Budget: In the Parliament the draft – The measures to reduce taxes and increase incomes –

In the shadow of the war in the Middle East, the government today submits to Parliament the draft budget for 2025. The budget has been drawn up assuming an oil price of $80 per barrel and inflation of 2.2%. However, after Iran’s attack on Israel there was an increase in the price of Brend oil, while developments in the region will determine the course of crude oil.

The economy will close this year with growth that will be close to the levels of 2.2%, while for 2025 the bar is placed marginally above 2.3% due to the uncertainty and risks associated with geopolitical developments. The government, as it emerges from the Medium Term, aims next year for a primary surplus of 2.5% of GDP and is bound by a ceiling of 3.7 billion euros in spending increases.

The draft budget incorporates the extraordinary income support that around 2 million households will receive before Christmas as well as public and private sector increases and tax cuts that will be activated in 2025.

Income support

Income enhancement measures for 2025 include:

1. Pension increase from 2.2% to 2.5%.
2. Horizontal increase of salaries in the State so that the introductory one does not fall short of the level of the minimum wage. The amount of the increase in the minimum wage, according to the prescribed procedure, will determine the increase in wages in the State that will be applied from April 1, 2025. In the event that the minimum in 2025 is determined at 870 euros, the wages of civil servants will increase horizontally by 20 euros (gross) per month.
3. Expansion of the target achievement allowance.
4. Increase of the student housing allowance for Regional Universities from 1,500 to 2,000 euros per year and 2,500 in case of cohabitation, from the current school year.
5. 20% increase in compensation of night uniforms (police, fire brigade, coast guard, armed forces). Hourly compensation will rise from 2.77 to 3.33 euros per hour. For a police officer with 64 hours of night work, this increase corresponds to 36 euros gross or 22 euros net per month.
6. Incentive to attract doctors to troubled and barren areas. Effective from September 2024, an increased incentive to attract and retain NHS doctors in problematic and barren areas of 200 to 600 euros per month depending on the specialty and region.

Tax reductions

On the tax front, the following tax reductions are activated in 2025:

1. 1% reduction in insurance contributions from 1/1/2025, of which 0.5% from employee contributions and 0.5% from employer health sector contributions, with a net cost of 440 million euros. Insurance contributions will be reduced by an additional 0.5% in 2027.
2. Abolition of the pretense fee for freelancers. The application fee was reduced by 50% last year, from 650 to 325 euros, and it will be abolished in 2025. It is noted that the application fee remains for legal entities and for branches.
3. Corrections to the minimum amount of net income for self-employed persons to be applied for tax year 2024 (2025 returns).
4. Permanentization of the refund of the EFF on agricultural oil by applying a zero rate from 2025. Farmers, through a process, will receive the refund of the EFF they have paid within each year.
5. Income tax exemption for vacant properties to be rented out. Any owner who converts between 8/9/2024 and 31/12/2025 an empty property (as shown by E2 for at least 3 years) or a property that is on a short-term lease (for at least 3 years) into a long-term lease (at least 3 years as shown in the electronic lease), will have an income tax exemption for the rent in question for 3 years. It concerns properties up to 120 sq.m.
6. Extension of VAT exemption for new buildings.
7. Removal of fixed telephony fee (5%) for optical fiber connections (≥100 mbps).
8. Exemption from insurance premium tax (15%) on health policies for children up to 18 years of age.
9. Tax exemption of voluntary business benefits for new parents. Voluntary financial benefits of the employer which are provided to a new parent for a period of up to twelve months from the birth of a child, up to the amount of 5,000 euros per year increased by an additional 5,000 for each dependent child, are not subject to personal income tax. A necessary condition is that there is no reduction in the earnings of the new parent during the months he received the benefit as well as for the immediately preceding and following six months, in relation to the earnings of the last month before the benefit. In addition, a tax exemption is established for vouchers for nurseries provided by companies to their employees.
10. 20% reduction in ENFIA for homes insured against natural disasters. The reduction of the ENFIA for residences, with a taxable value of up to 500,000 euros, that are insured for natural disasters is doubled from 10% to 20% (it also applies to the ENFIA that will be ascertained in 2025 for the months that someone is insured in 2024 proportionally). Homes with a taxable value of more than 500,000 euros continue to have a 10% discount and must be insured against natural disasters (flood, fire, earthquake) by 1/6/2025. In case of natural disaster after 01/06 they will not be compensated.
11. Independent taxation of NHS doctors on call at a rate of 22%. The average monthly net benefit for doctors is estimated at 150 euros and in many cases exceeds 200 euros.
12. M&A incentives.

Source: ot.gr