On Tuesday night, 26.11.2019, the new tax bill, which includes, among other things, tax relief for individuals and businesses, as well as a series of other development measures to stimulate the Greek economy and construction, was submitted to Parliament. Among other things, the bill includes lowering the tax rate from 9% to 22% for individuals’ incomes up to € 10,000, the new income tax rate with reduced rates, reducing the corporate tax rate from 28% to 24%. %, the tax-free increase of 1,000 euros per child, the reduction of VAT on infants from 24% to 13%, and the reduction of VAT on helmets and baby seats from 24% to 13%.
With … the tax bill
The bill also stipulates a collective proof equal to 30% of the declared income with significant improvements over the draft provision of the consultation. It also provides, inter alia, for the suspension of VAT on buildings for three years, a measure that will apply for compensation.
The tax bill is titled “Tax Reform with Growth Dimension for Greece Tomorrow” and according to a statement issued by the Treasury it is “a cut-off bill that seeks to restart the Greek economy, with immediate economic improvements.” the facilitation of the taxation of natural persons and enterprises and the economic activity of the productive part of Greek society.
At the same time, the tax bill provides significant incentives to attract foreign direct investment and capital that will make Greece an attractive investment destination.
It is the first time since the country’s accession to the crisis that a tax bill has been tabled for a vote that drastically reduces business taxation, while relieving individuals of unsustainable tax liabilities. “
The Treasury says in its announcement on the tax bill
“This is a bill with a clear development dimension.
The tax bill is at the heart of the Government’s tax policy commitments which include:
⦁ reducing taxes,
⦁ sustainable economic growth,
⦁ transparency and reducing tax evasion,
⦁ the expansion of electronic payment instruments and the transition of the tax system to the digital age,
Μ reducing the bureaucratic burden on the Tax Administration and businesses while benefiting taxpayers, and
⦁ facilitating and attracting investment and capital.
The tax bill that is being put to the vote provides for:
⦁ the drastic reduction in income taxes for households and businesses,
⦁ reducing the dividend tax distributed by legal entities,
⦁ rewarding entrepreneurship for the benefit of workers and the real economy,
⦁ favorably addressing corporate social responsibility and employee benefits actions,
⦁ attracting foreign investors to Greece with strong investment incentives ”.
In detail, the bill provides for the following provisions in the individual areas:
A. In the area of tax relief for individuals and businesses, the main tax reliefs include:
⦁ Lowering the corporate income tax rate from 28% today to 24% for 2019, thereby boosting small and large businesses, with a 50% reduction in its first tier tax rate. startups for their first three years of operation. It is noted that the steady will is to further reduce the rate of income tax on legal entities in the coming years, in order for the Greek economy to regain its competitiveness more dynamically in the European and international economic environment.
⦁ Introduce a 9% introductory tax rate for natural persons, freelancers, farmers, employees and retirees, from 22% today. This reduction is expected to benefit not only those with incomes below 10,000 euros, but all taxpayers, as their income is taxed on a gradual basis. In addition, the coefficients for higher incomes are reduced by one percentage point.
⦁ Introduce a low tax rate of 10% for agricultural cooperative schemes with the aim of relieving them of tax burdens and at the same time developing the primary sector of the Greek economy through the establishment of new agricultural schemes.
⦁ Reduction of the income tax advance to 95% of the resulting tax for legal entities (for 2018).
In addition, the income tax rate is adjusted based on the number of children, reduced VAT rates are applied to support vulnerable groups (infant protection) as well as social protection, and identified inequalities at the expense of vulnerable groups, ie:
⦁ Increase of the tax-free amount by EUR 1,000 for each protected child, irrespective of their number, and especially for those with 5 or more children, there is no reduction of EUR 20 for every EUR 1,000 increase in their income if their taxable income exceeds 12,000 euros.
⦁ Exemption from the solidarity levy on all persons with disabilities with a disability rate of 80% or more irrespective of the type of disability.
⦁ VAT reduction for infants from 24% to the current reduced rate of 13%.
⦁ Reduction of VAT on motorcyclist helmets and child seats from the current 24% to the reduced rate of 13%.
⦁ Rationalizing the taxation of stock options, for which the surplus value from exercising them, will not be added to the taxpayer’s other income in order to be subject to scale taxation, but will instead be taxed at a 15% tax rate.
⦁ Payments to employees due to the redemption of their insurance policy due to their participation in voluntary retirement are no longer an early acquisition and are not taxed at a rate of 50%.
⦁ Reduction of non-cash accrued earnings received in 2014 and thereafter indicated separately in the annual statement of remuneration granted to the payee or by any appropriate means in the year in which they are deducted, in accordance with the provisions of the year in question.
⦁ In-kind benefits to employees in the form of a corporate car, taxed on a tiered basis, on the basis of Retail Price-to-Tax and with new equity rates per step and with the exception of taxation on the income of exclusively licensed vehicles purposes and have a Retail Sales Price up to 17,000 euros.
