Tax Office: Cross-scanning and checks on thousands of tax returns – 2024-08-02 02:31:32

Extensive checks and cross-checks on hundreds of thousands of tax returns that even today continue to be submitted are going to be carried out in the next period by the Independent Public Revenue Authority.

The tax authority’s algorithm, which the authorities keep well hidden so that no active or potential tax evader can escape a future audit, is based on data that appears in the tax returns of employees, pensioners, professionals, farmers, income earners, but mainly on those that are systematically hidden and can be identified with the help of banks, the Land Registry, anonymous or named complaints, proof of living, the wherewithal, etc.

Evidence and suspicions of tax evasion

Cross-checks and checks will be targeted either randomly or because there is specific evidence and suspicions that self-employed persons who have declared gross income or profits lower than the minimum assumed income, property owners who declare empty apartments or rent them below 12 months a year, those who show e-receipts close to their actual incomes, those who invoked capital expenditure of past years to justify presumptions or purchase of assets.

The Tax Office will, in any case, also obtain data from bank accounts, which it will then cross-check with the declared incomes not only of the current year but also of previous years.

The information recently given by the Minister of National Economy and Finance Kostis Hatzidakis it was very impressive and shows that few taxpayers, even if they know they are “clean”, do not dare to mess with the Tax Office and question the result of the new provision of the law for determining the minimum presumptive income.

According to the minister, until the middle of the previous week, out of a total of 386,000 self-employed professionals who had submitted their tax returns to challenge the minimum presumptive income, only 122 professionals, i.e. 3 out of 10,000, had proceeded.

This fact alone does not prove that all those who did not challenge are tax evaders and happily accepted the new increase in their taxes, but what is certain is that no one wants to get into trouble with the Tax Office because they know that somewhere they may have commits some tax fraud and then finds himself paying much more taxes compared to the income arising from the new presumptive determination.

However, the IRS algorithm will target freelancers with declared gross income or net profits lower than the minimum presumptive incomes determined by the IRS formula. Someone will have an even greater chance of being audited if the gross income they declare, their annual turnover, is below the minimum profits that the Tax Office considers they should have declared.

However, it is not only freelancers who will be targeted by the tax audit. The Independent Public Revenue Authority, upon completion of the submission of the tax returns, will automatically cross-check the information entered in the codes of the E1 form and, depending on the information available to it from various databases, will call the taxpayers for clarifications and if it is not convinced by them , will proceed with the immediate issuance of a tax audit order.

The amounts of interest on deposits and repos acquired by the natural person during the previous year and the tax withheld as well as details of bank accounts, which cumulatively within the previous year showed movements of more than 100,000 euros or the balance of which is more than 200,000 euros are among the intersections that the tax services will carry out.

Shares, interest and loan payments

Also, the dividends paid to natural and legal persons within 2023, for which the Hellenic Stock Exchange SA (HEXAE) communicates the relevant data, as well as the sums of money paid by natural persons to credit institutions, credit companies and leasing companies (financial leasing) for interest-based amortization of loans (housing, consumer, etc.), including accrued and paid interest, interest on arrears, etc., will be checked to establish whether they correspond to the actual financial transactions of the taxpayer.

Even fixed and mobile telephony tariffs, electricity tariffs and how much water someone consumes are included in the AADE algorithm and may result in scams, as characteristically they report competently.

A typical example, someone who paid more than 1,000 euros annually to EYDAP was found to have an undeclared pool. Where, however, special weight will be given to the incomes from real estate and if these coincide with the incomes declared by the tenants or present on the Airbnb, Booking, etc. platforms.

Particularly worried should be property owners who declare empty apartments but appear to electricity providers to have consumed enough electricity in the previous year, or those who appear annually to rent out the apartments they own for less than 12 months.

In these cases the IRS algorithm is very likely to put them on a checklist.

Liable to e-receipts

On the other hand, a procedure that in recent years has become routine, as the code for the receipts is not pre-filled and anyone can put any amount they want in order to cover the limit of 30% of their annual income in order not to pay a tax penalty 22%, it can turn into a “nightmare” for many and they have to give explanations to the Tax Office.

According to information, those who are at risk of being audited are those who declare expenses with electronic payment methods in codes 049-050 close to the amount of their real incomes. Essentially, that is, that they have no money left for any other purchase or expenditure. Also, it is expected that those who display large discrepancies in the said codes in the amounts they declare with those that AADE has collected from the banks and provides as information when completing the tax return, will also be targeted.

It is recalled that in accordance with what is in force, employees, pensioners, farmers by their main occupation, self-employed and those who show income from rent must on an annual basis spend with electronic means of payment for the purchase of goods and the provision of services a total amount equal to 30% of his annual individual actual or imputed income (whichever is higher). Otherwise, they will pay an extra 22% tax for the missing receipts.

Evidence: Asset markets under the microscope

Thousands of taxpayers every year in order to justify presumptions or purchase of assets proceed to use up capital of past years. However, the auditing authorities may initially accept the amounts written in the relevant codes as correct, but the final reason will be given when the corresponding crossings are made.

It is worth emphasizing that last year more than 1.6 million taxpayers paid taxes based on their presumed income rather than their actual income. In fact, the amount added to them by the Tax Office amounted to 5.5 billion euros.

Based on data from the Tax Office:

• 547,827 employees declared in their tax return incomes of 1.46 billion euros and were taxed on incomes of 2.84 billion euros. This happened because 1.38 billion euros were added to their declared income from the application of presumptions (houses, cars, loans, private school fees, yachts, etc.).
• 465,238 pensioners declared income of €992 million but were taxed on €2.29 billion due to presumptions.
• 377,292 income earners declared incomes of 209 million euros. However the presumptions revealed incomes of 1.78 billion and they were eventually taxed on income of 1.98 billion euros.
• 180,889 freelancers and self-employed people declared an income of 391 million, the Tax Office added an assumed income of 759 million euros.
• 91,045 taxpayers with agricultural activity reported to the Tax Office an income of 185 million euros. By applying the presumptions, 328 million were added and they were finally taxed for 513 million euros.