Important changes are coming immediately to the way citizens are taxed in a presumptive manner. As the government has committed, it is planned and will be implemented within the next months, the reformation of the living standards from a zero base and at the same time their horizontal reduction by 30% from 2025.

The above development comes to complement the previous tax intervention for freelancers and the self-employed. At the Ministry of National Economy, they believe that there are many distortions in the system and cause injustices which must necessarily be corrected, but on the other hand, the effectiveness of this “tool” that brings the state coffers an additional 5.5 billion euros must be preserved.

According to officials of the ministry, a kind of “marriage” should be made between the presumptions of living and the new way of taxing professionals, so that the system on the one hand is efficient, but on the other hand it renders tax justice. And as they pointed out, there are not a few times that because some people inherited a property or bought a car at a given time, they are asked to pay high taxes in relation to their real possibilities.

On the other hand, they note that the system has “windows” that some exploit in order to avoid taxes.

As is already known, a six-member special committee has been set up under the General Secretary of Tax Policy, Mary Psyllas, whose purpose is to document the current situation and formulate opinions and proposals regarding the reformation of the presumptions and acquisition of assets. The Committee will meet at least once a month and on an emergency basis when urgent matters arise.

One change that appears to be taking place is the way the presumptions are calculated for real estate owned by taxpayers. For example, based on the last value adjustment, where there was a significant increase in some areas, for example in the center or in the south of Athens, the presumption increased excessively.

According to information, the changes under consideration are:

  • Changes in the way of calculating the subsistence allowances for residences, I.X. cars and pleasure boats.
  • Amendments to the provisions on the minimum amounts of proof of living of 3,000 euros for unmarried people and 5,000 euros for married or cohabiting couples.
  • Elimination of distortions and injustices caused by the determination of taxable income based on the presumption of subsistence.

It is indicative that more than 1.6 million taxpayers paid taxes based on their imputed income rather than their actual income. In fact, the amount added to them by the tax office amounted to 5.5 billion euros.

Based on data from the Tax Office:

  • 547,827 employees, although they declared in their tax return incomes of 1.46 billion euros, were taxed for incomes of 2.84 billion, as with the application of the presumptions, incomes of 1.38 billion euros were added.
  • 465,238 pensioners declared incomes of 992 million euros. However, they were taxed on income of 2.29 billion euros due to presumptions.
  • 377,292 income earners declared incomes of 209 million euros. However the presumptions revealed income of 1.78 billion and they were ultimately taxed on income of 1.98 billion.

Thousands of taxpayers were “trapped” in the presumptions due to the increase in property values.

  • 180,889 freelancers and self-employed while they declared an income of 391 million, the tax office added an assumed income of 759 million.
  • 91,045 taxpayers with agricultural activity showed an income of 185 million to the tax office. With the application of presumptions, 328 million were added and taxed for real and presumed income of 513 million.

The following interesting facts also emerge from the data of the Ministry of Finance:

  • In 356,188 taxpayers the added difference of presumptions is up to 1,000 euros.
  • In 975,263 taxpayers the PDT is 1,000 – 5,000 euros.
  • In 319,669 taxpayers the PDT is 5,000 – 10,000 euros.

Presumptions of living currently apply to:

1. Residences. For the taxpayer’s main residence (owned, leased or freely granted) the presumption is calculated based on its surface area with the following scale:

  • up to 80 sq.m. main areas, 40 euros per sq.m.
  • from 81 sq.m. up to 120 sq.m. main areas, 65 euros per sq.m.
  • from 121 sq.m. up to 200 sq.m. main areas, 110 euros per sq.m.
  • from 201 sq.m. up to 300 sq.m. main areas, 200 euros per sq.m.
  • from 301 sq.m. and above main areas, 400 euros per sq.m.

The presumption is increased by 40% for homes located in areas with objective prices from 2,800 to 4,999 euros per sq.m. and by 70% for homes located in areas with objective prices from 5,000 euros per sq.m. and above. For detached houses, the above amounts are increased by 20%, while for secondary houses they are reduced by 50%.

2. Cars. The presumption is formed according to the cubic centimeters of the car and starts from 4,000 euros for cars up to 1,200 cubic centimeters. Particularly:

  • For cars up to 1,200 hp. a presumption of 4,000 euros applies.
  • For cars larger than 1,200 cv. and up to 2,000 cubic meters, 600 euros are added per 100 cubic centimeters.
  • For cars over 2,000 c.c. and up to 3,000 cubic meters, 900 euros are added per 100 cubic centimeters.

3. Pleasure boats. The presumption is calculated based on the measures.

4. Swimming pools. The presumption is calculated based on their surface and its height is proportional to whether the pool is outdoor or indoor.

5. Tuition fees. The expense paid for private schools and training centers is taken into account.

6. Support staff. The expenditure on domestic helpers, car drivers, teachers and other staff.

7. Cost of living. The minimum annual expenditure is set at 3,000 euros for a single person and 5,000 euros for spouses submitting a joint declaration.