You already have your own income because you work under an employment contract or provide services. Regardless of the fact that you are not an adult, this income is subject to tax, which you must pay.

 

• Where does the money from taxes go and what is it used for?

In order for the state to carry out its functions, it collects taxes. Some are called "direct" because they are charged directly on the income of individuals, the profit of traders, dividends received, or property owned. Others are indirect because they are imposed on consumption - such as value added tax (VAT), excise duties, and customs duties.

Taxes form the main part of the revenues in the state budget. They pay for the costs of state administration and fully or partially finance public services for the population - defense and security, the judiciary, healthcare, education, culture, infrastructure, social care, etc.

Some taxes are collected by municipalities – for example, taxes related to the ownership or sale of real estate and movable property, the tourist tax, and the patent tax. This is also valid for the household waste fee, which is essentially not a tax. The amount of municipal taxes and fees is determined by the municipal council. The revenues from them are used at the local level for the construction and maintenance of streets, parks, street lighting, etc.

 

• What obligations do you have for your income?

Regardless of what your income is – from working under an employment contract or providing services, from rent, or from profit from investments, you owe tax on it. The taxable income and the tax base on which the tax is calculated are determined for each individual type of income.

In addition to the tax, mandatory social insurance contributions will be deducted from your income from work or from providing services, the amount of which is determined in the Social Security Code. The former are paid into the Pension Fund of the State Social Security, and the latter into a private universal pension fund for Supplementary Mandatory Pension Insurance, where they are accumulated in a personal account for a second pension. If you wish, you can also pay voluntary contributions into a private voluntary pension fund for Supplementary Voluntary Pension Insurance, where they are accumulated in a personal account for a third pension. Health insurance contributions will also be deducted from your income in accordance with the Health Insurance Act.

It is important to know that if you do not work, your health insurance contributions are paid by the state while you are a student, even if you have already turned 18. After graduating from secondary education, even if you are accepted as a full-time student, you must pay your own health insurance contributions for the months before you start your studies. The state also covers the health contributions of full-time students until they reach the age of 26, if they have no income from work.

For income that is not from work under an employment contract, there are so-called "tax deductible expenses". They represent a percentage of income that reduces the amount that will be taxed - the tax base. The legally recognized expenses are not actual expenses that must be proven.

Pocket money or other money that you receive from the family is not considered actual income, and you do not owe tax on it. They are part of the costs of raising children, and their source is the income of adults, which is taxed. You do not pay tax if you receive a scholarship.

If there are financial instruments purchased in your name and income is received from them, it may or may not be taxable depending on the type of instrument and the markets on which they are traded.

 

• What are your obligations as an owner?

What if you own real estate that was purchased in your name, donated, or inherited? For example, as an owner of an apartment donated by your grandparents, you owe an annual local tax to the municipality for the ownership of this real estate. The tax must be paid regardless of whether the property is used or not. Agricultural land and forests are not taxed.

If you plan to start your own business or practice a freelance profession after reaching the age of majority, i.e. work as a freelancer, it is important to know that freelancers are self-insured individuals and pay their social security contributions in full. The tax with which their activity is taxed varies depending on its nature.

When starting your own business or practicing a freelance profession, check the current tax rates in the relevant regulatory documents described below.

 

Useful links

Social Security Code

Health Insurance Law

Personal Income Tax Law

National Revenue Agency

NRA Electronic Services Portal

Personal Income Tax

What do we lose when we receive a salary in an envelope

Tax benefits

Exempt income

Types of taxes - Ministry of Finance page