can be assessed.

The possibility to avoid criminal punishment by a delayed reporting or payment of due tax, social security or health insurance contributions depends on the specific case.

Prepared by:

Econpartner AS | Norway

Tax residency in Portugal

Definition and requirements

In Portugal, a person is considered as a tax resident upon fulfilling either formal or material requirements, such as:

• having a permanent home in the country
• staying in the country for longer than 183 days within a period of 12 months

Upon arrival, the employee must declare their address of stay to the local tax office.

Days of presence

For the purposes of calculation of the days of presence in Portugal within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

Split tax residency is acknowledged within one tax period.

Personal income tax in Portugal

Tax rate and tax period

• 14.5 – 48% is the range of the applicable tax rates, based on the tax base

The tax period is the same as the calendar year. Based on the local tax system, salaries are paid at the end of the month (not in arrears), therefore salaries paid in January are considered as taxable income of the ongoing calendar year.

Tax base and deductions

Generally, the tax base is calculated from the gross taxable income, including benefit-in-kind.

The annual tax base below EUR 11,640 is not subject to tax. Other non-taxable parts of income are:

• Meal allowance
• Children allowance
• Cash responsibility allowance, until certain limits

The tax base can be further reduced by expenses related to family, health and health insurances, education, house mortgage or rental, among others. Other tax benefits include saving investments for retirement pensions or tax benefit for demanding invoices to suppliers.

Social security contributions in Portugal

Social security rates and registration

• 23.75% rate for the employer
• 11% rate for the employee

The total rate, therefore, is 34.75%.

The employee needs to register in Portugal for social security, while local and foreign employers must also register and then deduct and pay the respective contributions on behalf of the employee and the employer´s part.

Social security base calculation

The calculation base for social security is calculated monthly from the gross taxable income.

Payment and reporting of the social security

Social security is covered by due tax in Portugal, deducted, reported and paid by both local and foreign employer on a monthly basis.

A1 Forms

A1 forms for purposes of the Art. 12 of the EU regulation 883/2004 are generally issued only for the duration of each respective posting.

A1 forms for purposes of the Art. 13 or 16 of the EU regulation 883/2004 may be issued for period of 1 to 2 years or even longer.

Health insurance contributions in Portugal

Health insurance is covered by the social security contributions, but it is not mandatory. However, insurance for working accidents is mandatory, usually costing between 0.5% and 1% of the calculation base. It is paid by the employer on a monthly, quarterly or yearly basis, calculated from the gross income.

The employee needs to register in Portugal for this insurance, while local and foreign employers must also register and then deduct and pay the respective contributions on behalf of the employee and the employer´s part.

Portugal tax resident working in one or more other countries

Personal income tax return filing

Any employee with income taxable abroad is obliged to file an income tax return, whereas a yearly tax reconciliation by the employer is not allowed.

The due date for filing the tax return falls on June 30, with the possibility to extend the deadline till December 31 for incomes having source abroad in case the tax assessment in the other jurisdiction is not finalised until June 30. If a new fact resurfaces that has an impact on the tax assessment, a 30-day long extension is possible

The filing must be done online. Representation by a tax adviser and power of attorney is not required.

Avoiding double taxation

If there is no double tax treaty, the set-off method can be applied, limited to the applicable tax in Portugal. If there is a double tax treaty, the set-off method can be applied limited to the tax paid abroad. The application of the exemption method only applies to non-habitual residents, which is a special tax regime to new residents. To apply the respective method, a certificate on paid tax or similar confirmation is required.

Tax benefits and other specifics

To apply for available tax benefits respective evidence is required. Depending on the respective tax benefit the evidence or documentation may need to be presented to the tax authorities with the tax return.

In Portugal, 0.5% of the paid tax may be donated to a non-profit organisation.

In general, the income is attributable to the country where the work is performed. If the income or its part cannot be attributed to one country as whole, then the ratio based on the respective time worked in Portugal and other countries is applied.

Tax resident of other country working and paying taxes in Portugal

Personal income tax return filing

The employer, including foreign employer, is obliged to report and withhold tax on a monthly basis. Withheld tax is due within 20 days after the end of the month in which the salary was paid. The monthly report of the employer is due within 10 days after the end of the month in which the salary was paid. The yearly report is due until February 10 of next year.

