It’s time to crack the employee vs. self-employed conundrum: we answer your questions.

‘Are you an employee or self-employed?’ This may seem like a simple question. An employee is someone who works for an employer, while a self-employed individual works for themselves. Therefore, for most people, the question is easy to answer. However, in some cases the answer can be challenging. In countries across the EU, disagreements about people’s employment statuses have been brought before national courts. These issues have even been referred to the European Court of Justice.

In this article, we will discuss why your employment status is important. We will also outline some determining factors to distinguish between being an employee or self-employed.

Employee vs Self-Employed: Why does it matter?

The difference between an employee and a self-employed person can be multifaceted, complex and, at times, disputed.

Your status as an employee or a self-employed person will affect your working rights. Over the years, the EU has issued a number of Directives to EU Member States, covering a wide variety of areas such as employee working hours, paid leave, and health and safety in the work environment. An example of these Directives is EU’s Working Time Directive (2003/88/EC), which, among other things, required EU Member States to guarantee employees at least four weeks of paid annual leave per year. These Directives help to guarantee certain rights for employees across the EU.

In addition to your working rights, your employment status will affect your responsibilities, including your responsibilities as a taxpayer. For example, as an employee, your employer is responsible for calculating and sending your employment taxes to the tax authorities. However, if you are self-employed, you are responsible for calculating and sending your taxes to the tax authorities. The tax rules for employment income and self-employment income can be different between EU member states. Therefore, you must know your employment status so that you can make sure your taxes are completed in the correct way.

Am I an Employee or Self-Employed?

There are many employment situations for employees and self-employed people. If there is uncertainty over whether a person is an employee or self-employed, their case must be looked at individually. A person is generally considered an employee if the employer:

• decides:
  • where the person’s activity is performed (place of work)
  • how many hours a day the person works for (working hours)
  • what activity the person will perform based on the business needs of the company
  • how the activity is to be performed and will give directions to the person
• bears the risk for the company’s activities.

A person is generally considered self-employed if they:

• decide:
  • where their activity is performed (place of work)
  • how many hours a day they want to work for (working hours)
  • what activity they will perform based on the business needs of the company
  • how the activity is to be performed
• bear the risk for the activities they carry out.
• can hire other people to work for or help them.

In addition, there are a variety of other factors that can be taken into account when determining employment status depending on the individual case.

Where can I learn more?

To find out more about employment and taxation in the EU, explore the range of educational materials available across the TAXEDU website.