The general social welfare contribution is levied on income from economic activity and alternative income. The main exceptions are occupational accident pensions, regular maintenance payments pursuant to the Civil Code or a court order, family allowances, disabled persons' benefit for adults and military invalidity pensions.
In principle, all income other than the listed exceptions is subject to the welfare contribution. Exemptions from income tax do not apply to general social welfare contribution. The basis of assessment is gross income:
- gross wages and salaries (prior to deduction of employees' national insurance contributions) less a 1.75 % reduction for employment (this reduction is applied until four times the social security cap, i.e. 152,160 € for 2015) or business expenses for a certain category of employees (mainly travelling sales representatives);
- gross pensions and benefit payments (reductions are not taken into account);
- income from economic activity other than wages and salaries, net of business expenses and including personal national insurance contributions.
The only allowable deduction, then, is for business expenses.
For people with a low income, exemptions or reduced rates apply to alternative income, i.e. retirement and invalidity pensions, unemployment and pre-retirement benefit.
Moreover, the general social welfare contribution is payable on the following taxable income:
- income from real estate;
- contributory life annuities;
- income from movable capital;
- value added and sundry capital gains;
- income from privately let furnished accommodation and non-commercial income that does not fall under the heading of income from economic activity or alternative income.