The employee is obliged to file an income tax return, whereas there is no system allowing the local or foreign employer to process the calculation and payment of due tax.

The due date for filing the tax return falls on June 30, with the possibility to extend the deadline till December 31 for incomes having source abroad in case the tax assessment in the other jurisdiction is not finalised until June 30. If a new fact resurfaces that has an impact on the tax assessment, a 30-day long extension is possible

The filing can be done online, in written by post or personally. Representation by a tax adviser and power of attorney is not required.

Tax benefits and other specifics

To apply for available tax benefits respective evidence is required. Depending on the respective tax benefit the evidence or documentation may need to be presented to the tax authorities with the tax return.

In Portugal, 0.5% of the paid tax may be donated to a non-profit organisation.

In general, the income is attributable to the country where the work is performed. If the income or its part cannot be attributed to one country as whole, then the ratio based on the respective time worked in Portugal and other countries is applied.

Penalties

Penalties related to tax

• Delayed filing of the tax return: The fine ranges from EUR 150 up to EUR 3,750
• Delayed payment of the due tax: The fine ranges between a 15% and 50% interest rate from the value of overdue tax
• Delayed or missing registrations at tax authorities: The fine ranges from EUR 150 up to EUR 3,750
• Delayed or missing report on monthly salary or withholding tax from salary: The employer is obliged to report salaries and withheld tax on monthly basis. The penalty ranges from EUR 300 up to EUR 7,500

Penalties related to social security

There is no special penalty related to A1 forms in Portugal. However, a missing A1 form may lead to negative implications and penalisations abroad.

Similarly, foreign employee coming to Portugal without an A1 form may lead to the following implications:

• missing registrations with respective penalties from social and health insurance institutions
• missing reports and contributions with respective penalties
• their employment may be regarded as illegal, with respective penalties applicable
• Delayed report on social security: The fine ranges from EUR 75 up to EUR 25,000
• Delayed payment of the social security contributions: The fine ranges from EUR 75 up to EUR 25,000
• Delayed or missing registrations for the purposes of social security: The fine ranges from EUR 75 up to EUR 25,000 for employers, from EUR 50 to EUR 12,500 to employees

Criminal acts

If the purpose of incorrect reporting of due tax and social contributions is to avoid or decrease them, it is regarded as a criminal offence. The penalty depends on the value and may be as high as 8 years of prison.

The missing payment of the due tax and social contributions is regarded as a criminal act if the tax due exceeds EUR 7,500. The penalty may be as high as 8 years of prison.

However, their later reporting or payment can avoid criminal punishment.

Prepared by:

Collegium | Portugal

Tax residency in Romania

Definition and requirements

A person is a tax resident if:

• has a permanent home in Romania
• is present in Romania for a period (or more periods) exceeding a total of 183 days, during any 12 consecutive months, ending in the current calendar year
• is a Romanian citizen working abroad, as an official or employee of Romania in a foreign state
• has the centre of vital interests in Romania

Days of presence

For the purposes of the calculation of days of presence in Romania within one or more periods, any part of the day of presence is regarded as a whole day (including the day of arrival and the day of departure).

Split tax residency

Split tax residency is not acknowledged between more countries within one tax period.

Personal income tax in Romania

Tax rate and tax period

• 10% is the applicable tax rate

The tax period is the same as the calendar year.

Tax base and deductions

Generally, the tax base is calculated from the gross taxable income (money and in-kind) decreased by social security contributions paid by the employee, further decreased by non-taxable parts of the income, if the case.

The non-taxable values of income, among others, are the following:  

• aid for extraordinary cases;
• gifts for specific events up to RON 300 per event;
• value of safety equipment;
• value of trainings;
• stock options plan;
• expenses related to food, phone and car, in certain conditions.

There are multiple possibilities for deductions, however, they depend on the income, family situation and tax residency.

Social security contributions in Romania

Social security rates and registration

• 25% is the rate of social security in Romania

In Romania, social security contribution is withheld and paid by the employer from the income of the employee. It is also the obligation of the employer to register the employee.

