Definition: Self-employment income

Category: EU-SILC

Self-employment income is defined as the income received, during the income reference period, by individuals, for themselves or in respect of their family members, as a result of their current or former involvement in selfemployment jobs. Self-employment jobs are those jobs where the remuneration is directly dependent upon the profits (or the potential for profits) derived from the goods and services produced (where own consumption is considered to be part of profits). The self-employed person makes the operational decisions affecting the enterprise, or delegates such decisions while retaining responsibility for the welfare of the enterprise. (In this context, "enterprise" includes one-person operations). The remuneration of hobbies shall be regarded as selfemployment.

If the income collected or compiled corresponds to a time period earlier than the reference period, basic adjustments shall be applied to update the data to the income reference period.

The self-employment income is broken down into:

1. Gross cash profits or losses from self-employment (including royalties) (PY050G);
2. Value of goods produced for own consumption (PY070G).

Income from self-employment shall be calculated as:

- market output (gross revenue to turnover, including the value of goods produced by the enterprise but consumed by the self-employed person or his/her household),
- plus market value of goods and services bought for the unincorporated enterprise but consumed by the entrepreneur and his/her household members,
- plus property income received in connection with financial and other assets belonging to the enterprise,

- minus intermediate consumption (raw material costs, costs of sales, distribution costs, maintenance costs, administrative expenses, etc.),
- minus compensation of employees (wages, salaries and social security contributions for employees),
- minus taxes on production and import taxes,
- minus interest paid on business loans,
- minus rents paid on land and other non-produced tangible assets rented by the enterprise,
- minus consumption of fixed capital,
- plus subsidies.

In practice if the self-employed person or business prepares annual accounts for tax purposes, the gross income benefits/losses shall be calculated as net operating benefits/losses shown on this tax account for the most recent 12-month period, before deduction of taxes on income and compulsory social insurance contributions.

In the absence of annual accounts, either for tax purposes or as a business account, the alternative approach to measure self-employment income shall be to collect the amount of money (and goods) drawn out of the business for personal use (for consumption or saving, including the market value of goods produced or purchased by the business but taken for personal use). http://ec.europa.eu/eur-lex/pri/en/oj/dat/2003/l_298/l_29820031117en00010022.pdf