Recipients of social benefits are not always employees. Income replacement benefits, which are subject to the progression clause, are also paid to traders, self-employed persons, freelancers, or farmers.
These income replacement benefits are tax-free, like wage replacement benefits, but they still affect the amount of tax payable. This is because income replacement benefits are included in the progression clause and thus have a significant impact on the calculation of the personal tax rate.
You receive income replacement benefits as a non-employee, for example, as a freelancer or trader:
Income replacement benefits subject to the progression clause (e.g. unemployment benefit, parental allowance, insolvency benefit, sickness benefit, maternity pay and comparable benefits from an EU/EEA country or Switzerland) must be entered in the main tax form.
