en
Social insurance obligations of self-employed professionals
Social insurance obligations of self-employed professionals
In the system of mandatory state social insurance, the insurance contribution is determined as a percentage of salary payments (income) and is paid at the expense of the insurer and the insured. According to the Law “On Social Insurance,” mandatory state social insurance contributions on income are set at different rates.
Tax expert Ismayil Bagirov has explained the social insurance obligations of lawyers, independent mediators, and persons paying author’s royalties.
Pursuant to Article 14.5.5 of the Law “On Social Insurance,” members of the Bar Association and independent mediators are required to pay mandatory state social insurance contributions in the amount of 15 percent of their income after deducting expenses. The amount considered as income subject to mandatory state social insurance for members of the Bar Association and independent mediators is the difference between the income earned from the provision of services during the reporting period and the amount of expenses deductible from income for that period as determined by the Tax Code.
Example 1: Resul Hasanov (names are conditional), a member of the Bar Association operating in the city of Nakhchivan, entered into contracts with three companies in September 2026 to provide legal services. In that month, the lawyer’s income under the concluded contracts amounted to 800 manats, the deductible expense amount determined by the Tax Code for that period was 100 manats, the income subject to mandatory state social insurance was 700 manats (800 – 100 = 700), and the calculated mandatory state social insurance contribution amounted to 105 manats (700 × 15% = 105).
Thus, this person must pay 105 manats in mandatory state social insurance contributions each month.
Example 2: Ali Mammadov, who operates as an independent mediator in the city of Baku, entered into contracts with five companies in September 2026 to provide mediation services. In that month, his income under the contracts amounted to 1,700 manats, the deductible expense amount was 500 manats, the income subject to mandatory state social insurance was 1,200 manats, and the calculated mandatory state social insurance contribution amounted to 180 manats (1,200 × 15% = 180). Accordingly, this person must pay 180 manats in mandatory state social insurance contributions each month.
It should be noted that for persons working in the Bar Association and its affiliated legal consultation offices, as well as for those who are not members of the Bar Association, social insurance contributions are calculated in accordance with Article 14.3 of the Law “On Social Insurance.” That is, the Bar Association and its affiliated legal consultation offices pay 22 percent of the mandatory state social insurance contribution at their own expense, while 3 percent is withheld from the employee’s salary.
According to Article 14.5.2 of the Law “On Social Insurance,” for persons working under civil-law contracts (excluding individual entrepreneurs), mandatory state social insurance contributions in the amount of 25 percent of their income must be withheld at the source of payment.
Example 3: An individual performs work for a construction company under a civil-law contract, and the individual’s income under the contract for the month amounts to 1,600 manats. In this case, the mandatory state social insurance contribution to be withheld from the individual, as a person working under a civil-law contract, will be 25 percent of the income, i.e., 1,600 × 25% = 400 manats.
Example 4: An individual works as a teacher at a state university under an employment contract and earns a salary of 300 manats. At the same time, the individual provides training in tax and financial accounting to employees of “Cahan Holding” under a civil-law contract and earns 500 manats from this activity. Let us calculate the mandatory state social insurance contribution to be withheld from the individual and paid by the university in relation to the individual’s salary.
The mandatory state social insurance contribution payable by the university in relation to the individual’s employment at the university amounts to 22 percent of the wage fund, i.e., 300 × 22% = 66 manats. The amount to be withheld from the individual’s salary is 3 percent, i.e., 300 × 3% = 9 manats.
Thus, a total of 66 + 9 = 75 manats must be calculated for the individual’s activity at the university. In relation to the activity at “Cahan Holding,” 25 percent must be withheld at the source of payment from the individual’s income of 500 manats under the civil-law contract, resulting in a mandatory state social insurance contribution of 125 manats:
500 × 25% = 125 manats.
According to Article 14.5.4 of the Law “On Social Insurance,” legal entities and individuals paying author’s royalties (publishing houses, editorial offices, radio, television, sound recording studios, film and video studios, theaters, circuses, concert and performance organizations, art funds, cultural funds, special funds, individuals, etc.) are required to pay mandatory state social insurance contributions in the amount of 15 percent of the calculated royalty, withheld at the source of payment.
The mandatory state social insurance contribution is calculated on the royalty paid for the creation of a work. Mandatory state social insurance contributions are not calculated on royalties paid to the author for the subsequent use or repeated use of the work. The amount of the author’s royalty must not be less than the minimum amount established by law.
Example 5: In January, a publishing house paid Mehdi Aliyev a royalty of 1,500 manats for publishing an article. In this case, the publishing house must withhold 15 percent of the mandatory state social insurance contribution from the calculated royalty at the source of payment. That is, the publishing house pays 225 manats in mandatory state social insurance contributions withheld from the individual:
1,500 × 15% = 225 manats.
According to Article 14.6 of the Law “On Social Insurance,” except for the individuals specified in Article 14.5.1-1 of this Law, mandatory state social insurance contributions are calculated monthly and paid simultaneously with salary and other income payments, but no later than the 15th day of the following month, in full and exclusively through non-cash settlements.
