How do you calculate your day rate as a self-employed person without forgetting contributions and tax?

Why not simply divide your desired income by 220 days?

Because that calculation forgets two things: some of your working days cannot be billed, and what the client pays you is not your income. Before it reaches your account, every euro you invoice has to cover your business expenses and your social security contributions, then tax. A fair rate is therefore built backwards, starting from the income you are aiming for.

The formula fits on one line: (target net income + social security contributions + business expenses) ÷ billable days = day rate excluding VAT. Each term is costed separately, and it is usually the last one, the number of days, that gets overestimated.

Target net income here means net taxable professional income: what is left after expenses and contributions, and on which personal income tax (IPP/PB) will be calculated. For someone self-employed as a main occupation, it never falls below a floor: under €17,374.08, you pay the minimum contribution regardless. The page on being self-employed as a main occupation sets out these rules.

How many days a year can a self-employed person really bill?

Rarely more than 190. A year has about 260 working days; from these you must take away the 10 statutory public holidays, your holidays, a few days of illness or the unexpected, then all the non-billable time: quotes, bookkeeping, prospecting, training. With cautious assumptions, you end up with 176 days.

Non-billable time is the item most often forgotten. A graphic designer, a consultant or a translator can easily spend one day a week on it. Nobody pays for your holidays either: the article on paid holidays for the self-employed explains why they belong in your rate rather than in your cash flow.

Allow for the gaps between assignments too. A month without a client in spring wipes out around twenty billable days at a stroke. If your activity is seasonal or depends on a few large clients, use an even lower assumption: a rate calculated on too many days looks competitive, but it leaves a hole in the accounts at the end of the year.

What do you need to add to your target income before dividing?

First, social security contributions: 20.5% of net income up to €75,024.54, to which the social insurance fund adds its management fees, from 3.05% to 4.25% of contributions depending on the fund. Then actual business expenses: equipment, software, insurance, accountant, travel. The contributions simulator works out the first item.

According to FPS Finance, the business expenses you deduct must be supported by evidence: keep invoices and receipts. The entry on business expenses sums up what can be deducted.

VAT, for its part, is not calculated into the rate: it is added on top, at the standard rate of 21% for most services, and paid over to the State. Below €25,000 of annual turnover, the small business VAT exemption means you do not have to charge it; the page on VAT for the self-employed explains this choice.

That leaves personal income tax: it is calculated on the target income itself, at a progressive rate that also depends on your family situation and your municipality. The rate does not add it; it is up to you to set part of it aside every month.

When should you review your day rate?

At least once a year, and whenever something significant changes: losing a client, rising expenses, moving to a company. Contribution thresholds and ceilings are indexed every year, and the adjustment (regularisation) of contributions, calculated on the actual income established by the tax authorities, arrives two to three years later.

A rate that is too low is paid for at that point: the fund claims the difference on income that has already been spent. The article on first-year contributions shows how to set money aside. Plan for the risk of being off work too: sick days cannot be billed, and the incapacity for work benefit only replaces part of your income.

Further reading

The pages on this site that explore each of the points covered here in more depth.

• Self-employed as a main occupationThe status, the minimum contribution and the obligations of a main occupation.
• Social security contributions simulatorWork out the contributions on the net income you are aiming for.
• Is a self-employed person entitled to paid holidays?Why your weeks off belong in your rate.
• First year as a self-employed person: contributionsProvisional contributions, adjustment and the reserves to plan for.
• VAT for the self-employedVAT registration, exemption and applicable rates.

Frequently asked questions