The SVS, formerly known as the SVA (the name changed on 1st January 2020), is “a self-governing organization of the self-employed for the self-employed”. The name SVS stands for Sozialversicherung der Selbständigen, which means Social Insurance of Self-employed and as the name indicates, the SVS is an organization that manages all affairs related to social insurance for the self-employed in Austria and claims to maintain the health of 1.2 million customers and protect them during illnesses, accidents, or retirement.
Registration at the SVS
Everyone who conducts a non-wage income by being self-employed has to register with SVS within 4 weeks after the beginning of the activity. The amount of income is not relevant to the registration obligation. Based on the information you have provided, the SVS will review if you are subject to mandatory self-insurance. If you don’t register in time, the consequences are expensive: if your income for this period is higher than the marginal wage threshold, you will be considered as insured from the first day of self-employment and you will have to pay back the mandatory insurance contribution, along together with 9.3% default interest. If the first day of self-employment can’t be estimated, the first day of the insurance will be the 1st of January of the particular year. Learn how to register at the SVS with our article on Registration.
Mandatory social insurance
First, let’s have a closer look at some terms related to this topic:
- contribution basis (Beitragsgrundlage): the basis which is used to calculate your monthly contribution to the SVS. Depending on the type of the contribution basis - preliminary or final - there are different rules on how to calculate it.
- contribution rate (Beitragssatz): is the percentage that is used to calculate your monthly contribution to SVS.
- contribution (Beitrag): the monthly payment to the SVS.
- minimal contribution basis (Mindestbeitragsgrundlage): the lowest basis which is used to calculate the monthly contribution. It is regulated by the law and can vary for the different types of social insurances.
- maximum contribution basis (Höchstbeitragsgrundlage): the highest basis which is used to calculate the monthly contribution. It is regulated by the law and can vary for the different types of social insurances.
- marginal wage threshold (Geringfügigkeitsgrenze): the marginal wage threshold is an amount that changes every year, and for 2020, it is 5,527.92. If your earnings exceed the yearly threshold, you will be subject to pay mandatory social insurance, which is determined by the contribution basis.
- tax-exempt threshold (Steuerfreigrenze): the amount of yearly income (€ 11,000.00 for freelancers). If you exceed this amount, you will have to pay income tax.
You should be certain not to confuse the marginal wage threshold with the tax-exempt threshold. The first is used mostly in the social insurance law. This is the amount that defines if you will be subject to mandatory social insurance. The tax-exempt threshold is an accounting term that defines if you have to pay income tax.
Beginning of the mandatory social insurance The insurance coverage begins on the first day of self-employment if the application form for registration has been submitted within 4 weeks after the beginning of the self-employment. If the application form was submitted after this deadline, the insurance coverage will begin on the date of submission. If the employment you pursue demands an authorization (for example, psychologists or midwives), the starting date of the insurance will be the day that the authorization certificate has been issued.
When am I obligated to pay mandatory monthly social insurance contributions? This happens when you meet all 3 requirements:
- you conduct an activity of independent character like freelancing (new self-employed), sole-entrepreneurship, independent contracting
- you are not yet insured on another ground for the particular activity - for example, free service contractors are insured with the ÖGK.
- you earn income which exceeds the marginal wage threshold
For some activities, it's hard to decide if they should be classified as new self-employment or independent service contracting, which is why the SVS will provide you with a questionnaire to fill out during your registration. If you want to register as a new self-employed, but the SVS decides that this kind of activity falls under independent contract services, your application form will be forwarded directly to the ÖGK. This first registration with the SVS doesn’t mean that you will have to pay the social insurance contribution. The obligation for mandatory monthly contributions depends on the type of your declaration and the information you provide to the SVS. If you declare that your income for the year will be more than € 5.527,92 (the marginal wages threshold for 2020) you are subject to mandatory social insurance. There are four different declarations you can submit to SVS regarding your initial registration:
Exceeding statement (Überschreitungserklärung) is the legal term for the application form you will need if: - you’ve just started with your self-employment, and you assume that your income during the particular year will be higher than the marginal wages threshold
- you are already self-employed and you are not insured with the SVS because in the past years your income was lower than the marginal wage threshold, but you assume that in the coming year you will exceed this limit.
The mandatory social insurance begins when your yearly income is higher than € 5,527.92. However, if you don’t exceed this limit and you are not insured on another ground, you won’t have health and accident insurance. In this case, SVS gives you the possibility to opt-in to health and accident insurance when you have low income. The contributions you will have to pay in this case are substantially lower than those in the mandatory social insurance - the mandatory social insurance is €154.72 monthly; the monthly contribution, if you decide to opt-in to the health and accident insurance, is €41.41 (valid for 2020). For more information, go to https://www.sozialversicherung.gv.at/formgen/?contentid=10007.854307&portal=svsportal&LO=4
Hungry for more?
Learn how to handle taxes as a new self-employed.
Learn how to register as a new self-employed.