Freelancers and the self-employed, who, with high gross incomes, have multiples of net profits, which is associated with inflation in their expenses, deal a big blow to the budget and the tax control mechanism.

Ministry of Finance and AADE looking for solutions to increase the declared income or otherwise stop the concealment, at the expense of fictitious expenses in a number of cases, taxable material.

Its top management Ministry of Finance states that “only if the self-employed’s reported income increases will we proceed with the elimination of the claim fee.” He also notes that their declared expenses reduce net profit to the level of the minimum tax rate in order to pay the tax inspectorate as little as possible.

Although freelancers and the self-employed have benefited from the tax scale introduced in 2019, and generally from the rules in place in recent years, their declared incomes have not increased. In particular, the first tax rate was reduced from 22% to 9% for profits up to 10,000 euros, the solidarity fee was abolished, the claim fee is zero (for those who have a staff and increased their jobs), and the advance tax was reduced to 50%.

According to the tax administration, the net profit they declare is about 3.5-4 billion euros, when the gross income is close to 40 billion euros. In fact, most of them declare incomes up to 10,000 euros in order to be taxed at the lowest rate.

From the discussions that have begun, it follows that the procedure for taxing their income and declared profits will not change. That is, as the same chief executive notes, “they will continue to be taxed on the same scale that applies to employees and pensioners, just like it is done in most EU countries.”

“However, their control will change, as well as what expenses will be recognized,” the Ministry of Finance reports. Discussions have already begun, and its study is expected in the near future I LOVE with proposals and measures that have been taken by other European countries.

Incentives didn’t work

It is noted that the benefits provided by the Ministry of Finance to taxpayers for paying by cards or electronic banking of certain professional groups prone to tax evasion (plumbers, electricians, hairdressers, etc.) have not yielded results. The truth is that the motives did not cover him at least VAT which a citizen saves in tasks related, for example, to real estate. So he continued not to ask for evidence of great benefit.

Only those who turn in e-books are recognized – Professionals claim a net profit of 4 billion and expenses of 40 billion.

Thus, the Ministry of Finance is considering measures that may lead to the declaration of real incomes of those who continue to hide taxable material. Of course, any solutions that are proposed will be worked out by the new government and financial staff, who will take over the reins of the Ministry of Finance.

What they want from the Ministry of Finance is to revise the tax base for self-employment in Greece from scratch compared to international practice in order to simplify and expand the tax base based on similar benefits. This targeting is considered critical because, despite the trend towards improvement, Greece has the second largest VAT revenue “gap” in Europe.

As mentioned above, the professionals claim a net profit of around 4 billion euros, with a gross margin of almost ten times that. The rest is expenses. This means they are overcharging. For better control of expenses, it is planned to recognize only those expenses that go through e-books. My data. That is, all freelancer expenses, whether it is a VAT deduction or just a reduction in taxable income, must be made through e-books.

Essentially, they must request an invoice for all their expenses. For example, a simple receipt issued by a gas station would not be counted as an expense to reduce taxable income. To calculate it, the freelancer needs to provide their VAT number and receipt – an invoice will be issued, which will be automatically placed in e-books (myDATA).

According to sources in the Ministry of Finance, appropriate consultations with the European Union on this change will begin in the near future.

What is planned?

• Mandatory electronic invoicing, as is done, for example, in Italy. In Greece, e-invoicing is currently optional. It is noted that even at the EU level, the use of electronic invoicing is recommended to limit tax evasion, mainly on VAT. In fact, the plan provides that from January 2024 Member States will be able to introduce electronic invoices, and from 2028 the plan will become mandatory for all Member States.

• Digital client base for doctors, lawyers, etc. (Essentially, the additional books that were kept until 2012 will be back, but in electronic form). Some professional groups are required to maintain a digital registry, which will be available for audit and comparison with declared income. The digital client base in the second phase will be connected to MyDATA.

• Digital waybill. It will be implemented in the near future. Thus, the movement of products (construction and agricultural) is controlled. We know where it starts and where it goes, according to the tax office. A real-time digital consignment note will allow the control mechanism to know, for example, whether a manufacturer has ordered concrete and its destination. The auditors can immediately check whether the delivery has been made, the documents, as well as the workers, if they are declared in “tool”. Thus, the limitation of tax evasion and undeclared work is achieved.

A measure that will also be considered is the reduction of the 24 percent VAT, which creates incentives for tax evasion. Our country has one of the highest VAT rates in the EU.

Most declare less than 10,000 euros

Today, most self-employed professionals are taxed below the current tax-free limit. Characteristically, six out of ten self-employed women declared an income (in 2010) of less than 12,000 euros (i.e. .

Despite the fact that 13 years have passed, little has changed in the income and taxation of professionals. On the contrary, among the beneficiaries of the tax and insurance reform were professionals. In particular, a preferential scale with a rate of 9% on the first 10,000 euros of income from 22% automatically leads to a reduction in income tax of 1,300 euros. At the same time, the collection of solidarity on incomes over 12,000 euros was abolished, and the advance tax payment was reduced to 50%.

Only in Greece and Italy the level of self-employment is at the level of the EU. exceeds 20%.

For example, a self-employed person with a net income of 10,000 euros paid taxes to the tax authorities in the amount of 2,200 euros in 2019. With the change in the scale, the tax was reduced to 900 euros. That is, the benefit reached 1300 euros. A professional with an income of 15,000 euros paid a tax of 3,366 euros to the tax office, and with the change, the tax was reduced to 2,000 euros. According to AADE, there were 366,787 freelancers and self-employed people with income solely from business, based on the latest published data, who declared a net profit of 3.375 billion euros. Of these, 268,027 declared incomes up to 10,000 euros. That is, an income of 500-800 euros per month.

It is noted that according to Eurostat (2016) in the EU. only Greece and Italy have self-employment rates above 20%, while globally there are also examples from Colombia, Mexico, Korea and Chile, as OECD data show. The European average is 14%, and the countries with the lowest self-employment rates in Europe are Denmark (8%), Germany, Estonia, Luxembourg and Sweden, countries where the corresponding rate is around 9%.