Social security contribution base calculation

The monthly basis for calculating the social security contribution in case of individuals who obtain income from wages, represents the gross income received in Romania or abroad.  In the case of individual full-time or part-time employment contracts for which the level of social security contributions (CAS and CASS) is below the level of contributions calculated on a basis equal to the basic minimum gross salary in the country, the CAS and CASS obligation is introduced at the level of those due on a basis represented by the minimum gross salary in the country, corresponding to the number of working days in the month in which the individual employment contract was active, the difference being borne by the employer on behalf of the employee.

Payment and reporting of the social security contribution

The social security contribution is calculated and paid by the employer no later than 25^th of the month following the payment.  Should the employee be part of two or more separate labour contracts, then all employers be obliged to report and pay social security contributions.

A1 Forms

The process of issuing the A1 form has switched to an electronic platform of the Pension House and the regular issuance timeframe is around 1 month.  

Health insurance contributions in Romania

Health insurance rates and registration

• 10% is the rate of health insurance in Romania

In Romania, health insurance is withheld and paid by the employer from the income of the employee. It is also the obligation of the employer to register the employee.

Health insurance base calculation

The monthly basis for calculating the contribution of health insurance in case of individuals who obtain income from wages, represents the gross income received in Romania or abroad. In the case of individual full-time or part-time employment contracts for which the level of social security contributions (CAS and CASS) is below the level of contributions calculated on a basis equal to the basic minimum gross salary in the country, the CAS and CASS obligation is introduced at the level of those due on a basis represented by the minimum gross salary in the country, corresponding to the number of working days in the month in which the individual employment contract was active, the difference being borne by the employer on behalf of the employee.

Payment and reporting of the health insurance

The contribution of health insurance is calculated and paid by the employer no later than 25^th of the month following the payment.  Should the employee be part of two or more separate labour contracts, then all employers be obliged to report and pay health insurance.

Romanian tax resident working in one or more other countries

Personal income tax return filing

An individual who works in Romania and receive salaries from employers with no registered office in Romania would have the liability to declare income tax, while the non-resident employer could be subject to social security contributions on behalf of the latter.

The due date for tax return is 25^th of the month following the payment.

The submission of the related tax return would be requested by electronic communication.

Avoiding double taxation

As per the Romanian legislation, provisions of a double tax treaty may apply provided that a valid tax residency certificate would be available

Tax resident of other country working and paying taxes in Romania

Personal income tax return filing

Non-resident individuals working in Romania for local employers, would be subject to local taxation as per the labour legislation. Thus, they will be subject to monthly income tax, that would be computed, withheld and paid to relevant tax authority by the employer.

The due date for tax return is 25^th of the month following the payment

The submission of the related tax return would be requested by electronic means of communication.

Penalties

Penalties related to tax

Failure to submit the relevant statement in due time may be imposed with a fine ranging RON 50 – 5.000.

Also, late payment charges in total amount of 0,03% may be imposed for each and every day of failure to declare and pay the relevant tax liability.

• Delayed filing of the tax return: The fine ranges between EUR 105 and EUR 1,050.
• Delayed payment of the due tax: Interest and late payment penalties are 0.03% per day of delay and fine between EUR 210 and EUR 2,900 for taxes and contributions subject to withholding tax.
• Delayed or missing registrations at tax authorities: The fine ranges between EUR 105 and EUR 1,050.
• Delayed or missing report on monthly salary or withholding tax from salary: The fine ranges between EUR 105 and EUR 1,050 and for taxes and contributions subject to withholding tax it ranges between EUR 210 and EUR 2,900.

Penalties related to social security

• Not requesting an A1 form from the respective authorities: The fine ranges between EUR 1,050 and EUR 1,850.
• Delayed report on social security: The fine ranges between EUR 105 and EUR 1,050.
• Delayed payment of the social security contributions: The interest and late payment penalties are 0.03% per day of delay and a fine between EUR 210 and EUR 2,900 for taxes and contributions subject to withholding tax.
• Delayed or missing registrations for the purposes of social security: The fine ranges between EUR 105 and EUR 1,050.

