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Fiction meets reality in surreal Greece: “Deemed Income” taxes also people without income

Are you alive and happen to live in Greece? You will be taxed even if your income is zero for the sole reason that you are alive. For the exclusive and amazing Greek air you are allowed to breath, so to say.  The financial ministry has calculated that every person living in Greece needs 250 euro per month – ie. 62.5 euro per week or even 2.1 euro per day – to literally feed the “status” of being alive. That is the Greek finance ministry calculates that one person needs 3,000 euro per year to eat and maybe buy shampoo, wash his clothes and other daily personal activities.

With the new taxation law applied for the first time this year, millions of taxpayers will be called to pay taxes even if they have no income, but they are alive and have a home to live in. If they are fool enough to own also a car, not matter if permanently parked in the garage, they will be confronted with a taxable income they do not have in real life.

Two key features of the new taxation system that will apply this year for income of 2012 are:
1) Mandatory tax declaration for all adults – except dependent children -, even though the income of 2012 was poor or zero!
2) The minimum cost of living of 3,000 euro per year will apply to all taxpayers -irrespectively of real income in 2012 – just because they live!

The unlucky home-owner will be stunned to see he needed several thousands euro in 2012 to pay home expenses. And the car owner will realize, he needed more money to maintain a car of 1200cc that a flat of 60 square meters.

It makes no difference if the real-life home-owner has a mountain of unpaid utility bills and spent the winter without heating. If also makes no difference if the car-owner keeps the vehicle in the parking slot and uses it only for emergency situations.

The arm of taxman will fall heavy on the taxpayers’ shoulder and dig deep in his empty pocket and wallet. Because the Greek finance ministry calculates in 2013 income taxes for 2012 according to deemed income, imputed income or in simple English “an assumed income regardless of the real income.”

Apart from the deemed income to cover basic cost of living, additional imputed income criteria will be added for homes and vehicles, swimming pools and boats. The taxpayer will be surprised to see that money to pay back loan installments, pay private school for children or pay wages for a caretaker or household help will skyrocket the taxable income.

Soup Kitchen meets the taxman

In addition to assumed cost of living of 3,000 euro (5,000 for couples), deemed income criteria for home and cars look like that:

1) Home: According to Troika-bound Greek finance ministry, if the owner of a home up to 60 square meters, needs 2,400 euro per year . That is 120 euro per month to pay in utilities etc. Of course, if the home is 80 sqm assumed expenses are calculated at 3,200 euro, if it’s 100 sqm  at 4,500 euro etc.

2) Private car: the car owner will see another bunch of euro will be added to his deemed income: 4,000 euro annual expenses for a vehicle as small as 1200 cc. The list is long according to “cc”. See link below.

The finance ministry considers that if a taxpayer rules over all these luxury possessions (air to breath and food to eat, a small flat and a small car) the taxpayer would need at least 9,400 euro annual income.

Furthermore,  the taxpayer will have to prove that 25% of the fictive income was indeed spent, so the state could collect Value Added Tax and the government can claim that the real economy has not collapsed. Therefore, the taxpayer has to have collected receipts worth 2,700 euro (but utilities excluded!) otherwise he will be fined with another 10% extra tax.

According to this unprecedented assumed calculation of the fictive income the taxpayer may not have, he will be taxed even if the real  income is zero and the local EU citizen manages to cover basic needs through on borrowed money by friends and relatives or even donors.

One has just to think of all those people seeking a meal at the soup kitchens. And, yes, some of them may own a flat but are without a job and income and are unable to cover their basic needs.

Fiction meets Reality

The Greek finance ministry asks taxes even if the real income is below the official EU poverty threshold of 6,000 euro per year. Which translates into a 500 euro available amount per month.

Taxes are due even if the austerity- and recession-hit Greek simply sink in debts and he owes money even to the feral cats in his neighborhood.

The finance ministry justifies this ‘deemed income’ taxation scheme with the declared fight “to tackle tax evasion”. The real reason however is to strip even the needy ones from their last euro because the Greek state needs revenues.

Taxing just the real income would allow those with tax-free threshold of 5,000 euro or zero euro income to escape paying taxes. The imputed income of fictitious maintenance cost for home and car skyrockets the income one may do not have – at least on the paper.

Furthermore, the surreal state we live in demands that you pay double and triple taxes for the same assets you own: property and car.

All these genius work-out calculations of fictive income will trap about 2.4 million taxpayers with annual income below the tax-free threshold of 5,000 euro.

Interesting findings from deemed income calculations

1) car maintenance costs more than home maintenance.

2) over-taxation: while indirect tax (V.A.T.) and direct taxes are paid for food, utilities, property and vehicle ownership are paid, the finance ministry demands additional taxes for the same items.

3) the minimum wage of 580 and 510 euro gross per month introduced by the Troika/Greek government is lower than what is considered as poverty threshold by the EU (6,000 euro) and very slightly higher than the tax-free threshold of 5,000 euro.

