Tax evasion has become a habit for a non-negligible number of freelancers, as evidenced by tax return data.
A large percentage declare losses, while several report monthly incomes that do not exceed 300 euros. At the Ministry of National Economy and Finance, they estimate that behind these figures there is a significant “reservoir” of undeclared incomes, which, if revealed, can strengthen the state budget and reduce taxes for employees and pensioners.
State interventions
The State’s interventions so far seem to be bearing fruit. As officials from the Ministry and the AADE report, the results are very positive, both from the application of the presumptive method of taxation of incomes, and from the interconnection of cash registers with POS.
The effort does not stop here, as new interventions are launched, such as the complete elimination of discrepancies between declared income and expenses with the data entered in myDATA, continuous checks for the correct operation of the interface of cash registers with POS, acceptance of payments through the IRIS system and the implementation of the digital clientele.
No more spending without a document
Unsubstantiated overspending, which until now has been a common ploy to reduce or even eliminate profits, will cease to exist from 1 January 2025. Until then, from 1 October 2024, acceptable deviations between declared costs and those registered in the myDATA system will be significantly reduced, with the aim of their complete elimination.
According to the planned schedule, from October 1 to December 31, 2024, the revenue discrepancies will be zero, while the acceptable limit for expenses will be reduced to 5%, from 10%-20% that was in place until the end of September. From January 1, 2025, the deviation limits will be completely abolished, both for income and expenses, based on the data transmitted to the myDATA digital platform.
With the complete elimination of these discrepancies, virtual transactions will be ended, as the tax office will recognize for deduction from the gross income only the expenses registered in the system. In addition, the declared income cannot be lower than that obtained through the documents for purchases or provision of services.
The zeroing of allowable variances means that professionals will no longer be able to artificially increase their expenses in order to reduce their taxable income. However, they will be able to add additional revenue and the corresponding VAT in cases where sales invoices have been issued that have not been transmitted to AADE in time due to technical problems or other exceptions, such as low annual turnover.
The new system paves the way for the pre-completion of VAT returns, as the tax administration will be able to automatically calculate the amount of tax to be paid, without the intervention of the taxpayer. The “locking” of VAT returns is expected to contribute to the reduction of the “VAT gap”, i.e. the revenue lost by the state from the non-collection of Value Added Tax. The “VAT gap” has already been reduced by €3 billion, thanks to the increase in electronic transactions and payments.
Income and expense data entered on the myDATA platform will be automatically transferred to tax returns, making the process more transparent and efficient. Thus, after the VAT, the codes of the E3 form, which determines the taxable profits and the amount of the income tax, will also be “locked”.
Permissible limits of deviations
The permissible limits of deviations for VAT in relation to the data registered in myDATA are configured as follows:
* July 1 to September 30, 2024: 10% on income and 20% on expenses.
* October 1 to December 31, 2024: 0% on income and 5% on expenses.
* From January 1, 2025: No deviation in income and expenses in relation to the data entered in the myDATA digital platform.
Digital customer base
AADE is introducing a new electronic process for professionals, implementing the digital client register, which will allow auditors to monitor in real time the activity of taxpayers. This measure will be combined with the interconnection of cash registers with POS, digital waybills and electronic invoices, and is expected to make a significant contribution to the fight against tax evasion, making concealment of turnover almost impossible.
According to the plan, the digital client will be applied to:
* Professionals who offer services to vehicles, such as garages, electricians, body shops, vulcanizers, parts sellers, car washes and vehicle rentals.
* Professionals in the field of events, such as estates, halls, catering and organization companies.
* Private schools, clinics, doctors, lawyers, diagnostic centers and other similar professions.
These professionals will be obliged to electronically record the details of their clients on a platform connected to the AADE, also mentioning the reason for the visit, if it is a new or ongoing provision of services.
IRIS
The informal deadline of the Ministry of National Economy and Finance for the registration of freelancers in the IRIS system ends on Monday, September 30, allowing them to accept payments from their clients. From Tuesday 1 October, the tax enforcement mechanism will start cross-checking, and professionals or self-employed people who do not have an IRIS will face a fine of €1,500.
This service has already gathered more than 530,000 freelancers and sole proprietorships. The data shows a significant increase in the use of IRIS in 2024, as 1 in 2 citizens – i.e. more than 3 million – with web banking enabled have now linked their accounts to this instant payment system.
So far, transactions carried out through the IRIS system in 2024 amounted to 34 million, with a total value of €3.7 billion. This increase is impressive, with rates of 150% and 116% respectively compared to the same period last year.
Controls
AADE has launched extensive audits to determine whether businesses and professionals are complying with the new trading measures. The audits focus on the interconnection of cash registers with POS, the use of a new type of cash register in the catering industry, as well as the implementation of the IRIS direct payment system.
The interconnection of the cash registers with the POS is a key element of the controls, using data from the AADE e-send system. The aim is to ensure that the obligors send the necessary receipts and details of card sales.
Emphasis is also placed on taxi drivers, despite the sharp reactions from the industry, who must place a sticker on the rear right window of the vehicle, where it is written in Greek and English that:
* The driver is obliged to issue a receipt at the end of the journey and accept payment by card.
* The customer is not required to pay in cash.
Source: APE – MEB
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