Penalties related to health insurance

• Delayed report on health insurance: The fine ranges between EUR 1,050 and EUR 1,850.
• Delayed payment of the health insurance contributions: The fine ranges between EUR 105 and EUR 1,050.
• Delayed or missing registrations for the purposes of health insurance: The interest and late payment penalties are 0.03% per day of delay and the fine for taxes and contributions subject to withholding tax ranges between EUR 210 and EUR 2,900

Criminal acts

The incorrect reporting and missing payment of due tax, social security and health insurance contributions can be regarded as a criminal act if it is proven that they were done for the purposes of tax evasion.

Tax residency in Slovakia

Definition and requirements

In Slovakia, tax residency is based on fulfilling either formal or material criteria, such as:

• having a registered permanent residence in Slovakia, including temporary residence of EU citizen in Slovakia
• having actual residence in Slovakia
• staying in Slovakia for 183 days and more, except for purposes of study, medical treatment

Days of presence

For the purposes of calculation of the days of presence in Slovakia within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and day of departure).

Split tax residency

In Slovakia, split tax residency between more countries within one tax period is acknowledged.

Personal income tax in Slovakia

Tax rate and tax period

• 19% is the applicable tax rate up to the threshold of EUR 47,537.98 in 2024
• 25% is the applicable tax rate above the threshold of EUR 47,537.98 in 2024

The tax period is the same as the calendar year. The threshold for the tax rate changes every year in Slovakia.

Based on the local tax system, salaries paid in January for the work performed in December are considered as taxable income of the previous calendar year. Income from employment concerning a previous year but paid after January is regarded as taxable income of the year in which it is paid.

Tax base and deductions

The tax base is calculated from the gross taxable income, including monetary income and benefits in-kind, decreased by the:

• social and health contributions paid by the employee
• non-taxable parts of the income, if applicable, which depend on the income, family situation and tax residence

To decrease the tax base, other tax benefits may be applicable (subject to different requirements and limitations):

• non-taxable part of the income on the spouse
• payments to the supplementary pension savings
• tax bonus on child
• home loan interests

Social security contributions in Slovakia

Social security rates and registration

• 25.2% rate for the employer
• 9.4% rate for the employee

If the employee is subject to the Slovak social security, the employer must register them. Both local and foreign employers must register, deduct and pay the respective contributions on behalf of the employee and the employer.

Social security base calculation

The social security base is calculated on a monthly basis from the monthly salary, more precisely from the gross taxable income without accord to social and health contributions decreasing the tax base.

There is no minimum base applicable for the calculation, only a maximum base, which depends on the average salary in Slovakia. Currently, in 2024, the maximum base equals to EUR 9,128 per month. The maximum base applies to the whole income of the employee from all employers. On the side of the employer, there are some minor social contributions without maximum limitation, while the maximum base is applicable to each employer separately, not jointly.

The due social security is calculated as:

• Calculation base multiplied by the applicable rate
• Example for an employee: EUR 6,678 * 9.4% = EUR 627.73

Payment and reporting of the social security

Social security contributions are not covered by the due tax, and therefore are calculated and paid separately, on a monthly basis.

The employer is obliged to file monthly reports to the social security institution, which automatically exchanges information with the tax authorities.

If the employee is employed by 2 or more employers, all employers are obliged to report and pay the social security contributions, including foreign employers.

A1 Forms

A1 forms for purposes of the Art. 12 of the EU regulation 883/2004 are generally issued only for the duration of each respective posting. A1 forms for purposes of the Art. 13 or 16 of the EU regulation 883/2004 may be issued for period of 1 to 2 years or even longer.

Slovak authorities do a thorough check of documents and conditions before issuing A1 form. Therefore, it may be lengthy process.

Health insurance contributions in Slovakia

Health insurance rates and registration

• 11% rate for the employer
• 4% rate for the employee

For health insurance, the employee needs to register as an insured person at the selected health insurance institution. Both local and foreign employers must register, deduct and pay the respective contributions on behalf of the employee.

Health insurance base calculation

The health insurance base is calculated from the gross taxable income; including also other types of income (not just income from employment). Contributions are paid on a monthly basis, as advances, whereby a reconciliation of the whole income and health insurance premium is done each year, on the basis of reported taxable incomes. There is no minimum base applicable for the calculation, however, for low-income employees there may be a deductible part decreasing the applicable calculation base. There is no maximum calculation base for the employee nor the employer.

