Are you filling out an application and wondering which amount to put down? The difference between gross and net salary is one of the most common questions, but fortunately it is easy to explain. Here is a clear information package about what they mean and why they differ from each other.
You agree on a new job or gig: Gross salary
When you see the salary in a job advertisement or agree on an invoice amount, it is almost always referring to the gross salary.
Gross is the amount of your salary before taxes and other deductions. You will not receive this amount in full in your account, as statutory deductions will be made.
Your salary will be paid into your account: Net salary
Your net salary is the amount you see in your online bank on payday. The net amount is the amount that remains after all taxes and payments have been deducted. This money is entirely at your disposal. You don't have to worry about paying your bills; we take care of that for you.
What exactly is deducted from gross salary?
A few deductions are automatically taken from your salary:
1. Withholding tax: Determined according to your personal tax rate.
2. Social security costs: Health insurance contributions and any YEL insurance contributions.
3. Truster (if percentage order).
How much will I have left?
Since the tax rate is individual for each person, no one can promise an exact net salary in advance.
When pricing your work, take the above deductions into account. If you want a certain amount in your pocket, the final invoice amount must be higher. You can use our calculator to help you.
Keep your tax rate up to date in OmaVero. If you earn more than expected, raise your tax rate in time to avoid unpleasant tax arrears later on.