(salary (salaries), services charged under the law of obligations, business income, profits from the transfer of property, lease and rental income, royalty, interest, dividend, taxable pension, allowance, scholarship, bonus, compensation or other income.
a) when gross income is up to 1200 eur per month (14 400 eur per year), then the person is entitled to a minimum income tax 500 eur per month.
b) when gross income is more than 2100 eur per month (25 200 eur per year), then the person does not have the right to minimum tax-free income AT ALL.
c) 1200 eur -2100 eur range earned gross income case, the tax-free rate decreases proportionately.
The formula is applied on an annual basis:
6000 – 6000 ÷ 10 800 × (total income – 14 400)
Therefore, each employee has to find his/her tax-free rate! and inform the employer (accountant) about its size, with a statement.
If the employee has asked for more during the year, then he/she will have to pay back to the tax authority in 2019.
If the employee has asked less during the year, then he/she will get it back in 2019.
An employee may have a difficult situation in 2019, when he/she asked for an exemption more than he/she had expected total income. He/she has to pay the state, but there is no money, it’s been spent. So it’s a good to think carefully, what size of tax-free rate would be the most sensible ask to account.
An accountant can not know the person’s total income (we only see the salary), the employee can inform the accountant about the size, the accountant can help find, recommend the amount. But accountant can not take responsibility for it, because the person’s income can change over the year, regardless of how employee sees them today.