The official figures of the European Commission, the AADE and the General Accounting Office of the State demonstrate that due to tax evasion the average employee in Greece pays more tax annually to the state than 85% of the self-employedn that declare incomes purely from self-employment, is emphasized by the Ministry of Finance.

At the same time, again due to the problem of tax evasion, the contribution of self-employed professionals in Greece to the budget is 2.1% of revenues, while in the EU and the Eurozone it is 5.2%.

Particularly:

DETAILS OF AADE

According to the statistics of AADE and GLK, 71% of freelancers declare an income lower than the minimum wage.

Furthermore:

– Of the 750,000 thousand self-employed people, around 500,000 thousand have incomes only from the practice of freelancing while 250,000 have incomes from salaries / pensions. 54% of purely freelancers declare zero income, while 85% of them declare an annual income below 10 thousand euros. The average income tax collected by the state from this 85% of self-employed – i.e. 425,000 professionals – it is 217 euros per yearan amount that rises to 867 euros with the pretension fee.
On the other hand, the average taxable income for 3.5 million employees is €12,300 per year, and the average tax they are required to pay is €1,160. Accordingly, pensioners pay an average of 847 euros in income tax.
-37% of the self-employed (272,000) pay zero income tax. Of these, 75,000 (10%) do not even pay the registration fee, so they have zero participation in direct tax revenue, and the remaining 197,000 (27% of the total) pay only the registration fee.
–It is indicative that 21,000 freelancers declare incomes lower than the Minimum Guaranteed Income limits (2,400 euros for a one-person household, 3,600 euros for a couple, etc.) and thus finally receive at least 200 euros monthly through the Minimum Guaranteed Income.
–4% of the self-employed pay 50% of the taxes in this category of taxpayers. In other words, those self-employed people who declare their income normally, bear a disproportionately large burden on their backs. This means that if the current system is perpetuated, it also strengthens the injustices within the freelancers themselves.

EUROPEAN COMMISSION

– Again due to the problem of tax evasion, according to the annual report of the European Commission on taxation (https://taxation-customs.ec.europa.eu/taxation-1/economic-analysis-taxation/data-taxation-trends_en ) revenue from self-employment tax in 2021 was 0.8% of GDP compared to the EU average of 2.1%.
In addition, the taxation of freelancers in our country corresponds to 2.1% of total tax revenue compared to 5.2% in the Eurozone. This means that the Greek State collects from professionals less than half of the European average.
–If we take into account the fact that freelancers in Greece in proportion to the employed are much more than in the EU (the participation of freelancers in Greece is 27%, more than double the European average of 13%), the picture for our country is worsening.

In other words, the Greek state collects from the self-employed a quarter of the income tax collected by other countries – EU members from the particular group of taxpayers.

THE RESULT OF THE REFORM

With self-employed tax reform, State revenue from self-employed taxation will be 1.1-1.2% of GDP, from 0.8% which is today. In other words, with the implementation of the provisions of the bill, the state’s revenues increase without the contribution of freelancers approaching the 2.1% of GDP, which is the EU average, in any case.

Today 47% of freelancers pay up to 1,000 euros in tax per year and 27% pay between 1,000-3,000 euros. With the new system the situation changes: up to 1,000 euros will pay 17% and 54% (double compared to before) will pay 1,000-3,000 euros. Therefore, those who paid nothing or paid little in relation to their incomes, will pay their share.

On the part of the Ministry of National Economy and Finance it is pointed out that we have to decide as a society if the current system that is grossly unfair represents usor we want to fix it in the direction of a fairer system for freelancers, employees, pensioners and freelancers themselves.

WHAT’S CHANGING

A key rule of the new system is that freelancers and the self-employed can no longer be taxed on income below that of an employee paid the minimum wage. In other words, the amounts that they will now have to declare as income cannot fall short of 10,920 euros/year (with certain exceptions that are analyzed below), which is what the employee who is paid the minimum wage also declares. The minimum wage presumption is therefore established, which reflects the minimum value of the self-employed person’s personal work in his business.

The presumption of minimum wage is rebuttable. That is, it can be disputed by the taxpayer as long as he can prove it based on facts (force majeure, military service, hospitalization, etc.) that his earnings were less.

