By Chrysostomos Tsoufis

A misunderstanding regarding the tax treatment of retroactive incomes paid to heirs of beneficiaries is cleared up by a circular from the head of AADE Giorgos Pitsilis.

According to the tax code, in general, income from salaried work and pensions, as well as additional fees not included in regular wages, are withheld at a rate of 20% on the amount paid and then taxed based on the tax scale that was in force in the tax year to which they refer. However, this does NOT apply when the amounts are paid to an heir or heirs of a beneficiary and refer to a period of time prior to death. As the Pitsili circular clarifies, these amounts “do not gather the conceptual characteristics of income, that is, periodicity, a stable and continuously exploitable source, compensation for personal work or other activity or the fruits of assets”. Therefore, they are an inheritance and not income, so there is no obligation to withhold income tax when paying the beneficiaries.

Despite this, AADE was informed that Mr EFKA , when paying the heirs of retroactively insured pensions in execution of court decisions, proceed with the withholding of 20%, issuing printed pension benefit certificates in which the retroactive pensions column is marked “HERITARY”!!. It imposes in this way, unintentionally of course, additional suffering to those who receive retroactive pensions who must take specific actions in order not to “go for wool and come out with a haircut”.

So that the above is returned unnecessarily withheld taxaccording to the circular, the heirs should submit an amended tax return for the tax year in which they received the money, indicating in codes 611-612 the amount withheld by the EFKA based on the certificate granted to them.

In addition, the total amount as an inheritance, if it has not already been entered, should be filled in in codes 781-782 since they do not constitute income. Amending declarations have no penalties for heirs.

Subsequently the competent D.O.Y., after carrying out a check in order to establish that the above tax has not already been refunded or set off in the heir’s declaration, he will proceed with the liquidation of the submitted amending declaration, so that the withheld tax can be set off.