The due health insurance is calculated as:

• Calculation base multiplied by the applicable rate
• Example for an employee: EUR 10,000 * 4% = EUR 400

Payment and reporting of the health insurance

Health insurance contributions are not covered by the due tax, and therefore are calculated and paid separately on a monthly basis, while they are also subject to a yearly reconciliation. The employer is obliged to file monthly reports to the health insurance institutions. If the employee is employed by 2 or more employers, all employers are obliged to report and pay the health insurance contributions, including foreign employers.

Slovak tax resident working in one or more other countries

Personal income tax return filing

An employee with taxable income abroad is obliged to file an income tax return. A yearly tax reconciliation by the employer is not allowed, in such case.

The tax return deadline falls on March 31, but it may be extended with written notification by up to 3 calendar months or by up to 6 calendar months with income taxable abroad

The tax return can be filed electronically or in written form by post or personally. However, entrepreneurs are obliged to communicate with the tax authorities only electronically. Representation by tax advisor is voluntary; in such case a signed power of attorney is required.

Avoiding double taxation

In case a double tax treaty is not applicable, the income from employment taxed in the other country may be exempted from taxation in Slovakia. In case a double tax treaty is applicable, which allows the application of a set-off method, the employee can apply the exemption method, if the income was taxed abroad and it is more beneficial to them. For the purposes of avoiding double taxation, generally, a certificate on the paid tax or similar confirmation is required. In exceptional cases other evidence may be accepted.

Tax benefits and other specifics

To apply for available tax benefits respective evidence is required. Depending on the respective tax benefit, the evidence or documentation may need to be presented to the tax authorities with the tax return. In Slovakia, 2% of the paid tax may be donated to non-profit organisation; it is 3 % for volunteer workers. In general, the income is attributable to the country where the work is performed. If income or its part cannot be attributed to one country as a whole, then the ratio based on the respective time worked in Slovakia and other countries is applied. Individual parts of income may need individual evaluation and attribution ratio as they may concern different time periods or situations. This may concern, especially, the paid vacation (granted for calendar year), bonuses and benefits.

Tax resident of other country working and paying taxes in Slovakia

Personal income tax return filing

The local and foreign employers are obliged to report and withhold tax monthly. Withheld tax is due within 5 days after the date on which the salary was paid. The employer´s monthly report is due by the end of the calendar month following the month concerned. The yearly report is due by the end of April.

Employers may handle the yearly tax reconciliation, upon timely request of the employee (filed till February 15), subject to the condition that the employee has no other income taxable from Slovakia.  When these conditions are not fulfilled, the employee is obliged to file a tax return in Slovakia. Filing a personal income tax return by a foreign tax resident is highly recommended in cases when the employee needs a confirmation on paid tax issued by the Slovak tax authorities.

The deadline for filing the tax return is March 31, however it may be extended by up to 3 calendar months.

The tax return can be filed electronically or in written form by post or personally. Representation by a tax adviser is not mandatory but voluntary; in that case, a signed power of attorney is required. However, tax residents out of EU may obligatorily need representative for deliveries from tax authorities.

Tax benefits and other specifics

Entitlement to tax benefits is subject to condition of having at least 90% of the total income from sources in Slovakia. Depending on the respective tax benefit, the evidence or documentation may need to be presented to the tax authorities with the tax return.  In Slovakia, 2% of the paid tax may be donated to non-profit organisation; it is 3 % for volunteer workers. Every taxpayer has a dedicated tax account number provided by Slovak tax authorities, where the due tax is paid.

In general, the income is attributable to the country where the work is performed. If income or its part cannot be attributed to one country as whole, then the ratio based on the respective time worked in Slovakia and other countries is applied. Individual parts of income may need individual evaluation and attribution ratio as they may concern different time periods or situations. This may concern, especially, the paid vacation (granted for calendar year), bonuses and benefits.