For reasons of tax justice, a reduction of the minimum wage is foreseen in several cases. For example, to freelancers with a disability equal to or greater than 80% (50% reduction) and to those who carry out an activity and have their main residence in villages with a population of up to 500 inhabitants and on islands with less than 3,100 inhabitants (also a 50% reduction) . It is emphasized that professionals with a newly established business activity are granted full exemption from the new system for the first three years, a reduction of 67% in the fourth and 33% in the fifth. Therefore, as shown in the examples, there will be many cases of new professionals who will pay less with the new system compared to the current one.

Also, on the other hand, the bill provides for an increase in the presumption of the minimum wage in relation to the turnover, the number of employees and the age of the activity.

EXAMPLES

Here are examples of the new system:

1) Insurer with a start in 2006 and a turnover of €52,699, declared zero profits, had zero tax and paid a claim fee of €1,250. With the new taxation system, his taxable income is determined at €15,011 (€14,196 + €815 due to 10% payroll) and his tax at €2,002. (+€752).
2) El. Professional with an electrical goods store, started in 1992 and a turnover of €51,215, declared profits of €4,156, paid tax of €374 and business tax of €650. With the new taxation system, his taxable income is determined at €14,196 and his tax at €1,823 (+€799).
3) Entrepreneur with tourism, started in 2000 and a turnover of €55,776, declared €4,163, paid tax of €375 and business tax of €650. With the new taxation systemhis taxable income is determined at €14,196 and his tax at €1,823 (+€798).
4) A baker who started in 2006 and had a turnover of €59,737, declared zero profits, had zero tax and paid €650 in business tax. With the new systemhis taxable income is determined at €15,393 (€14,196 + €1,196 due to 10% payroll) and his tax at €2,086 (+€1,436).
5) Lawyer with a start in 2012 and a turnover of €22,326, declared profits of €17,691, paid tax of €2,592 and professional fees of €650. With the new taxation system, his taxable income remains at €17,691 and his tax will be €2,592. The tax payer in question will have a reduction of €650 (he is gradually exempted from the pretense fee).
6) Oil painter with a start in 2007 and a turnover of €43,458, declared profits of €4,859, paid tax of €438 and business tax of €650. With the new taxation systemhis taxable income will amount to €19,165 (€14,196 + 35% VAT surcharge) and his tax to €2,916 (+€1,828).
7) A new lawyer starting in 2022 with a turnover of €17,140 declared profits of €5,548 and had a tax of €499, while he is not liable for professional fees. With the new system, his taxable income will amount to €10,920 and his tax will be zero for the years 2023 and 2024 (2nd and 3rd year of operation), therefore, he will have a tax reduction for the following two years. In the year 2025 (4th year of operation) he will pay 33% of the corresponding tax, i.e. €364. In the year 2026 (5th year of operation), its tax will amount to €738 (67% of the corresponding tax), while from the year 2027 (6th year of operation) etc. the tax will amount to €1,102.
8) New entrepreneur in the field of coffee retail starting in 2022 with a turnover of €28,253 and an employee declaring profits of €0 and having zero tax and professional fees. With the new system, his taxable income will amount to €11,716 and his tax will be zero for the years 2023 and 2024 (2nd and 3rd year of operation). In the year 2025 (4th year of operation) he will pay 33% of the corresponding tax, i.e. €422. In the year 2026 (5th year of operation), its tax will amount to €856 (67% of the corresponding tax), while from the year 2027 (6th year of operation) etc. the tax will amount to €1,278.
9) A plumber who started in 2009 and had a turnover of €40,510 declared a profit of €6,155, had zero tax and was not liable for business tax. He is entitled to a 50% reduction due to living on an island with less than 3,100 inhabitants or in a village with less than 500 inhabitants. With the new system, his taxable income will rise to €7,290 (14,196 + 383 due to salary costs – 50% due to residence) and his tax to €656.
10) A carpenter who started in 1997 and had a turnover of €24,591 in a village of less than 500 inhabitants, declared profits of €3,404, paid tax of €306 and business tax of €0. With the new taxation system, his taxable income will rise to €7,098 (50% of €14,196) and his tax to €639 (+€332).

* The taxes mentioned in the examples of the application of the new system do not include the sobriety fee, which is reduced from 2024 and abolished thereafter.