Receipts, from car repair shops, rooms to let, bars, plumbers, lawyers, doctors, etc. will have to be collected from the new year by taxpayers in order to qualify for additional reductions in income tax. Dozens of categories of freelancers will join the list of the Finance Ministry and taxpayers who make transactions through cards or e-banking will get a deduction from their taxable income.
Specifically, 30% of the amounts paid annually by the taxpayer in electronic money for purchases of goods or services to certain categories of businesses and self-employed persons will be deducted from their taxable income and, consequently, the final tax will be reduced.
Thus, the categories of professions that will lead to the reduction of charges are as follows:
- car workshops
- rooms to let
- bar
- plumbers
- electricians
- painters
- hairdressing salons
- gyms
- beauty centres
- private lessons
- lawyers
- doctors
- technical offices etc.
However, the discount provided, as reported by accounting firms according to a report by Prokopis Hadjinikolaou as published in capital.gr, is not sufficient to curb tax evasion. This is because the discount provided does not cover the VAT offered by professions that do not systematically issue receipts.
While they note that drastic measures will be needed, namely either increasing the percentage of expenditures that reduce taxable income to levels above 50% or the deduction should be made directly in the final tax. As they stress, in any case the State will have to cover the VAT that various professionals give away as a discount. If this happens, the Greek State will be a winner again. Firstly, it will give that VAT as a gift to taxpayers and, secondly and more importantly, it will have more income tax revenue, as it will increase the taxable income of professionals who usually declare incomes that do not exceed 10,000 euros.
How the discount will work
1. A taxpayer with an annual taxable income of EUR 20,000 pays a fee of EUR 3,000 to a freelancer by card or e-banking. 30% of the €3,000 expenditure, i.e. €900, will be deducted from his taxable income, which is limited to €19,100.
– Tax on income of €20,000: €3,100.
– Tax on income of 19,100 euros after deduction of 30% of expenses: 2,902 euros.
This means that this taxpayer will save 198 euros in tax.
2. A taxpayer with an annual taxable income of EUR 20,000 pays electronically expenses of EUR 5,000 from professionals with a propensity for tax evasion. 30% of the €5,000 expenditure, i.e. €1,500, will be deducted from his taxable income, which is reduced to €18,500.
– Tax on income of €20,000: €3,100.
– Tax on income of €18,500: €2,770.
This taxpayer will have a tax gain of 330 euros.
The tax lottery plan
It is envisaged that there will be one or possibly more winners of the tax lottery, winning amounts of more than €100,000. This incentive is expected to increase the number of taxpayers asking for receipts and even from “risky” professional groups. It is noted that currently 1,000 taxpayers earn 1,000 euros per month. That is, the cost to the Ministry of Finance amounts to 1 million. euro. In the case where, for example, 1 or 5 taxpayers earn more than 100,000 euros, the rest could be divided equally among the others. In any case, the government’s plan provides more money to fewer lucky people.
