The YEL income is determined based on the price of the services rendered. The YEL income is calculated based on a corresponding annual wage that would be paid for the same work to another, equally competent person.
All industries do not have established prices for work, so, often, the entrepreneurs themselves can give the best estimate. The YEL income always corresponds to the price of work regardless of whether the work brought profit or loss to the company.
It is important that you estimate the YEL income correctly because it is very significant for your future plans and social security. Minimum contributions lead to minimum social security. The YEL income is always determined on an annual basis, but you can change it anytime.
The minimum limit of the YEL income changes every year. In 2022, it is 8 261,71 euros. The maximum limit of the YEL income and the amount entitling entrepreneurs to unemployment benefits are checked annually.
However, the YEL income is confirmed by the insurance institution providing the insurance based on the entrepreneur’s notification. You should always change your YEL income to reflect your actual work situation to make sure that your social security stays at an appropriate level.
Furthermore, the YEL income is flexible: in the years when your business is good, you can pay higher contributions. Decreasing your YEL contribution is more tightly regulated. You need to notify your pension institution about any changes to your YEL contribution. Changes are valid for one calendar year at a time.