I cannot believe that such a tax legislation can be true. The 3.bailout agreement “prerequisites” will reportedly tax people without or very low income as if they were a profit-bringing enterprise and will even ask tax payment in advance. This absolutely incredible and almost criminal and human rights violating over-taxation will affect people – natural persons- who have no regular income from work but who happen to won a home or a car. The whole idea is in fact an upgrade of the insane tax legislation of “deemed income” of the second Memorandum of Understanding of 2013.
According to some Greek media, taxpayers without real income who own a property, a car or receive interests form bank deposits will be taxed as “freelancers”. That is they will be taxed with 26% form the first euro and will be called to pay taxes in advance.
“Deemed Income” & “Presumption of Living”
These “deemed income” criteria were introduced in May 2013, Greek tax authorities do not accept that someone can live and breath without income. So they calculate “a real income” which is in fact a fictitious income , based on the expenditure of taxpayers, their needs, the deposits they have, the cash, their assets and any possible income of any other possible sources.
The whole chapter of “τεκμήρια διαβίωσης” can be translated into English as “presumption of living”
Therefore, Greek tax authorities calculate that one person needs 3,000 euro annually to feed himself and cover basic needs. In addition they calculate that depending on the square meters of the home/apartment the person live in, he needs XXXX euro to maintain it and pay in utilities, heating oil etc. The same is valid if the person has a car on his name. Depending on the vehicles’ cc, the tax authorities calculate that XXXX euro per year is needed to maintain and drive around the car.
This tax legislation from 2013 ended in absurd over-taxation of people without income who happened to have a home in their name or some bank deposits. This taxpayers would be called to pay 300 or 400 euro tax for the fictitious income the tax office assumed the person had.
Now with the 3. bailout things will get even worse, despite the fact that these taxpayers do pay taxes for the property and the car and also a 15% tax on the deposits interest.
Another absurdity of the Greek taxation system is that while authorities calculate the “criteria for presumption of living” according to some generalized “guides” the they do not accept utilities, heating cost, telecommunication cost and other bills if the taxpayer adds them in his tax declaration.
The “presumption of living” cost of the tax authorities does not take into account also the possibility that the tax payer without sufficient (see: taxable income) may have debts to relatives and friends, lives without electricity, phone and television.
Taxing ‘natural persons’ with 26% as free-lancers
According to newspaper Realnews, “the text of the 3. bailout agreement clearly states that it will review the “presumption of living” and in particular the exemptions listed in the law 4330/2015 with regards to the taxation of natural persons.”
Approximately 1,000,000 taxpayers caught in the new net of “deemed income” and “presumption of living” criteria will be taxed with 26% from the first euro of the tax authorities calculations. They will pay 75% tax in advance in 2015 and 100% as of 2016 and the subsequent years, as if they had a profit-bringing business!
For the current year 2015 – tax year 2014- they will be asked to pay a tax rate of 45.5% euro for the non-existing income they do not have.
Several provision in the Law 4330/2015 passed in June 2015, were protecting hundred thousands of taxpayers with very low income from deposit interests and/or rents or occasional/temporary jobs from being taxed as “freelancers”. They were taxed in the same category as “employees and pensioners.”
One of the Law provisions was referring to tax payers with annual income below €6,000 euro and “deemed income” not above €9.545. They would pay no income tax if they would not exercise a business activity obliged to be taxable or an ‘individual agricultural activity.” This provision was legislated in order to grand tax relief to those with occasional employment status like jobless, housewives, students, participants in EU-funded work experience programs.
You cannot tax a jobless who takes part into an EU-funded “growth & job creations” program, has an -education & work temporary contract of 5 months and earns €2,500 in total with 26% tax. Can you?
Well the lenders and the Greek government that signed the 3. bailout agreement think: Yes, you can.
And they want the June law provisions scrapped.
Reminder: according to European Union, annual income of 6,000 euro is considered to be “poverty line”.
PS registered as “free-lancer means also an extra tax, the so-called trade fee of annual 650 euro, plus social insurance contributions to OAEE which are minimum 300 euro per month.
That’s the Europe we love: breath and live just to pay taxes.
Presumtion of income is nothing new and is a typical instrument of Socialism wherever it exists. The States usually dispose of four different kinds of money for their expenditures: Tax-money, printed money, lent money and stolen money. Usually it’s a mix of all four , but in Greece – an not only there – number four is prevailing. And why? Because the other three possibilities do not exist any more, it seems.
PS: Read “borowed money ” and not “lent money”, sorry.
And you wonder why Greece is becoming the laughing stock of the world. The great exodus of the young the talented and the smart is now in progress and greece will soon be left with the pensioners and those that have nowhere to go, a sad state ao affairs to say the least.
Does this apply if you live in Greece, have no income here, no bank account and pay utility bills, food, everything…..from abroad only?
I suppose it will depend on whether you pay taxes in GR. anyway it is not official yet.
Re: Greek tax authorities do not accept that someone can live and breath without income.
But this is true, I am sorry, but this is true. How can one feed oneself without earning or getting – or begging – money. We can dispute about how much this is – but this is true.
When any day one buys bread, milk… one has money. From where did one get it ?
Of course, one could get this money from friends or relatives – but then , donation tax should apply. And if no donation tax – then income tax.
By the way, this time I am ironic. This is true, but one should not be such a policeman… But from the point of view of tax authorities – this is true.
if one has savings in the bank in the bank he can live with with money. the savings may have been taxed (salary, income from former business etc) already + plus the interest from the deposit is taxed with 15%
PS. This is the real triumph of the left… Every income that was earned should be taxed, except … what one got from the state (it is taxed too, but already at the source). Of course, this influences negatively the life – many people work honestly and do not have force and time to declare everything etc. But this is a logic that can be brutal, but is understandable.
If somebody came to a shop to buy bread, milk, meat… from where did he / she get money ?
1. working = income tax
2. friend or parents = donation tax
3. stealing = hmmm, difficult , depends on a country.
Income tax is one thing. The other thing is that VAT is paid by everybody from birth to death, even dogs and cats must pay it. VAT is a necessary evil in the modern welfare state, but socially many things would be better without this tax. It should not be higher than 10 0/0.