Penalties

Penalties related to tax

• Delayed filing of the tax return: The fine ranges from EUR 30 up to EUR 16,000
• Delayed payment of the due tax: The fine is 15% p.a. from the value of overdue tax, for a period of maximum 4 years
• Delayed or missing registrations at tax authorities: The fine ranges from EUR 60 up to EUR 20,000
• Delayed or missing report on monthly salary or withholding tax from salary: The employer is obliged to report salaries and withheld tax on a monthly basis. The penalty ranges from EUR 30 up to EUR 3,000

In determining the amount of the penalties, the Slovak tax authority considers the gravity, duration and consequences of the unlawful condition and the tax reliability index. As of January 2024, the tax authority does not impose the penalty which amount may be determined within the prescribed range, for the first infringement.

Penalties related to social security

• Delayed report on social security: The fine can soar up to EUR 16,596.96
• Delayed payment of the social security contributions: The penalty is 0.05% per day from the overdue payment
• Delayed or missing registrations for the purposes of social security: The fine can soar up to EUR 16,596.96

There is no special penalty related to A1 forms in Slovakia. However, a missing A1 form may lead to negative implications and penalisations abroad. Similarly, foreign employee coming to Slovakia without an A1 form may lead to the following implications:

• missing registrations with respective penalties from social and health insurance institutions
• missing reports and contributions with respective penalties
• their employment may be regarded as illegal, with respective penalties applicable

Penalties related to health insurance

• Delayed report on health insurance: The fine can soar up to EUR 3,319
• Delayed payment of the health insurance contributions: The penalty 15% p.a. from the overdue payment
• Delayed or missing registrations for the purposes of health insurance: The fine can soar up to EUR 3,319

Criminal acts

The incorrect reporting of due tax or social and health insurance contributions done with the purpose to avoid or decrease them, is regarded as a criminal offence. The penalty depends on the value and may result in maximum 12 years of prison. The missing payment of due tax, social security or health insurance contributions can also be regarded as a criminal act, if the payment is avoided on purpose. The penalty depends on the value and may result also in maximum 12 years of prison.

Criminal penalisation may also concern the employer, as a legal entity. There are different penalties applicable, e.g. money penalty from EUR 1,500 to EUR 1,600,000, ban of activity or cease of assets.

Nevertheless, the later reporting or payment of due tax, social security or health insurance contributions can avoid criminal punishment.

Tax residency in Turkey

Definition and requirements

In order to be considered as a tax resident in Turkey, a person must fulfil both material and formal criteria. They are the following:

• the person has a permanent residence, permanent home or habitual stay in Turkey (working in Turkey and/or staying with family in Turkey)
• the person stays in Turkey continuously for more than 6 months in a calendar year (temporary departures are not considered as interruption)

Days of presence

For the purposes of calculation of the days of presence in Turkey within one or more periods, any part of the day of presence is regarded as a whole day (including day of arrival and departure).

Split tax residency

In Turkey, split tax residency between more countries within one tax period is acknowledged.

Personal income tax in Turkey

Tax rate and tax period

• 15 – 40% is the range of the applicable tax rates, based on the tax base

The tax period is the same as the calendar year. In Turkey, the salary income becomes taxable once the full associated economic and legal rights are entitled. Salaries are not paid in arrears, therefore the salaries for December would be taxable in the twelfth month and included in the payroll in December. However, retrospective payments can be exceptions, such as bonuses.

Tax base and deductions

In general, the tax base is calculated from the gross taxable income (including salary and all benefits) decreased by social security contributions paid by the employee, further decreased by the non-taxable parts of the income, if applicable. The non-taxable part depends on the value of income, family situation and tax residence.

In order to decrease the tax base, the following items can be deducted:

• Social and health contributions
• Non-taxable value of the income on the taxpayer, on the spouse, on the supplementary pension savings, on the health spa costs, subject to income and tax residency requirements

Social security contributions in Turkey

Social security rates and registration

• 22.5% rate for the employer
• 15% rate for the employee

The employee is registered by the local employer on the online social security portal. The employer then deducts and pays the respective contributions on behalf of the employee and the employer´s part. The registration does not apply to foreign employers (applicable for the entities in Turkey).

Social security base calculation

Basically, the gross income is the calculation base for social security, which is subject to a cap, i.e. maximum amount. It is calculated on the monthly basis, from the monthly salary and multiplied with the rate. The minimum calculation wage equals the minimum wage. In case the employee has multiple employers, the maximum calculation base applies to each salary, separately on every employer.

