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Greeks Swept by Tax Tsunami Amid Recession & High Unemployment

Greeks are shocked. And swept away by the tax tsunami that hits them amid deep recession, political and economic uncertainty, and the threat of euro exit swinging above their heads. The tax statements that reach millions of households make taxpayers to hold their breath. Even though incomes were decreased at 30% in 2011,  for the same tax year Greeks are called to pay higher taxes and thus eight of them within the following months.

Changes in the taxation law have resulted into taxing not real income but ‘deemed income’. If the real income is lower than the ‘deemed income’ the tax contribution will be according to the latter. “Deemed income” criteria went 200%.  Further the tax free amount was lowered from 12,000 euro down to 5,000. Tax returns are almost down to a minimum due to the new taxation criteria, the bonus tax return due to receipts collection for expenses has been cancelled.

Taxing the Poor…

If a taxpayer in Greece has 5,000 euro gross annual income, he has to prove through receipts that he had spent 1,250 euro. If he can’t he will be fined with a 10% of this amount he ought to have spent.

Even people with zero income will be forced to pay taxes due to  ‘deemed income’.

Owner or a leaser of a 50 sq.m. flat and a 1200 cc car, will have to pay tax even if he has no income. According to taxation law, maintenance costs for 50 sq.m. are 2,000 euro per year, and 4,000 euro for the car. To this 6,000 euro,  tax authorities add 3,000 euro as ‘living costs”. From the end amount of 9,000 euro only 5,000 is tax free. For the rest 4,000 euro, the taxpayer will have to pay 10% that is 400 euro tax even if he has zero income.

An additional 10% of tax will be applied if the taxpayer cannot cover the required amount of expenses with receipts.

That is if the taxpayer declares 5,000 euro income but the deemed income is 8,000 euro, he needs to cover with receipts an amount of 2,000 euro. has he no receipt, he will pay additional 200 euro.

Deemed income requirements are decreased at 30% for pensioners over 65 years old.

Supposedly you have a part time job or full job with 420 euro per month. The flat leasing contact is under your name. Your living expenses are covered by relatives and friends or partner.

A tax is in at any case. Taxpayers in the income class 12,000-16,000 euro gross will see  700 euro fleeing their annual budget.

The same applies for long-time jobless with zero income.

What if the EU declares as poor annual gross income of 6,000 euro? Greek governments know better…

Taxing Income below 900 euro/month

Employee unmarried with no children will pay income tax at least 620 euro for 11,200 euro gross income. But 934 euro tax if he earns 12,600 euro per year. This ‘net’ amount is equal to a ‘gross’ months salary.

If he cannot come up with enough receipts, his deemed income is higher and is owner of a property, he would most propably will have to spend the summer months without food and water…

The state needs to collect 2 billion euro as soon as possible.

Greek media report that 6 out of 10 tax declarations contain no tax returns.

Solidarity & Property

Additionally to income tax for the year 2011, Greeks will have to pay:

– “Solidarity tax” for 2011 (starting from 1% for incomes from 12,000 to 20,000 euro and increasing); Solidarity tax is deducted from salary as of 1.1.2012

– “Trade fee” (500 euro; 300 last year).

Property owners will get on their knees as they will have to pay at least three property taxes: the regular property tax for 2009 (ETAK), the regular property tax for 2010 (FAP) for properties worth more than 400K euro, the regular property tax for 2011 (FAP) for properties worth more than 200K euro, the emergency property tax for 2012.

And yes! The big losers are those with income 12K-16K euro gross per year. As usual…

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15 comments

  1. If I read correctly, Greeks and those working in Greece have to also add new skills to their current job description; “magician”. Where on earth does a zero income earner get money for taxes when he cannot even get enough for his own family….. This is outrageous. I personally have not received more than half the year’s projected income according to my work contract, so I am expected to pay taxes that outweigh my real income; what is my family supposed to have eaten, where were they supposed to have been housed…. I am at a complete loss for words.

    • keeptalkinggreece

      This reminds me of a friend who has been receiving just 150 euro per month, instead of 900E/m.This is going on since last September. She is one of the many thousands Greek employees who work but remain unpaid.
      “magician” is not correct. “Trainee magician” would be more appropriate lol

  2. The logic of how this all came about is simple

    If the northern EU “advisers” who control Greece have come to think that ANY and ALL Greeks’ tax returns are bogus … Ie that not single tax return is honest…

    Then they WILL advise asking for “unbelievable” sums to get at the money they think is habitually stashed away and not declared.

