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Comment by mic-kul | Hacker News Reader

In Poland most of developers run own companies to pay linear income tax (19% flat) plus €350 a month for state pension instead of paying 18% tax for first €20k earned plus 32% for overages plus mostly hidden to employees installment for pension scheme. So when your cost to the employer is €100k a year: - under labour law you take home €5.7k per month - running a company you take home €7k per month

For a country with a minimal wage of €610 this is a significant difference.

Most of the companies will offer paid time off to contractors, end even companies offering high-paying jobs like pilots do in do the same: https://www.ft.com/content/b8f77f16-d865-11e8-ab8e-6be0dcf18...

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> under labour law you take home €5.7k per month - running a company you take home €7k per month

I dunno about Poland, but where I live this type of employment has some caveats:

- You need save for your time off (holidays) yourself. - You save on social security taxes, but it means your salary is not compensated by it when you are ill (or your kids are ill and you need to take care of them), thus you need to save for this yourself. - I would like to say that you would need to save up more yourself for your retirement fund (as you pay less for state pension), but at these level of incomes, usually at both scenarios (self-employed vs being employed) you would like to do that, so it cancels out.

Also it may be illegal, i.e. if you are employed like a full time employee - you cannot work as an independent consultant/contractor. Though AFAIK this definition of "like a full time employee" is not very strict.

IMO problem is that income taxation should be treated (mostly) the same, no matter how you earn the money. Because now (where I live), the wealthier you are, the more elaborate schemes you can run to avoid paying taxes on your income.

> Also it may be illegal, i.e. if you are employed like a full time employee - you cannot work as an independent consultant/contractor. Though AFAIK this definition of "like a full time employee" is not very strict.

Polish here. It is like you described but a) not many people know about this (sometimes I surprise some guys telling them their employment form - independent contractor for one company where you are actually working full time - is illegal) and b) I've never heard of someone being caught practicing this.

I'm also Polish, I know quite a few people in IT who used to do exactly that, but this year they all had to stop or figure out some workarounds, because the Polish tax office has started asking for proof that their company is actually working with more than one client. If they only have a single client in a year then they have to convert to full time employment. So yes, people are absolutely getting caught by this.

most of the countries now have something like that but for sole proprietship. if you have an llc, you can do basically whatever you want because it is taxed different, and somebody has to be employed there, so the country gets the taxes. its just that you can pay yourself some salary and the rest you can pay out at the end of the year as profit that is taxes different.

> b) I've never heard of someone being caught practicing this

Yup. Me too.

It's not as bad with design/IT agencies anymore, but I know that lawyer agencies are still notorious for this. Big-ish lawyer agencies with dozens of lawyers have no employees, everyone is a "partner" (or whatever the term is).

I think that is kinda normal for lawyers though. In the Czech Republic (I've been here 16 years and work with a lot of lawyers) it's normal for lawyers to be "contractors", very few are salaried.

In fact it's a funny rite of passage for most lawyers: after graduation they have to work for 3 years for a law firm before they are allowed to take the bar exam and become "real" lawyers. During this time they earn a salary. When they finally become "real" lawyers by passing the bar, they get fired. :) And immediately taken back on as contractors.

The difference is a law "partner" is called that because they become a partner in the LLP. In other words they are given a very real ownership stake in the firm. They are paid a portion of the firms profits in addition to any salary.

Associate lawyers (what you are before partner) are paid a regular salary as employees.

Law firms aren't healthy workplaces, but I wouldn't worry about the legal rights of the lawyers working for them.

No, it is not illegal - I've been practicing this for the last 10 years, never had any trouble with tax office.

It all depends on how your contract is written - if you have clauses that put some of the business risk on you (e.g. you give 3 month warranty on the code you write, or have some bogus penalties for contract breach, or other things, which I've never seen enforced) then it cannot be treated as full time employment, even if you have just one client for which you issue invoices.

The only thing that is an actual red flag for tax office is when you start as a full time employee, and then switch to running sole proprietorship and your previous employer remains your only client - then it is too obvious that this is just employment in disguise.

EDIT: Also, those "independent contractor" contracts come in different shapes. I, for example have just an hourly rate set, and then I get paid for the hours worked. Some people prefer to have flat monthly rate, and even some paid vacations included in their "B2B contracts", which makes it more suspicious.

Other thing worth mentioning is that for full time employee penalty for malpractice is up to 3 monthly salaries.

Contractors are liable with all assets/wealth.

Sure but contractors just get an indemnity insurance for this exact reason, which you can't get as an employee.

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