Payment and reporting of the social security

In Turkey, the social security institution and tax authority are separate systems. However, they automatically exchange information.

Social security is paid both by the employee and the employer, but the reporting and payment are done by the employer on a monthly basis. In case there are multiple employers, all of them are obliged to pay and report.

A1 Forms

Instead of A1 forms, the Turkish Social Security authority issue a certificate under the bilateral agreements between the countries. It may be a time-consuming process, as the authorities would check the documents and conditions before issuing the form.

Health insurance

In Turkey, health insurance is included in the social security premiums. Therefore, the same applies to them as to social security contributions.

Turkish tax resident working in one or more other countries

Personal income tax return filing

If the employee receives salary from outside Turkey (without a recharge to Turkish entity), there is an annual income tax return obligation to be submitted by the employee.

The due date for tax return is March 31, without the possibility to extend the deadline.

The filing can be done electronically, in written by post or personally. Representation by a tax adviser is voluntary but requires a signed power of attorney.

Avoiding double taxation

If there is no double tax treaty, the local legislation is applicable. In case the income from employment was taxed in the other country, the tax-credit method can be applied. The employee can use only the method that is available based on the double tax treaty. In order to do so, a certificate on paid tax or similar confirmation is required. The documents should be apostilled and translated into Turkish.

Tax benefits and other specifics

To apply for available tax benefits respective evidence is required. Depending on the respective tax benefit the evidence or documentation may need to be presented to the tax authorities with the tax return.

In general, the income is attributable to the country where the work is performed. If the income or its part cannot be attributed to one country as whole, then a ratio based on the respective time worked in Turkey and other countries is applied. Calendar details and physical presence is important to determine the related days in a country. Upon clarification of the days, a prorate calculation is done.

Income Tax and Stamp Tax Exemptions

As of Jan 2022, income tax and stamp tax exemptions have become applicable for wage income. The exemption amounts are equal to the income tax amount and stamp tax amount calculated over the applicable minimum wage on the related calendar year.

Tax resident of other country working and paying taxes in Turkey

Personal income tax return filing

The employer, including foreign employer, is obliged to report and withhold tax on a monthly basis. If the employee generates income subject to the annual income tax return, that should be done by the employee, whereas the submission of tax return is due by the end of the March of the following year.

The due date for tax return is March 31, without the possibility to extend the deadline.

The filing can be done electronically, in written by post or personally. Representation by a tax adviser is voluntary but requires a signed power of attorney.

Tax benefits and other specifics

To apply for available tax benefits respective evidence is required. Depending on the respective tax benefit the evidence or documentation may need to be presented to the tax authorities with the tax return.

In general, the income is attributable to the country where the work is performed. If the income or its part cannot be attributed to one country as whole, then a ratio based on the respective time worked in Turkey and other countries is applied. Calendar details and physical presence is important to determine the related days in a country. Upon clarification of the days, a prorate calculation is done.

Penalties

Penalties related to tax

• Delayed filing of the tax return: The monthly interest rate is 3.5%
• Delayed payment of the due tax: The daily interest rate is 3.5% divided by 30
• Delayed or missing report on monthly salary or withholding tax from salary: The employer is obliged to report salaries and withheld tax on monthly basis. There are various penalties depending on the case (including irregularity penalties, interest or a tax penalty equalling the tax itself, etc.)

Penalties related to social security

• Not requesting an A1 form from the respective authorities:In Turkey, there is no special penalty related to a not requested A1 form. However, a missing CoC certificate form may lead to negative implications and penalisations in other countries
• Delayed report on social security: Similar to tax penalties, there are various types of penalties including monetary penalties and social security inspection
• Delayed payment of the social security contributions: The penalty is 3% per month over the social security amount. There are also possible irregularity penalties
• Delayed or missing registrations for the purposes of social security: The penalty equals one month of minimum wage (TRY 20,002.50for 2024)

Criminal acts

In Turkey, criminal penalisation is applicable for tax frauds. The penalty depends on the scope of case and may be as high as 5 years of prison.

The later reporting or payment of due tax and social security contributions can avoid criminal punishment.

Prepared by:

CottGroup | Turkey