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Tax-return: Greece increases requirements for e-payments to flat rate 30%

Greece’s taxpayers will need a significant volume of electronic transactions as of next year in order to be able to “build” their tax-return basis. The daft budget 2020 envisages that the rate on e-spending must be equivalent to 30% of annual income.

The provision affects employees, pensioners and professional farmers and payments via credit, debits cards as well as via e-banking.

The new tax-return measure is thought as alternative to the IMF demand to lower the tax-free threshold for incomes below 6,000 euros annual income.

At the same time, with this measure the Greek Finance Ministry tries to combat tax evasion especially on Value Added Tax.

With the increase of electronic transactions, a taxpayer with 20,000 euros annual income will have to spend €6,000 – from €2,500 currently – in order to be eligible for tax return.

So far, employees, pensioners and professional farmers need  rates 10%-20% of electronic payments in order to be eligible to a tax deduction of €1,900-€2,100

For example, annual income of up to €10,000 needs 10% of e-transactions, €20,000-€30,000 a 15% and incomes of over €30,000 a 20%.

The new measures introduces a flat rate of 30% for all income categories. It hits more the low incomes that will have to triple their expenditure, while the high income categories will just double it or below double.

Negative affected are also seniors with difficulties to deal with e-transactions or people in remote areas.

Seniors over 70 years old will need to collect only paper receipts.

It creates also problems to those whose bank accounts are “frozen” by the tax offices and cannot use e-payments

Examples: E-payment requirements 2018 vs 2020

Income                               2018                        2020                                 Difference

5.000 500 1.500 1.000
7.000 700 2.100 1.400
8.000 800 2.400 1.600
9.000 900 2.700 1.800
10.000 1.000 3.000 2.000
11.000 1.150 3.300 2.150
12.000 1.300 3.600 2.300
13.000 1.450 3.900 2.450
14.000 1.600 4.200 2.600
15.000 1.750 4.500 2.750
16.000 1.900 4.800 2.900
17.000 2.050 5.100 3.050
18.000 2.200 5.400 3.200
19.000 2.350 5.700 3.350
20.000 2.500 6.000 3.500
25.000 3.250 7.500 4.250
30.000 4.000 9.000 5.000
35.000 5.000 10.500 5.500
40.000 6.000 12.000 6.000
45.000 7.000 13.500 6.500
50.000 8.000 15.000 7.000

According to the draft budget, he measure is expected to bring to state additional revenues of €640 million mainly from the increased VAT collection.

In 2018, the average electronic cost per taxpayer amounted to around € 3,600.

The cost for those who failed to “build” the tax-free basis through e-transactions was € 35.5 million. A fine of 22% is imposed on the failing amount.

The majority of taxpayers have so far managed to exceed the current requirements in order to build the tax-free mainly through supermarket and utility bills that absorb a large proportion of households annual spending.

The list of the required e-payments includes almost everything; supermarket purchases, electricity and water bills, landlines and mobile bills fuel, heating oil, car insurance home repairs etc.

Exempted are rent payment, loans installments, circulation fees for cars, purchase of real estate, vehicles, yachts, taxes and stocks.

Detailed list of expenditure accepted by the finance ministry for tax-return here in Greek

 

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2 comments

  1. Interesting. These measures are directed against the working class household in Greece, and will probably not affect the middle class at all. It’s a rather crude way to make poorer people pay more in taxes, while leaving the tax rate unchanged for the richer ones. All done in the name of reducing the informal economy and collecting more taxes — it doesn’t matter that it will be the poor paying more taxes!

    Let those of my Greek friends who complained endlessly about Tsipras remember that it was their votes that led to this ND government, with its obvious obsession with neoliberalism and disinterest in supporting anything other than the stinking rich of the world.

  2. Why is rent exempt? I presume it is because many richer people with political connections have properties they can rent out and they do not wish to pay the appropriate tax on their income. For poorer families living in rented accomodation the cost can be 50% of their income, making it rather difficult to spend another 30% in electronic transactions.