Why does the comparison look so different?
As an employee, your employer covers significant hidden costs: employer social security/NI contributions (10–30% of salary depending on country), pension contributions, sick pay, holiday pay and equipment. As a freelancer you cover all these yourself — so your effective gross needs to be higher to achieve the same net income.
How much more should a freelancer charge vs an equivalent employee salary?
As a rule of thumb, a freelancer needs to charge 1.5–2× their equivalent employee gross salary to achieve the same net take-home. This accounts for self-employment taxes, loss of employer contributions, unpaid holidays, downtime between contracts, and business costs.
Is freelancing more tax-efficient than being employed?
It depends on the country and structure. In the UK, operating through a limited company can be more tax-efficient than being employed (salary + dividends vs PAYE). In Spain, autónomos pay high social security contributions that can offset income tax benefits. Always consult a local accountant.
What about employer pension contributions?
Employers typically contribute 3–10% of salary to a pension — this is part of your total employee package but not reflected in your gross salary. Freelancers must fund their own pension from net income, adding to the cost gap. This calculator doesn't include pension to keep comparisons simple.