The question always comes in the same form. I can perform the same work under an employment contract or by invoicing as a self-employed individual, and I want to know which is cheaper. The answer depends on three figures: income tax, contributions, and the cost borne by the payer.
This page compares the figures for two income levels, clearly separates employer costs from employee costs, and shows the legal threshold beyond which the choice is no longer free, because billing is reclassified as employment.
Read also: Self-Employed Status Declaration and Contributions.
The comparison is made on the same annual gross income, because only then are the figures comparable. You don't compare net pay with the gross bill, because they don't measure the same thing.
In the form of wages, income tax on employment and the employee's contribution are deducted from the gross amount, while the employer adds its own contribution. In the form of self-employment, income tax on business activity is deducted from the invoice—which until December 31, 2029 is 0% on amounts below 1,400,000 lek—and contributions on the minimum base, while the payer adds nothing.
| Voice | As an employee | As a self-employed person |
|---|---|---|
| Income Tax | 13% up to 2,040,000 base lek, 23% above | 0% until December 31, 2029, for a turnover of up to 14,000,000 lekë. |
| Standard discount | 360,000 lek on top of 720,000 lek in income | Not applicable; operating expenses are recognized. |
| The individual's contribution | 11.21% of the gross salary | Based on minimum standards, not on income. |
| The payer's contribution | 16.71% of the gross wage | It doesn't exist. |
The social contributions base is capped. As of January 1, 2026, the monthly maximum is 186,416 lekë, so the following comparisons have been made under this cap to keep the figures readable.
Read also: How much tax is withheld from pay and how the tax brackets work.
Let's assume an annual gross income of 1,200,000 lek, which is 100,000 lek per month.
Salary or self-employment: 1,200,000 lek per year
| Voice | As an employee | As a self-employed person |
|---|---|---|
| Income tax | 109,200 lek | 0 lekë until 2029 |
| Contributions made by the individual | 134,400 lek | 40,800 lek health insurance, plus social contributions on top of a 50,000-lek base salary. |
| Contributions of the payer | 200,400 lek | They do not exist. |
| Total cost to the payer | 1,400,400 lek | 1,200,000 lek |
| It remains up to the individual before the self-employed's social partners. | 956,400 lek | 1,159,200 lek |
As an employee, the gross salary is 1,200,000 lekë, the standard deduction is 360,000 lekë, the taxable base is 840,000 lekë, and the 13% tax yields 109,200 lekë. Employee contributions at 11.21% on 1,200,000 lekë amount to 134,400 lekë, so the net pay is 956,400 lekë. The employer adds 16.71%, i.e., 200,400 lek, and the total cost becomes 1,400,400 lek.
As a self-employed individual, my turnover is 1,200,000 lek, below the 14,000,000 lek threshold, so the tax is 0 lek until December 31, 2029. The 3.41% health contribution on the amount above 100,000 lek gives 3,400 lek per month, or 40,800 lek per year, leaving 1,159,200 lek before the social security contribution on the 50,000 lek base. The client pays the 1,200,000-lekë invoice and there are no additional costs.
At higher levels the gap widens, because income tax and employment contributions increase along with wages, while the self-employment contribution remains fixed at the minimum base.
Salary or self-employment: 2,160,000 lek per year
| Voice | As an employee | As a self-employed person |
|---|---|---|
| Income tax | 234,000 lek | 0 lekë until 2029 |
| Contributions made by the individual | 241,920 lek | 40,800 lek health insurance, plus social contributions on top of a 50,000-lek base salary. |
| Contributions of the payer | 360,720 lek | They do not exist. |
| Total cost to the payer | 2,520,720 lek | 2,160,000 lek |
| It remains up to the individual before the self-employed's social partners. | 1,684,080 lek | 2,119,200 lek |
With an annual salary of 2,160,000 lek, or 180,000 lek per month, the wage provides a taxable base of 1,800,000 lek after the standard deduction of 360,000 lek, and the 13% tax yields 234,000 lek. The employee's 11.21% contribution amounts to 241,920 lekë, leaving a net of 1,684,080 lekë. The employer adds 360,720 lekë, bringing the cost to 2,520,720 lekë. As a self-employed individual, the payer saves 360,720 lekë and ends up with 435,120 lekë more before social security contributions.
The difference doesn't come from a trick. It comes from the fact that self-employed contributions are calculated on fixed minimum bases, while employment contributions are calculated on the actual wage, and from the 0% rate that applies through December 31, 2029.
