Greek Taxation: New Ways to Squeeze Out Small Businesses & Freelancers

A new-new-new, the la  Taxation bill is under way as the Greek Finance Ministry “tries to combat tax evasion and injustice”(apparently).  The self-assessment, in power since 2004, will be abolished and the so-called new “objective criteria” will be applied for the taxation of small businesses and freelancers. These will include not only the real revenues but also, among others, the amount of employees, the size of real estate, the mobile phone bills amounts and the tangible assets, i.e. the bank savings. If the tax office realized the taxpayers’ savings can not be confirmed with the tax declaration, the taxpayers will be asked to pay more tax. As of 2012 one million Greek owners of small businesses and freelancers will be kindly requested to pay more in taxes. What if the government continuously repeats that there would be no more taxes. The real life dismisses these claims. For the x-time, since Greece’s turned to international lenders for financial aid. The new criteria are expected to give the final shot to thousands of small businesses, self-employees and freelancers who desperately try to survive in an economic environment of deepest recession.  

Greek FinMin To Abolish Tax Self-Assessment Regulation

The Greek Finance Ministry prepares a new bill for the National Tax System with the ambition of a new beginning in fighting tax evasion and injustice. In this context, a series of regulations that flared up tax evasion regularly are under revision, with the ultimate aim of elimination. 

Thus, the self-assessment of small businesses and freelancers are to be abolished by 2012, while the objective criteria for minimum income will be restored.  

The regulation of self-assessment established in 2004 and referred to businesses with annual gross income up to €300,000 and freelancers with income of €150,000.

The arrangement provided that if a business or a freelancer declared income above the ceiling, then their tax book would close without a tax audit.

This regulation caused loss of considerable state revenue as there were many taxpayers who closed tax book, but their income was much high than declared. (Capital.gr )

The new objective criteria

“The new objective criteria will not be so new, and will be largely  similar to those applied in the mid 90’s. They managed to increase the state revenues, however they triggered a storm of reactions and were removed after three years of implementation. The objective criteria to be restored include factors such as the location of the company’s geographic base (the tax office will calculate a different income for a doctor with offices in Athens noble-suburb Kolonaki than in middle-class Peristeri), the surface of professional office, the mobile phone amounts, the number of employees, the size of real estate, the tangible assets of the taxpayer etc.

All this along with other factors will be components of an algorithm by which  the minimum income a freelancer will be calculated. The taxpayer will be taxed at the highest income after the comparison of the “objective criteria” and the declared income to tax office.”

The objective criteria is an amazing taxation measure that shows people are richer than they thought, they were. My 84-year-old father, for example, got “richer” by 5,000 euro this year, as the tax office calculated that he needs 5,000 euro to maintain his flat. The disabled man needs to pay taxes even though his real income -pension- has suffered a generous …”haircut”!

And by the way: I will hardly see any much-needed investors around, if the taxation system changes every six months.