Gross salary and net salary: what is the difference?

If you invoice through Paidin or are considering umbrella employment, you have probably come across the terms gross salary and net salary. The difference between them determines how much money actually ends up in your account each month. In this guide, Paidin explains what these terms mean, how the calculation works with umbrella employment, and why it is important to understand both amounts before sending your first invoice.

What is gross salary?

Gross salary is your total pay before tax is deducted. It is the amount shown on your pay slip and reported to the Swedish Tax Agency (Skatteverket) by the employer; in Paidin's case, Paidin as the umbrella employment company. Gross salary is your full compensation, including the portion that goes towards preliminary tax.

When Paidin pays your salary, the gross amount is calculated from the invoice total after the service fee and employer contributions have been deducted. Your gross salary through Paidin therefore depends directly on the amount you invoice and your client pays.

Gross salary is the basis for calculating sickness benefit, parental benefit and other social insurance entitlements from Försäkringskassan (the Swedish Social Insurance Agency). That is why it must be reported correctly, something Paidin handles automatically.

What is net salary?

Net salary is the amount that is actually paid into your bank account. It is gross salary minus preliminary tax. Net salary is simply the money you can use freely after tax has been paid.

By default, Paidin deducts 30% in preliminary tax as recommended by Skatteverket. This is based on umbrella employment being treated as supplementary income alongside regular employment. If you have a tax adjustment certificate (jämkad skattsedel) or a different tax rate and have notified Paidin, the tax will be calculated accordingly instead of the standard 30%.

How is net salary calculated with umbrella employment via Paidin?

With umbrella employment via Paidin, the calculation starts from the amount your client pays: the invoice total excluding VAT. The following deductions are made in order:

1. Paidin's service fee is deducted from the invoice amount. The fee depends on the invoice size: 4.8% for amounts under SEK 20,000, 3.6% for SEK 20,000 to 49,999, and 2.9% from SEK 50,000. The first invoice through Paidin is completely free, regardless of amount.

2. Employer contributions (31.42% as standard) are calculated on your gross salary and paid by Paidin to Skatteverket. These contributions fund health insurance, pension and parental insurance, among other things. Since employer contributions are added on top of the gross salary, the calculation works backwards: the remaining amount after the service fee is divided by 1.3142 to determine the gross salary. Older individuals currently have a lower employer contribution rate of 10.21%, and young people between 18 and 22 have a temporarily reduced rate until 2027. Paidin handles this automatically based on the applicable time limits and age.

3. Gross salary is the amount remaining after the service fee and employer contributions.

4. Preliminary tax is deducted from the gross salary according to your tax rate.

5. Net salary is the final amount Paidin pays into your bank account.

Example: invoice for SEK 40,000

Here is a step-by-step calculation when you invoice SEK 40,000 excluding VAT through Paidin (fee tier 3.6%):

In this example, you receive SEK 20,539 in your account from an invoice of SEK 40,000. Paidin details gross salary, tax, employer contributions and net salary on your pay slip so you always see exactly what has been deducted and why.

The difference between traditional employment and umbrella employment

In traditional employment, the employer sets your gross salary. Employer contributions are added on top and never appear on your pay slip. You only see the gross salary and the tax.

With umbrella employment via Paidin, you have a unique advantage: you see the entire chain from invoice amount to net salary. You know exactly how much goes towards the service fee, employer contributions and tax. This gives you full transparency and the ability to plan your finances more effectively.

Another difference is that as an umbrella employee through Paidin, you directly influence your gross salary. The more you invoice, the higher your gross salary becomes, and thanks to Paidin's tiered fee model, the percentage fee decreases at higher amounts. This means a larger share of the invoice becomes salary the more you invoice.

Paidin also handles tax and contribution payments to Skatteverket, pension allocations (if you have chosen to set aside for pension), and employer and VAT declarations. All of this you would need to manage yourself when running your own company.

Calculate your salary with Paidin's calculator

Want to know exactly how much you will receive for a specific invoice? Paidin has a salary calculator where you enter your invoice amount and instantly see gross salary, net salary and all deductions.

Try Paidin's salary calculator

The calculator applies the correct fee tier based on the invoice amount and shows a detailed breakdown of all costs. It is the fastest way to see your payout before sending your invoice through Paidin.

Frequently asked questions

Can I influence my net salary?

Yes. Your net salary with umbrella employment via Paidin depends on three things: the invoice amount, your tax rate and the fee tier. You can increase your net salary by invoicing higher amounts (which gives a lower fee tier at Paidin), by reviewing your tax rate with Skatteverket, or by registering expenses that Paidin can deduct before salary is calculated.

Is vacation pay included in the gross salary?

Yes. Paidin calculates vacation pay (12%) and includes it in your gross salary. The vacation pay is disbursed on an ongoing basis with each salary payment, unless you choose to save it.