The standard corporate tax rate is 33.99% which compares favourably when you consider that a freelancer is taxed at up to 50% of his or her total income. For SMEs with an annual profit of less than €322,500 the rate can drop to as low as 24.98%.

To qualify for this lower rate the company director needs to pay him or herself a gross annual salary of at least €36,000. If you choose to pay yourself a very low salary (or no salary), you cannot qualify for the lower rate of corporate tax, even if your annual profit is less than €322,500.

Note that company tax can be paid in advance on what you think you will earn and then the balance is paid at the end of the year.

Social security contributions

Employees pay 13.07% on their gross income, with a maximum of €3300 per quarter. This means that for a freelancer, the maximum amount that he or she may need to pay will reach 63% of income (50% tax + 13% social security) whereas in a company, the maximum tax rate for the business is 33.99%. Therefore, the more you earn, the better off you are as a business rather than as a freelancer.