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Greece hammers out new system for self-employed: taxation according to “deemed income”

Unable – or better say: unwilling – to combat notorious tax evasion by the rich, the Greek government thought of another revolutionary plan to get revenues: taxation of self-employed according to deemed income. Not the real income will be taxed but the estimated  income according to a broader number of criteria.

The tax officers will estimate the tax to be paid according to:

the taxable gross income of enterprises and self-employed based on collected information concerning the real liquidity, the living standards and the assets like deposits at banks, other forms of savings (shares, bonds etc), real estate and living expenses.

This new audit procedure will urge the necessity for the immediate abolition of banking secrecy before the tax authorities can scrutinize the movements of bank accounts of taxpayers.

Tax authorities will determine the total taxable income and impose ‘deemed income tax’ regardless of the data submitted by the taxpayer in his tax declaration.

Greek media report that ‘the tax officers will notify the taxpayer about the deemed income tax and if the taxpayer has objections he will have to prove his lower real income than the higher estimated one.

The new taxation system is to be finalized in four decrees in the upcoming weeks, months (years?)

The innovative Greek taxation nonsense is been promoted as applying to Greek taxpayers the US taxation system for self-employed.


To tell you the truth I do not know how the US-taxation system works for self-employed and businesses. But I can note these:

1) How tax officers will check each one tax declaration and determined the deemed income with more than 300 tax offices to have closed down across the country due to austerity cuts?

2) Will taxpayer pay double and triple taxes for real estates (regular and emergency property taxes) or interests from bank deposits (tax at 15%)?

3) How will the tax office know of the real estates and assets if these data are not collected?

4) Will the tax officers tax their ‘under the table income’ they will receive in order to fix the self-employed tax difference between real and deemed income?

5) How many times they plan to change the taxation system in the near future?

6) How can investors bring their money to Greece if the tax system changes every 6 months?

7) How can I overcome my identity crisis, when we were supposed to turn into “Denmark of the South”, developed into “Nigeria of the North” and we’ll see ourselves living in the “USA of Europe”?

They want or they don’t want?

Combating tax evasion seems to be a helpless case here in this country. It must have to do with the unwillingness from the side of the government to tackle this issue and protect those supporting it. It must have to do with the broken relationship between the state and the taxpayer. It must have to do also with the incredible direct and indirect tax hikes of the recent years, hikes that have drained out every Greek taxpayer -even the honest one. It certainly has to do with the broader corruption and the black money circulating under the table that make even the most honest taxpayer think “I’m a full-time idiot, if I pay my taxes.”

No matter how much they suffer from the tax hikes, employed and pensioner see their tax share leaving their income before they receive their salary or pension. Self-employed and enterprises have a more relaxed attitude towards paying their direct or indirect taxes. they pay a little sum and keep whistling indifferently sitting on a tree bench.

How many big and well-known businessmen have been arrested in the last two years for owing the state taxes? Quite a lot… but they mostly get out on bail. Trials need an awful long time, the state cannot claim what it should.

A couple of days ago, the International Monetary Fund slammed Greece for the notorious tax evasion by the rich and the self-employed.

The IMF noted in its report:

“Very little progress has been made in tackling Greece’s notorious tax evasion. The rich and self-employed are simply not paying their fair share, which has forced an excessive reliance on across-the-board expenditure cuts and higher taxes on those earnings a salary or a pension.”

I don’t know about the rich. I assume they have their assets and ownership titles parked in offshore companies.

As for the self-employed … well… they hardly issue receipts. Of course, they would if the Value Added Tax was lower than 23% :). But are only Greek self-employed refusing to issue receipts? Or don’t we see the phenomenon in other European countries as well?

Now on the issue of tax inspectors… what can I say? I recently heard by an accountant that they ask ‘money under the table’ to fix taxpayers issues and thus from a fixed tariff list! But maximum 15,000 euro 🙂

What have we got to do, than …

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  1. Hi KTG, the USA does not use deemed income. All our tax is based on actual income. You make 10K, you are taxed on 10K. You are only taxed on what you report. And our Social Security System (IKA) is different than your TEVE etc because if you make 1 dollar, you pay a portion of that to TEVE(SS), not like here where even if you only make a Euro they charge you as if you don’t.

    Nope, the US tax system is quite fair.

    Now, the flip side is if the tax office thinks something is wrong, they just audit you and if they find something that is wrong, then you can get fined or put in jail depending on what it is etc.

  2. One caveat. Waiters in the USA are taxed according to deemed income to a point. My apologies. Since the average tips are 15-20%, the US Tax office assumes that you must make at least 8% on tips that are in cash. So, even if you don’t they assume you do. So, in that case, people who work for tips, like waiters and possibly others, could find themselves in a Greek style system. But all other freelancers are under the regular, “make 10K” pay tax on “10K” period. things like tekmirio don’t exist. If you have a regular job and a Ferrari, no one is going to notice probably, but if you have 3 Ferraris, then maybe someone could notice and then the tax office in the USA comes snooping around, but nothing like here where if you have a crappy car, they still think you are rich with deemed income.