In the system of mandatory state social insurance, the insurance contribution is determined as a percentage of salary payments (income) and is paid at the expense of the insurer and the insured. According to the Law “On Social Insurance,” mandatory state social insurance contributions on income are set at different rates.
Tax expert Ismayil Bagirov has explained the social insurance obligations of lawyers, independent mediators, and persons paying author’s royalties.
Pursuant to Article 14.5.5 of the Law “On Social Insurance,” members of the Bar Association and independent mediators are required to pay mandatory state social insurance contributions in the amount of 15 percent of their income after deducting expenses. The amount considered as income subject to mandatory state social insurance for members of the Bar Association and independent mediators is the difference between the income earned from the provision of services during the reporting period and the amount of expenses deductible from income for that period as determined by the Tax Code.
Example 1: Resul Hasanov (names are conditional), a member of the Bar Association operating in the city of Nakhchivan, entered into contracts with three companies in September 2026 to provide legal services. In that month, the lawyer’s income under the concluded contracts amounted to 800 manats, the deductible expense amount determined by the Tax Code for that period was 100 manats, the income subject to mandatory state social insurance was 700 manats (800 – 100 = 700), and the calculated mandatory state social insurance contribution amounted to 105 manats (700 × 15% = 105).
Thus, this person must pay 105 manats in mandatory state social insurance contributions each month.
Example 2: Ali Mammadov, who operates as an independent mediator in the city of Baku, entered into contracts with five companies in September 2026 to provide mediation services. In that month, his income under the contracts amounted to 1,700 manats, the deductible expense amount was 500 manats, the income subject to mandatory state social insurance was 1,200 manats, and the calculated mandatory state social insurance contribution amounted to 180 manats (1,200 × 15% = 180). Accordingly, this person must pay 180 manats in mandatory state social insurance contributions each month.
It should be noted that for persons working in the Bar Association and its affiliated legal consultation offices, as well as for those who are not members of the Bar Association, social insurance contributions are calculated in accordance with Article 14.3 of the Law “On Social Insurance.” That is, the Bar Association and its affiliated legal consultation offices pay 22 percent of the mandatory state social insurance contribution at their own expense, while 3 percent is withheld from the employee’s salary.
According to Article 14.5.2 of the Law “On Social Insurance,” for persons working under civil-law contracts (excluding individual entrepreneurs), mandatory state social insurance contributions in the amount of 25 percent of their income must be withheld at the source of payment.
Example 3: An individual performs work for a construction company under a civil-law contract, and the individual’s income under the contract for the month amounts to 1,600 manats. In this case, the mandatory state social insurance contribution to be withheld from the individual, as a person working under a civil-law contract, will be 25 percent of the income, i.e., 1,600 × 25% = 400 manats.
Example 4: An individual works as a teacher at a state university under an employment contract and earns a salary of 300 manats. At the same time, the individual provides training in tax and financial accounting to employees of “Cahan Holding” under a civil-law contract and earns 500 manats from this activity. Let us calculate the mandatory state social insurance contribution to be withheld from the individual and paid by the university in relation to the individual’s salary.
The mandatory state social insurance contribution payable by the university in relation to the individual’s employment at the university amounts to 22 percent of the wage fund, i.e., 300 × 22% = 66 manats. The amount to be withheld from the individual’s salary is 3 percent, i.e., 300 × 3% = 9 manats.
Thus, a total of 66 + 9 = 75 manats must be calculated for the individual’s activity at the university. In relation to the activity at “Cahan Holding,” 25 percent must be withheld at the source of payment from the individual’s income of 500 manats under the civil-law contract, resulting in a mandatory state social insurance contribution of 125 manats:
500 × 25% = 125 manats.
According to Article 14.5.4 of the Law “On Social Insurance,” legal entities and individuals paying author’s royalties (publishing houses, editorial offices, radio, television, sound recording studios, film and video studios, theaters, circuses, concert and performance organizations, art funds, cultural funds, special funds, individuals, etc.) are required to pay mandatory state social insurance contributions in the amount of 15 percent of the calculated royalty, withheld at the source of payment.
The mandatory state social insurance contribution is calculated on the royalty paid for the creation of a work. Mandatory state social insurance contributions are not calculated on royalties paid to the author for the subsequent use or repeated use of the work. The amount of the author’s royalty must not be less than the minimum amount established by law.
Example 5: In January, a publishing house paid Mehdi Aliyev a royalty of 1,500 manats for publishing an article. In this case, the publishing house must withhold 15 percent of the mandatory state social insurance contribution from the calculated royalty at the source of payment. That is, the publishing house pays 225 manats in mandatory state social insurance contributions withheld from the individual:
1,500 × 15% = 225 manats.
According to Article 14.6 of the Law “On Social Insurance,” except for the individuals specified in Article 14.5.1-1 of this Law, mandatory state social insurance contributions are calculated monthly and paid simultaneously with salary and other income payments, but no later than the 15th day of the following month, in full and exclusively through non-cash settlements.