Entrepreneurs who perform an independent business activity have the option to pay themselves an entrepreneur’s salary. Although this is not a salary in the employment-law sense, it plays an important role in the tax recognition of expenses and the calculation of mandatory social security contributions.

For corporate income tax payers, the entrepreneur’s salary allows for tax optimisation, the use of personal tax allowances, and proper planning of pension and health insurance contributions.

For 2026, the minimum contribution base for calculating an entrepreneur’s salary is set at EUR 2,192.30. Taxpayers who pay themselves an entrepreneur’s salary are required to submit the JOPPD form.

What is an Entrepreneur’s Salary?

Entrepreneurs who operate their own business activity are not considered employees within their own trade or business, and therefore the provisions of the Labour Act do not apply to them. They cannot enter into an employment contract with themselves, as a contract requires another contracting party.

Under the Personal Income Tax Act, the entrepreneur’s salary is considered income from employment, meaning that it is recognised as an expense when determining corporate income tax, even though it is not a “real” salary in the employment-law sense.

If profit is paid out from an independent business activity, it is taxed as capital income at a rate of 12% and is treated as final income.

Who Can Pay an Entrepreneur’s Salary?

An entrepreneur’s salary may be paid by individuals who are corporate income tax payers and perform an independent business activity, including:

• Independent professions – activities registered in state registers or professional associations/chambers
• Agriculture and forestry – all independent activities registered with the Tax Administration
• Other independent activities – activities of a permanent nature intended to generate income, registered with the Tax Administration
• Independent activity alongside employment – independent activities performed simultaneously with employment or other mandatory insurance coverage

The entrepreneur’s salary forms part of the annual income of an individual and is taxed in the same way as an employee’s salary, but it is not considered employment income in labour-law terms.

Benefits of Paying an Entrepreneur’s Salary

Paying an entrepreneur’s salary offers several key advantages:

• Tax-deductible expense – the salary reduces the corporate income tax base
• Mandatory contributions – contributions are calculated for pension insurance (Pillar I and Pillar II) and health insurance
• Right to personal tax allowances – if the entrepreneur has a tax card or submits the ZPP-DOH form, they may claim increased allowances for dependants and/or disability
• Regional tax relief – the advance personal income tax payment may be reduced by 50% if the entrepreneur resides in local government units classified in Group I according to the development index or in the City of Vukovar

It is important to note that entrepreneurs aged 25–30 are not entitled to a tax refund, as the refund applies only to income from employment, and an entrepreneur’s salary is not treated as employment income.

Calculation of Mandatory Contributions

Entrepreneurs who are corporate income tax payers are required to calculate mandatory contributions based on the minimum contribution base of EUR 2,192.30, applying a coefficient of 1.1. Contributions include:

• Pension insurance – Pillar I (15% or 20% if the entrepreneur is not insured under Pillar II)
• Pension insurance – Pillar II (5%)
• Health insurance (16.5%)

If multiple persons operate a joint business activity under co-entrepreneurship, the contribution base is determined separately for each co-entrepreneur.

How to Determine the Amount of an Entrepreneur’s Salary

An entrepreneur’s salary may be:

• In the minimum prescribed amount,
• In a lower amount – contributions are still calculated on the minimum base,
• In a higher amount – contributions are calculated on the actual salary base.

Contributions must be paid on the salary payment date, no later than the end of the current month for the previous month.

Non-Payment of an Entrepreneur’s Salary

If the entrepreneur does not pay themselves a salary, contributions are still calculated on the minimum base. If the salary is later paid retroactively for several months, contributions must be calculated for the entire period.

Calculation for Periods Shorter Than a Month

If contributions are calculated for part of a month (e.g., when acquiring insured status during the month, terminating the activity, sick leave, or childcare for a child with developmental difficulties), the base is determined proportionally to the number of days during which the insurance obligation applies.

Conclusion

An entrepreneur’s salary is an important tool for tax and contribution planning. Proper calculation enables cost optimisation, the use of personal allowances, and the correct exercise of rights within the mandatory insurance system.

If you need assistance with calculating entrepreneur’s salary or mandatory contributions, brandom can support you. Contact us and ensure that your payroll calculations are accurate and fully compliant with the law.