Friday , September 22 2023
Home / News / Economy / The latest on Greece’s new taxation system for employees & pensioners

The latest on Greece’s new taxation system for employees & pensioners

After pressure by the Troika and Greek taxpayers outrage, finance Minister Yiannis Stournaras modified for one more time the three taxation categories for employees and pensioners. According to Greek media, Stournaras is due to present to today’s Eurogroup the following scheme:

  1. 22% tax rate for annual income up to 25,000 euro
  2. 32% tax rate for annual income 25,001-42,000 euro
  3. 42% tax rate for annual income above 42,001 euro

The tax-free amount of 5,000 euro  is scrapped and replaced by a tax reduction of 2,100 euro, amount that will be reduced down to zero for income above 42,000 euro.

  • full 2,100 for annual income up to 21,000 euro
  • 100-euro reduction for every 1,000 euro for income 21,0001-42,000 euro

With the new scheme, only those with annual income up to 13,000 euro will pay 100 euro less taxes than currently.

For income 13,001-23,000 euro taxes remain the same.

Increased are the taxes for annual income 23,001-50,000 euro, and much more charged will be the incomes above.

As for receipts collection it is not clear yet how the process will be, even though there are indications that they will be no tax reduction for collected receipts. The question is there should be some kind of motivation for taxpayers to collect receipts and not bypass paying 13% and 23% Value Added Tax.

If the Troika approves the modifications the taxation draft will be submitted to the Greek Parliament on Friday and be voted by end of the year or beginning of January. The new taxation system will be implemented for 2013 while the taxes will be paid in 2014.

Additionally, taxpayers will be charged with the extra ‘solidarity fee’ and the ’emergency property tax’ for property owners, usually totalling 1,000 euro euro per year for the low and medium incomes.

Employees and pensioners are the usual pool targeted by the Greek state to collect revenues. Taxes are directly deducted ‘at the source’ that is before the employee gets his salary or the pensioner his retirement money.

According to tax declarations for 2011 (paid in 2012)

    • 500,000 employees and pensioners declared annual income less than 12,000 euro
    • 1,222,384 employees and pensioners declared annual income between 12,000 and 20,000 euro
    •  96 employees and pensioners declared annual income of more than 500,000 euro

However, the 2011 taxation system calculated ‘deemed income’ which does not corresponds to real incomes.

 full text here with examples

PS I will post a detailed report on the issue once the Troika has blessed the Greek proposal.

Check Also

Fitch and Moody’s upgrade Greek banks

Fitch Ratings on Tuesday upgraded Greece’s four systemic banks ratings, following a recent round of …

One comment

  1. There is a better taxation system that can be implemented but they do not care who they hurt.