«First, the tax returns will be submitted and the tax collection results from the measure imposing a minimum annual income on the self-employed will be recorded, and then it will be decided what will be done and when with the proof of living”.
This was stated to the Economic Post by a senior official of the Ministry of Finance after the recent barrage of publications which were based on information about changes in presumptions after a competent committee had been established in the general secretariat of fiscal policy.
Cost of living: 30% horizontal cuts coming – Where the biggest injustices have been found
The timetable for reducing the presumptions by 30% will be determined by the Ministry of Finance immediately after the completion of this year’s tax returns, temporarily freezing any discussions that had begun about changes to the way the tax office determines and taxes presumptive incomes arising from marital status, if one owns a house, a car, a yacht, sends one’s children to a private school, etc.
The minimum income
In the Ministry of Finance, although a special working group has been set up to deal with the changes in the presumptions, the mandate given by the political leadership is to go back on any adjustments in order to first have a clear picture of the effectiveness of the minimum income imposition measure in around 700,000 freelancers and small and medium-sized businesses and then any decisions are made.
This will happen when all tax returns are submitted and most importantly cleared in order to finally determine how many and who are caught in the traditional presumptions and what deviations their real incomes show from the presumptions. This applies not only to freelancers but also to employees and pensioners as well as farmers and income earners.
Greater reduction
According to the same information, if the minimum income measure proves to exceed the self-employed’s presumptive incomes resulting from their marital status and the assets that determine these presumptions (cars, real estate, etc.) then it is very likely for the employees and pensioners, who in any case cannot hide the incomes they receive as they appear pre-filled in the tax declarations, that by 2027 there should be a greater reduction than the one announced by the Prime Minister Mr. Kyriakos Mitsotakis in the run-up to the elections, amounting to an average of 30 %.
The gradual dislocation
The gradual “removal” of the presumptions that burden 2,000,000 taxpayers every year is expected to start with the incomes of 2025 and not this year and be completed at the end of 2027. This means that the incomes that will be earned in 2024 and declared – will be taxed in 2025, based on what they report competently from the Ministry of Finance, they will be taxed without any change in the presumptive determination.
Of course, this can change when the political leadership of the Ministry of Finance has a complete picture of the effectiveness of the measure of imposing a minimum income on freelancers.
The POS
An important role in the final decisions will be played by the effectiveness of the interface of cash registers and POS payment systems with the MyData system. This will help in the transfer of tax data – data in real time and through extensive cross-references to significantly limit tax evasion and at the same time not to rely on the tax system on presumptions to determine the minimum taxable income of professionals, income earners as well as employees and pensioners.
Both the Minister of National Economy and Finance, Mr. Kostis Hatzidakis, and the Deputy Minister of Finance, Mr. Haris Theoharis, expect the collection effectiveness of the measure applied from this year to the self-employed with their new taxation system, taking the minimum wage as a reference point, considering that it cannot a self-employed person has less income than an employee.
The amounts that self-employed persons must now declare as income cannot fall short of 10,920 euros per year. This amount, with the various surcharges, is more than certain to cover in most cases the incomes determined on the basis of the presumptions. Consequently, for this particular category of taxpayers, there will be a significant change in the existing presumption limits so that they are not overburdened compared to the minimum incomes they are now required to declare.
The objective costs
The conversation about abolishing or even limiting the presumption of living has been opened and closed many times in recent years because in the end no one made the decision to proceed with the complete change of the taxation system which is largely based on subjective criteria such as whether someone is married or single, if he owns a house, a car, a yacht, a holiday home, etc.
For each asset, a fictitious income is obtained which, by summing it up, results in the final imputed income, which if it is more than the real one, the taxpayer is ultimately burdened with it.
The objective costs taken into account
- The minimum objective cost of living, which is set at the amount of 3,000 euros, in the case of single, divorced or widowed and at the amount of 5,000 euros, in the case of spouses submitting a joint declaration, as long as real or presumed income is declared. The number of children does not affect the evidence.
- The imputed expense for owner-occupied or rented or free-granted main residences, secondary and their auxiliary spaces with the calculation based on the objective values which in many cases have increased significantly. For example, for owning or renting a house of 80 square meters in an area of average objective value, the presumption added to the rest amounts to 3,200 euros.
- The estimated costs of passenger cars I.X. mixed-use cars and JEEP-type cars are based on cubic capacity and year of manufacture. For cars up to 1,200 cubic centimeters, they amount to 4,000 euros, while for cars larger than 1,200 cubic centimeters, 600 euros are added per 100 cubic centimeters up to 2,000 cubic centimeters. For cars larger than 2,000 cubic centimeters, 900 euros are added per 100 cubic centimeters and up to 3,000 cubic centimeters, and for cars larger than 3,000 cubic centimeters, 1,200 euros are added per 100 cubic centimeters. The aforementioned amounts of presumptions apply to cars up to five years old. For vehicles aged 5 to 10 years, a 30% discount is provided, and for cars over 10 years old, a 50% discount. For example for an I.X. 1,400 cc 5-year presumption of 5,200 euros is imposed on the owner.
Other imputed costs
However, it is not only these imputed expenses that determine the minimum income taxed by the tax authorities in the event that this falls short of the actual – declared. Estimates are also the expenses of private primary and secondary schools, the expenses of domestic helpers (more than one), car drivers, teachers, etc., the expenses of private pleasure boats (e.g. a 6-meter boat has an annual estimate of 6,000 euros) , aircraft, helicopters, gliders, the existence of an indoor or outdoor swimming pool, as well as the amounts paid annually by the taxpayer for the interest-based amortization of housing or consumer loans. In the event that someone pays a monthly installment for a housing loan of 600 euros, the tax office charges them with a presumption of 7,200 euros per year which is added to all the rest.
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