⦁ With regard to the benefits in kind in the form of a loan, the benefit in kind is no longer the full amount of the loan, but the difference in interest on the basis of the interest rate on the employee’s loan and interest rate. which would be charged if they received the loan at an interest rate equal to the average market rate.
A It is clarified that the benefit in kind is counted against the income of the recipient in excess of € 300 in value.
⦁ The 0.6% levy of Law 128/1975 on factoring and leasing credits is abolished in order to reduce the cost of financing and consequently the operation of small and medium-sized enterprises.
⦁ Extended taxation of public utility vehicles.
⦁ Finally, the taxation of investment firms such as real estate investing companies (GFCFs), real estate mutual funds, portfolio investment companies and UCITS is being streamlined in order to enhance investment.
B. Significant incentives to attract foreign direct investment and capital. Particularly:
⦁ With a view to attracting investment, tax legislation is being clarified and simplified, while an alternative way of taxing foreign-origin income by paying an annual flat tax of more than EUR 500,000 is introduced.
⦁ Further, the tax rate on dividends is reduced from 10% to 5% and the conditional exemption of legal persons who are tax residents of Greece from the capital gains transfer tax is introduced.
⦁ There is also an exemption from income tax and solidarity levy on corporate bonds listed on a regulated market.
⦁ The market for bareboat chartering and leasing vessels is regulated, as well as the taxation of tugboats, fishing boats and second class vessels.
C. Measures are being introduced to restart the economy in important sectors contributing to the country’s GDP and which have been particularly affected by the economic crisis. Particularly:
⦁ VAT is suspended on buildings licensed from 1-1-2006 and onwards, while the suspension of VAT is suspended. also occupies the consideration.
⦁ Property tax is suspended on the transfer of property for three years.
⦁ Incentives are made to incur the costs of obtaining services related to the energy, functional and aesthetic upgrading of buildings, by granting a 40% tax deduction on the costs of the related works, with a total expenditure of € 16,000, divided equally 4 year period.
⦁ Increase the maximum number of installments of fixed debt settlement from 12 to 24 and in special cases of exceptional debt from 24 to 48. The same debtor may be included for the second time if the settlement is lost for any reason relating to his fault.
⦁ The rent for renting public fishery waters to fishing cooperatives is reduced from 10% to 5% on the value of the catches.
D. Tax measures are introduced to promote sustainable development, such as:
⦁ Introduce a package of measures to promote the use of public transport and zero-emission vehicles, following the best practices of other Member States. In particular, the supply of a vehicle with a low or zero-emission vehicle is not considered to be a supply in kind. In addition, the company is given a 30% discount over the zero-cost car hire expense, while the cost of purchasing, installing and operating publicly accessible zero-emission vehicle charging points is 30% higher. above expense. Finally, the company is granted the possibility of over-depreciation at higher rates than those existing for the acquisition of passenger cars, trucks and buses which are low or zero pollutants.
⦁ Strengthening corporate social responsibility and employee benefits by:
– a deduction from gross business income for expenses relating to Corporate Social Responsibility actions, unlimited travel cards to MMMs without them being income for the employee,
– enhancing the provision of cash and in-kind donations by institutions to the State, by deducting income from expenditure in cash or in-kind donations to the Greek State and local authorities.
E. The arrangements for expanding electronic transactions are an important step towards transparency and reducing tax evasion. Particularly:
⦁ Employees, retirees, freelancers and income earners should spend 30% of their actual income on electronic payment instruments.
In addition, it should be noted that in addition to the above:
1. The calculation of real income shall not include the amount of the solidarity levy and the amount of maintenance for a divorced spouse or child.
2. In the case of expenses incurred in connection with the payment of personal income tax and ENFIRY, loans to financial institutions and rents exceeding 60% of real income, the required rate of expenditure shall be limited to thirty percent (30%). Twenty percent (20%) of their real income
3. For the taxpayer whose account has been seized, the expenditure limit shall be limited to five thousand euros (5,000 euros).
4. Exemptions are provided for taxpayers who have objective difficulties in using electronic payment instruments.
⦁ Interventions are being taken to reduce the bureaucratic burden on the Tax Administration and businesses, while benefiting taxpayers.
⦁ Debt of natural and legal persons totaling up to EUR 10 per taxpayer is deducted once. In this way, the Tax Administration is relieved of the bureaucratic costs of tracking these debts, while over 500,000 taxpayers will again be able to issue tax information, which in turn has a positive effect on their financial activity.
⦁ The periodic write-off of small amounts of up to € 1 per taxpayer is applied in order to discharge the operation of the Tax Administration.
⦁ Businesses are able to write off outstanding amounts from their clients, totaling up to € 300 per borrower, without having to have previously practiced all the legal procedures for their recovery, since in most cases the cost of the procedure is higher than the amount of the debt.
⦁ Finally, the excise duty tax certified for wines which until the last day of validity of the EFA wine (31.12.2018) were not used for consumption is refunded or deleted.
“The above measures are expected to work with multiplier benefits for the Greek economy and society by shaping a new economic environment with opportunities and opportunities for all citizens and businesses,” the finance ministry said in a statement.