The savings disappear the moment the relationship is treated as employment. When 80 percent of income comes from a single client, or 90 percent from fewer than three clients, the law provides for reclassification of the income as employment income.
The consequence isn't just the unpaid tax. Employer contributions also arise, and late fees and penalties are added on, so saving for a few years can turn into an obligation for a single assessment.
Attention. Law No. 81/2025, published in January 2026, changed the treatment of hidden employment. The exact content of the change and the application of the thresholds thereafter need to be verified. UNVERIFIED, must be confirmed before publication. The 80% and 90% thresholds of Article 12 of Law No. 29/2023 have been verified.
Read also: When the self-employed are considered employees.
Numbers don't make the decision. A salary provides a full pension based on what's been paid, labor code rights, paid leave, protection in case of layoff, and stability against banks. Self-employment offers flexibility, lower costs through 2029, and opportunities for many clients, but it leaves the individual responsible for insurance, invoicing, reporting, and the risk of re-qualification.
✔ Pay is meaningful when the work is done for a single client, according to their schedule and instructions.
✔ Pay has meaning when an individual needs a full contributory history for a pension or loan.
✔ Self-employment makes sense when clients are three or more and the contracts are independent.
✔ Self-employment makes sense when the individual sets their own schedule, tools, and working methods.
✔ Self-employment makes sense when income fluctuates, because the fixed cost remains low.
Our practical recommendation is this. If you are actually working for a single client, an employment relationship is the fairest and safest form. If the request comes from three or more clients, self-employment is the natural form and the savings are legitimate.
Read also: Sole proprietor or LLC, which structure suits you?.
The net pay is compared to the gross invoice, and self-employment is artificially made to look better.
The employer cost is forgotten, so businesses think that a monthly salary of 100,000 lek costs 1,200,000 lek per year.
The transition from being an employee to self-employment is made with the same employer and the same schedule, that is, with every element of the employment relationship.
The savings are considered permanent, while the 0% rate on income from operations expires on December 31, 2029.
The pension is not taken into account because the self-employed person's contribution is paid on the minimum basis and not on actual earnings.
The service contract is copied from an employment contract, and the text of the contract itself proves the dependency.
The invoice is issued without taxation, and the business client does not recognize the expense, so the individual's savings become the client's problem.
Until December 31, 2029, self-employment is cheaper for both parties, because the tax on business income is 0% under 14,000,000 lekë in turnover and contributions are paid on a minimal basis. The condition is that the relationship must be genuinely independent.
The total cost is 1,400,400 lekë per year, i.e., a gross salary of 1,200,000 lekë plus the employer's contribution of 16.71%, which amounts to 200,400 lekë.
956,400 lek remain, after tax 109,200 lek and employee contribution 134,400 lek.
Tax is 0 lek until December 31, 2029, the health contribution is 40,800 lek per year, so 1,159,200 lek remain before the social security contribution on a 50,000 lek base.
The self-employed contributor's contribution is calculated on the minimum wage, that is, on a lower base than the actual wage, so the effect on the future pension is smaller. For the evaluation of the periods and the base, please write to us with your history.
Yes. When 80% of the income comes from a single client, or 90% from fewer than three clients, the law provides for reclassification as employment income, with employer contributions arising alongside the tax.
Rate 0% expires on December 31, 2029. As of January 1, 2030, business income is taxed at 15% up to 14,000,000 lek, making expense documentation and method selection financially sensitive.
Yes. Employment income is taxed through the agent, the activity is reported on the annual return, and when the total exceeds 1,200,000 lekë, DIVA is also filed.
Read also: Real employee cost and payroll calculator.
Law No. 29/2023 “On Income Tax,” as amended, Article 12 on the reclassification of the self-employed, Article 22 on deductions, Article 24(1) on employment rates of 13% and 23%, Article 24(2) on business rates, Article 69(1)(d) on the rate of 0% until December 31, 2029
Law No. 81/2025, amendments on hidden employment, and General Directive No. 26, dated September 8, 2023, as amended by Directive No. 9, dated March 12, 2026
Law No. 7703, dated May 11, 1993 “On Social Security,” as amended, and Law No. 10383, dated February 24, 2011 “On Mandatory Health Care Insurance,” Articles 7 and 8
Government Decree No. Decision No. 77, dated January 28, 2015, as updated, for rates 16.7% and 11.2%, and Decision No. 776, dated December 19, 2025, for a minimum wage of 50,000 lekë and a maximum wage of 186,416 lekë.
Consolidated text of Law No. 29/2023 and the Income Tax, General Directorate of Taxation