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Troika’s Vision of Taxing Greeks: Up to 45% for Employees & Pensioners, Up to 35% for Self-Employed

Greeks will be called to pay one billion euro more on taxes with the new taxation system according to new taxation draft prepared by the Troika. Self-employed will pay taxes from the very first euro of revenues, while one million low-pensioners and employees will be exempted from tax (annual income apparently 9,000 euro).

The most crazy taxation scheme wants employees with over 48,000 euro income paying 45% taxes, while self-employed with pay 35% for income of over 50,000 euro.

Free-lancers will be taxed from the very first euro and be charged to pay also 23% VAT even if clients pay them much alter after they issued the relevant invoice.

Taxes: Employees and Pensioners

three income tax rate categories:

Up to 9,000 euro: no tax

9,001-25,000 euro: tax rate 21%*

25,001-48,000 euro: tax rate 36%

Over 48,001 euro: tax rate 45%.

*KTG understands there must be another category for incomes 9,0001-18,000 euro, otherwise it’s crazy to ask people with 10,000 income to pay 21% tax!

Taxpayers will see many of tax-free deductions to disappear as they will be scrapped. Only 10% tax deduction for medical expenses and alimony will remain.

Lucky are expected to be those with annual income less than 9,000 euro, as they will most likely pay no tax. It looks as the tax-free cap for employees and pensioners to be raised again from 5,000 to 9,000 euro.

Those with the average annual income of a Greek family, i.e. 25,000 euro, will have to pay much more taxes than today:

Tax Reductions

Up to 18,000 euro income will enjoy tax exemption fo 1,950 euro ( I assume by providing receipts).

18,000-29,000 tax exemption is reduced by 50 euro for every 1,000 euro of income.

29,000-43,000 tax exemption will be 100 euro for every 1,000 euro.

Example: Annual income 30,000 euro paid 5,510 euro tax (after tax exemptions) will pay 5,75o euro.

Taxes: Self-Employed & Corporate Tax

Income up to 25,000 euro: tax rate 26%

Income more than 50,000 euro : tax rate 35%

For the incomes between 25,001-49,000 apparently the Troika is still seeking for a tax rate:

“The introduction of a new integrated tax regime for the self-employed and professionals with an initial tax rate of 26% rising to 35% after €50,000 and with no personal tax allowance.”

About the so-called “Tax Reform” the Troika foresees (Page 43/Paragraph: 40)

•A simplification of the personal income tax with three rate bands instead of the current eight rates with an enhanced tax credit. Through these reforms, some one million wage and salary earners and pensioners will be taken out of the personal income tax.

•The elimination of selective tax credits (on mortgage interest payments, life insurance payments, and student expenses etc.)

•The conversion of personal tax allowances for children into means-tested benefits.

•The introduction of a new integrated tax regime for the self-employed and professionals with an initial tax rate of 26% rising to 35% after €50,000 and with no personal tax allowance.

•A restructured tax regime for corporate profits with a corporate tax rate of 26% and a tax on distributed dividends of 10%, resulting in a gross tax rate on distributed profits of 33.4% (instead of former tax rates of 20% and 25% respectively resulting in a gross tax rate of 40%).

•The elimination of special tax regimes based on imputed income, such as those currently in place for farmers and seamen.

The new taxation will be on effect for incomes as of 1.1.2013 and taxes will be paid in 2014.

The new tax hikes will hit especially middle incomes in combination with wages and pension cut, whereas all bonuses (Xmas, Easter,Vacation) will be scrapped from even low pensioners.

Full Troika Draft Report including all austerity measures and state expenditure cuts here.

Read and Cry :(

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10 comments

  1. “*KTG understands there must be another category for incomes 9,0001-18,000 euro, otherwise it’s crazy to ask people with 10,000 income to pay 21% tax!”

    Hum, I think you don’t get it … all this work by taxing the differents bracket of incomes with different rates …
    If you earn 10k€, you’ll pay 21% of the incomes above 9k€, that means 21% of 1000€, so 210€. You’ll pay at the end 210€ for 10k€ of annual incomes !

    A man who earn 30k€ will pay 21% of (25000 – 9000) + 36% of (30000 – 25000), i’ll let you do the math 😉

    So everything is smooth with no “steps” … did you already paid taxes in the past ? 😉

    -fx

  2. a lot of people does the same mistake, when Hollande in France talked about a 75% bracket, people were like if bolchevism was back, but it was only 75% of the amount in the [1 000 000 € – Infinite], so actually not a big deal … 😉

    Some says too “I’ll not work to earn more, else I’ll jump from a rate to another and at the end be left with less money”, that is a stupidity too. Everything is smooth with that bracker system !

    -fx

    • I don’t insult people even as a joke. but it’s a matter of good manners and culture, right?

    • I have been paid to help people fill out their tax forms in my country. Many have no clue about anything and don’t realize there is a bracketing system, especially since the caluclations are laid out for them in the tax guides and they just plug in numbers blindly. Many, even with very little income, just go to tax companies that spring up all over the place and they mess stuff up too sometimes.Don’t be too hard on people for not knowing. I didn’t know either until I had this job and they taught me about it.

  3. Whatever taxation is installed – I’m sure Greeks will find a way around it! Apart from taxes for money earned …
    Time to get people to cough up for:
    Illegal parking
    smoking in public places
    not wearing helmets/seat belts
    speeding
    shops filling pavements with chairs which makes people with pushchairs/wheelchairs walk in the road (my personal hate)
    littering (must be millions missing from this favourite pastime)

    Please add to list
    I’m fed up being a law abiding citizen – I’m in a minority.

  4. I think it should be graduated. Meaning you make 10,000K, you will pay no tax on the first 9K, then 21% on the extra 1K. I doubt that people who make 9K pay nothing, and someone making 10K pays 20% on all the income.

    Am I right KTG?

    • that’s why I doubt some of the tax categories especially for the low incomes (10,000:12=833 gross or even less if you add 13/14th Xmas/Easter/vacation bonuses)