    • That may be quite close to the truth. The Troika knows the theoretical tax rate and also has access to the statistics about the actual tax revenue as a precentage of the GDP. The difference between both is telling.

  3. keeptalkinggreece

    “I would like to add here that many GReeks are receiving cash from relations abroad” – many? how many?
    I know only greeks that have no relations abroad whatsoever 🙁

  4. I went to the bank to ask for a loan to pay taxes, since I have not received salary for many moons. They told me – you have no income, we can not give you loan. Than, I just kindly asked the bank to pay taxes instead of me – and I will repay them once I get hold of some money …

    Do you think it will work?

    • keeptalkinggreece

      it’s similar what I told my father: go to tax office and tell them about the emergency property tax, that you are able to pay installments of only 5 euro per month.
      Do you think it will work?

  5. keeptalkinggreece

    BTW, Ann: and then you wonder why your comments have a steady position in KTG-spam section, while the majority of them get deleted, thus with pleasure….

  6. “WE DO NOT HAVE TOO MANY PUBLIC WORKERS”, well, as they don’t get paid, you can hardly label them as workers. Volunteers maybe, but that is usually on a voluntary basis…
    As for Tsipras (or anybody else for that matter) NOT saying things, you can hardly take that as proof that whatever it is they don’t say is therefore not going to happen. that basically gives you carte blanche to accuse anybody of anything you like, because they didn’t say it???

    • Please Ephilant, you know better then to come with this nonsense. Part of an election campaign is spelling out your measures in detail to solve the problems at hand. But not here in Greece. Today I read:

      Speaking on state broadcaster NET, Papadimoulis said that the party is ready to present a much more detailed program than it did prior to the May 6 elections, which ended in a fragmented result. He said that the new program will contain a breakdown of SYRIZA’s plans for the country’s financial recovery.

      So, SYRIZA went into the May 6 elections without any detailed plans. That’s just utterly shocking. And I suspect that the other parties did not either. At least SYRIZA is coming up with them now.

      • keeptalkinggreece

        SYRIZA was surprised by its May 6 elections rates, it could not imagine it woul dbe second party. there is a difference to make a party programme targeting to be opposition party, or a governance party. Anyway they will disclose their programme on Friday.

        • No, there is no difference in most countries. You make plans and you tell how you will pay for that. In some countries every election program of every party is calculated to it’s effects by auditors. So, as voter you know exactly what are feasible plans and what are not. What are the choices they make to pay for their alternatives and which party does not have a clue and is just free wheeling.
          It’s all part of giving voters a real choice and part of established democracies.

        • Even the German “lberals” FDP, a party struggling in every election to get across the 5% hurdle, regularly passes a detailed program about their economic and politic proposals and points of view. As do the Greens and the Left party. Even the brand new Pirate party wasted no time, held a big discussion about their basic principles and passed a program. It’s only reasonable to expect the same from the more established Syriza. It’s high time Greek parties live up to international standards. Democracies need to be based on transparency and accountability, not on weather vane populism.

  7. “Deemed income” is plain an simple theft. But for businesses nothing much changes. We were always taxed not on the real income but on the years we were doing business.
    When you had your business 5 or 10 years you were deemed by the tax-office to have an x-amount of income. HELLOOOO! Economy goes in cycles! And businesses don’t grow linear. If they grow at all. But hey, who would blame a poor tax-man/woman, who has only known this centralistic sovjet state of affairs?
    I ones had a short business course, organized by the OAED, when I started out here in Greece. The first thing this lady teacher told us was: “Greece is a capitalist country”. I was totally perplexed that she said that, because I was still in that stage believing it to be so. But the reaction of the other participants to this course should have warned me. They verbally attacked her because they did not agree. And they were so right. But they were still defending the statism as something send from heaven and denouncing capitalism as something from hell. And those were people who were about to start a business. 🙄

  8. This is obviously a popular topic !

    For me the most interesting thing is, that the Greek state does not seem to do anything to “round up” the tax dodgers, which thrive in every layer of the society. And this continues year after year, decade after decade.
    For example the building sector is totally rotten.

    And people who themselves pay tax seem to tolerate these tax dodgers. Especially on the islands it seems that you get a receipt only in super markets.

    The result is, unluckily, that we who already pay our tax dutifully, also have to pay for the dodgers.
    So we end up paying double, and the dodgers get a free ride through their life.

    The North European tax collecting model is no joke, but very efficient and just. Greece can learn a lot of this. To make the tax system logic.
    Now it is just like putting fires out when it is needed with all kind of “creative” flat taxes, that really hit hard those with a low income.