4) With the deemed income criteria, the state admits that the minimum wage of 580 and 510 euro gross per month does not allow somebody to cover even basic needs for food, utilities and a roof over the head.
Next taxation system in 2014

While the number of unemployed exceeds 1.3 million people, the new system will force many of them pay income taxes even if they had no income in 2012.

365 days from now, in May 2014, a new new taxation system will apply for the income of 2013 and thus eliminating the tax-free threshold of 5,000 euro. Maybe by then, the 1.3 million unemployed have found a job…

KTG-readers from Ireland have informed me that taxation based on “deemed income” was ruled as against the Constitution. The Irish Constitution. But Greece is not Ireland, Spain is not Portugal and so on.

PS With such taxation injustice based on the fiction scripts put down together by local and international technocrats , I do not wonder anymore why I hear from more and more people, that they leave their bills (loans, rent, utilities, taxes,) rest in peace at the back corner of a dusty drawer. I also do not wonder anymore that the real economy has collapsed and nothing moves in the market.

List with details of “deemed income” criteria here but in Greek.

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  1. Definately a Head Banger! The fact is that the Greek news reported some time back that homeless people (people with no fixed abode, living on the street) will be deemed to have a fictional income of 3000 Euro per year and therefore will be taxed if they cannot present the required amount of receipts.


    • keeptalkinggreece

      we also reported it last year. however homeless do not need to make a tax declaration, unless they consider their situation temporary and need a tax offcie clearance for next years.
      Of course, they are mad.

  2. Boy, this sounds really bad. I’m surprised the Greek government hasn’t started grave robbing yet.

  3. I am predicting the great Greek exodus of 2011 to 2015 like the exodus of the 70,s all of the Greek youth that can will get out of Greece and then ware will the goverment be.

    • That is precisely what is happening in Irelandnow.In the seventies/eighties thousands of us left, mainly youth. I wasn’t youth then, but got out nevertheless, for the second time. Like thousands of others, I went back, believing the expertise and experience gained elsewhere would come in handy to help my country and it’s people grow and prosper. Boy was I (and thousands of others) wrong. The gobshytes in charge might have changed masks,they certainly did not change attitude. Far from it, and if anything, the new bunch is far worse than the ones who arranged our leaving. They don’t just steal from the people to line their own pockets, they sold the country to line the pockets of international financiers and bankers.
      Over 300,000 of us have left again, and counting. However, most of those will now tell you “never again”. Our one-way ticket is exactly what it says on the tin. One-way. The first diapora grew out of need, the second out of desperation, but both had the underlying dream of returning and building a country we could be proud of. This leaving is fuelled by anger. The young people know their dream was stolen from them, there is nothing left to dream about. They have turned their backs on their country in their thousands, and it would not surprise me if the Greeks did the same. Who can blame them?

  4. We left south africa to come to a Ist world country. Were we ever so wrong! we also found to our horror about this ridiculous tax. We brought whatever we saved all our working lives and have to live off that without medical help, without pension or any other income. But we are hoping that some sense will eventually prevail. 🙂

    • It would seem that the classification of 1st, 2nd or 3rd world has become a measure of the levels of corruption in those countries rather than the intended measure of wellbeing and God-forbid happiness of the various peoples living in these countries….

  5. Look i am greek but living in Australia, the thing i dont understand is why to the citizens just sit there and take it, why? They know its wrong and they are being robbed but they stiil line up to pay these demons..why fir gods sake, please wake up citizens of Greece and finally realize that you are greece, you have the power, there is only a handfull of these leaches, storm the parliment what ever it takes, hang these enemies of the people and take back your dignity, save yourselves so we can be saved, get angry, get smart please wake up..its alteady to late, love and peace..

    • keeptalkinggreece

      ops! revolutionary wake up call from Australia? whatever it takes? who said that people line up to pay taxes?

  6. it seems typical of these politicians to blame the public and then to make them pay financially for their crass mistakes and greed…….if only the true facts of how and when these public ‘debts’ originated and which public figures ‘benefitted’ from them were known, people may take the governing of the country into their own hands…….they couldn’t do any worse than their government.

  7. The Greek government should be exploring ways to get Greek businesses, large, medium and small, but especially large businesses to pay their taxes properly.

    A prime example is where employees in many companies are paid partially with “black money”, which is cash in hand and off the books as a tax free supplement to their salaries. Of course the business then also pays less tax, pension etc. for those employees.

    The problem is Greek business is bribing the politicians and civil servants to achieve their nefarious, selfish and greedy goals.

    Expecting the man in the street to foot the bill for billions of stolen taxes, before and after the government collects it, is the perfect recipe for a spectacular collapse of the Greek nation, let alone the economy.

    Wake up Greece! Stand up Greece! Take responsibility for your actions and stop the insanity now!