VAT number or employee: who earns more? pros and cons

Do you earn more with paid employment or with a VAT number? A question that many workers ask themselves when evaluating a career choice.
To understand, however, the pros and cons of both situations, it is necessary to put different elements on the scales which, also based on one's predisposition, can make the perception of the gain vary in one case and in the other.
Obviously, establishing who earns more between a self-employed worker and an employee is a variable that depends on many conditions, including and above all on the tax regime chosen for those who operate with a VAT number.
If it is not possible to establish a priori in which working situation one earns more, one can inform oneself about the advantages and disadvantages of both working methods both from a practical point of view and from a tax compliance point of view, without forgetting, obviously, the contribution question.
A self-employed worker with a VAT number can work (and therefore invoice) many more hours than an employee, this is certain, but the calculation of the convenience of one job compared to another should be done with the same job performed and the same working hours.
In any case, things that do not have a price, but a value, must be placed on the final scale, such as free time to dedicate to activities that are not strictly work-related, paid holidays and sick leave.
In short, in addition to the salary (and compensation) there are other issues, such as the responsibilities to be taken on, or the freedom to decide when and how to work, defining the hours and organizing the work according to one's needs.
Having said that, let's see who could earn more between a VAT number and an employee.
VAT number or employee: who earns more? Pros and cons How to calculate the salary of an employee Pros and cons of employment VAT number: advantages and disadvantages The flat tax for VAT numbers How to calculate the salary of an employee Of course, not all employees earn the same salary.
The final amount on the pay slip depends on: the national collective labor agreement for your sector; the employee's level of classification; from minimum wages.
For example, some CCNL (National Collective Labor Agreement) also provide for the fourteenth month's salary, while others only provide for the thirteenth.
But having an employee contract also means that the employer plays the role of tax withholding agent: it means that all the practical obligations will be up to him/her.
The worker will see the payment of taxes and social security contributions directly on the pay slip, as well as family allowances and deductions.
From the monthly pay slip, the employee can see: how much he or she has paid in IRPEF; the share of social security contributions (paid by the employer); any contributions to other social security funds if you are registered with professional or supplementary healthcare funds, if provided for by the CCNL.
These items, added, contribute to the gross monthly salary: once these are removed, the employee will see how much his net salary is.
read also Renzi bonus on the pay slip, new calculation rules.
What changes in 2024 Pros and cons of employed work One of the main advantages of employed work is the security of the salary amount month after month: an employee, in fact, always knows (in broad terms) what the salary he is entitled to will be.
The employee, therefore, can always count on the monthly salary (which in the event of company crises is also partly guaranteed with the redundancy fund).
There are no surprises on the proceeds that will occur during the year.
He is entitled to thirteenth, in some cases fourteenth, paid holidays, paid sick leave and even paid holidays.
And he is also entitled, if eligible, to the former Renzi bonus and to the contribution relief.
At the end of the job you can count on the TFR and in case of dismissal on the unemployment benefit.
The cons, however, are that: it must respect the employer's schedules and requests; cannot decide not to work without giving notice; the salary always remains the same, regardless of performance; to have a higher salary it is necessary to work overtime.
VAT number: advantages and disadvantages For self-employed workers, or freelancers, who register for VAT, the situation is completely different.
There are no reference CCNL, but a compensation is established with your client or with your client, after having presented a quote, in which the estimated working hours to deliver the project are usually calculated, or if the type of work requires multiple items (like a package of items, for example) can be agreed upon for a lump sum.
From a practical point of view, however, it must be the VAT number holder who alone pays both the taxes to the State and the contributions to his own social security institution.
In any case, it must be taken into account that the self-employed worker has significant advantages compared to the employed worker: no subordination constraints with the client; he decides his working hours himself and can also independently choose not to work at all on a given day; decides alone (obviously the client will have to accept the estimate or request) the compensation to ask for; he is not tied to a single client, but can choose to work for the one who pays best; carries out his work independently, without necessarily having to be present at the workplace: he is not tied to times or places.
Obviously, compared to employed work, there are also disadvantages for those who work with a VAT number: no security in the number of "jobs" to be carried out during the year; no security of income month after month; there are no paid holidays, the days you don't work you earn nothing; there is no paid sick leave, if you are sick and don't work you don't earn anything; you cannot count on unemployment benefits if you remain unemployed (there is Iscro, but it is intended only for particular cases that meet certain income requirements); there is no severance pay when you decide to stop working; there are no thirteenth, fourteenth or performance bonuses; there are no paid holidays; taxes and contributions must be deducted from the compensation; you must bear the expense of an accountant for tax obligations if you are not able to do so independently.
read also VAT numbers, clear results for the exemption of INPS contributions.
Amount from 29 November 2021 The flat tax for VAT numbers If you want to sum it up, the employee cannot earn below a certain amount, established by the minimum wages of his/her reference CCNL, and it is his employer who takes care of the tax part and contributory.
A worker with a VAT number, however, will have to pay taxes and contributions (we usually rely on a trusted accountant, which therefore constitutes an additional cost).
If on the one hand there are no limits to how much to invoice, on the other hand you must be careful to set aside the sums to be paid as taxes and contributions.
The real ace in the hole for VAT numbers, however, is the flat tax, i.e.
the 15% preferential tax regime (which in some cases even drops to 5%) for revenues and compensation up to 65,000 euros in revenues and compensation.
In practice, a flat tax of 15% (or 5%) is applied not on the entire turnover, but only on revenues and compensation.
read also Flat rate scheme 2021, how does it work? Requirements, limits and news for VAT numbers