New Greek Taxation System for Self-Employed Professionals

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The Greek government has announced a significant change in the taxation of self-employed professionals. Starting this year, self-employed individuals will be presumed to earn a minimum of 10,920 euros per year, and their taxes will be based on this presumed income when they submit their tax return declarations in 2024.

This decision made two months before the end of the 2023 taxation year, follows statements from various government officials indicating that 7 out of 10 self-employed individuals declare incomes lower than their employees.

The government's calculation for the presumed income is based on the minimum wage of 780 euros per month, multiplied by 14 months, resulting in 10,920 euros. It's worth noting that employees receive 14 salaries per year, which includes 1/2 salary as a Christmas and Easter bonus, as well as one salary for vacations. Self-employed and freelancers do not receive these extra two months of wages.

With these changes in deemed income taxation, approximately 473,000 professionals currently declaring very low incomes will each pay an average of €1,444 in taxes.

According to data from the Ministry, the taxable income is expected to increase from €7.78 billion to €13.35 billion, resulting in an additional €5.567 billion in declared income.

Finance Minister Kostis Hatzidakis has described this new taxation system as fair and in line with regulations in advanced EU countries. He explained, "The new system is based on the minimum wage, as a self-employed person cannot have an income lower than an employee paid the minimum wage. It also provides a more favourable status for young professionals in their first five years of activity, as well as for the disabled and residents of small islands and settlements."

Hatzidakis further stated, "We estimate we will have a significant reduction in tax evasion, leading to a substantial increase in state revenue from taxing the self-employed, by €874 million. After the abolition of the fee for practising a profession, the final amount will be €606 million."

Under the new system, welfare allowances received by professionals will be reduced by €100 million. The 600-euro annual fee for practising a profession will also be reduced for those who declare taxable incomes 50% above the presumed income, while others will receive a 25% reduction.

The Minister emphasized that the presumed income for self-employed individuals will vary depending on their years of activity. For example, a self-employed person with over three decades in business must declare a minimum annual income of 14,000 euros and pay taxes between 1,450 and 1,650 euros, including the fee.

It's worth noting that before the 2023 elections, Prime Minister Kyriakos Mitsotakis had announced plans to abolish the 600-euro fee and taxation based on presumed income for employees, pensioners, and the unemployed, which had been imposed since 2012 as one of the conditions set by lenders for the bailout.

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