The Greek Ministry of Finance announced changes to the tax system in February 2010 and made amendments in October that affect approximately 8.5 million taxpayers and apply to both salaried and self-employed workers.
Please be aware that this is an overview of income brackets and tax burden and a guide to collecting and submitting receipts, which began March 2011. A comprehensive explanation of taxes in Greece is impossible to accomplish in one article because laws are complicated and change often, so the smallest misunderstanding can cost you handsomely in penalties and, in some cases, property.
The last tax overhaul is detailed in 92 articles of law 3842/2010 (in Greek), but several amendments were since passed in 2012 as part of austerity and the system has changed again for 2013.
Specific questions should be directed to a trustworthy, competent accountant or a Greek tax office (eforia). I cannot stress this enough, as I have no intention of advising people on complicated matters meant for specialists.
*Article last updated January 9, 2013. There are revisions pending.
This article was copied by lawyers and ‘expat guides’ claiming to have expertise and original information. When confronted, they refused to enforce their own copyright policy.
Be careful who you trust.
Revision, no revision
On June 24, 2011, as part of ‘Midterm’ austerity measures, Finance Minister Venizelos announced a ceiling on receipts that would apply retroactively from January 1, 2011. However, this revision was revoked later the same day after ministers expressed opposition and said they would vote ‘no.’
In 2012, the government announced collecting receipts would continue through 2013 and new thresholds would be introduced for both income brackets and receipts.
How much income tax will I pay?
There are eight nine basic tax brackets that apply to all workers from January 1, 2010, determined by annual income. A lower tax threshold of €10,500 no longer applies to self-employed or independent workers.
► €0–12,000: 0% *but only if you provide the necessary receipts, explained below
► €12,001–€16,000: 18%
► €16,001–€22,000: 24%
► €22,001–€26,000: 26%
► €26,001–€32,000: 32%
► €32,001–€40,000: 36%
► €40,001–€60,000: 38%
► €60,001–€100,000: 40%
► More than €100,000: 45%
Each child increases the tax-free threshold/exemption: One child, €1,000 to €1,500; two children, €2,000 to €3,000; three children, €10,000 to €11,500 (not a typo); Fourth child and consecutive children, €1,000 to €2,000 each.
Two-career married couples calculate their tax liability separately, not as a combined total.
Chart from Eleftherotypia
How many receipts will I need?
In an effort to reduce tax evasion and a black economy estimated at 30 percent GDP, the Greek government now demands that taxpayers submit evidence of their expenses from January 1, 2010. The only way to earn a tax-free status is to provide the required percentage of receipts for each portion of your income, which is calculated on a step scale not a flat rate. What do I mean by that?
First, look at the percentages for each bracket.
► Up to €6,000 — 0% – no receipts required.
► Up to €12,000 — 10% in receipts
► More than €12,000 — 30% in receipts
The original system applied a flat rate percentage according to your total income, so someone earning €30,000 had to provide €9,000 in receipts; this is no longer the case. The revised system uses a tiered calculation that is more fair.
To calculate the total amount of receipts according to your income, multiply the percentage corresponding to each portion of your income on a step scale. Using the same example above of €30,000, it would be:
(€12,000 x .10) for the first €12,000 + (€18,000 x .30) for the remaining €18,000, to total €30,000. So total receipts would be: €1,200 + €5,400 = €6,600.
What if I don’t have enough receipts?
Anyone who cannot provide receipts required for their tax bracket will pay an additional 10% tax or penalty on the difference. Maximum penalty cannot exceed €1,200.
For example, using the same figure above for consistency: If you earn €30,000 and need €6,600 in receipts, but only provide €3,000 in receipts and nothing for the remaining €3,600, you need to pay a 10% additional tax or penalty of €360 (€3,600 x .10).
What if I have more receipts than necessary?
You get a tax credit or bonus of 10% on the difference.*
If you earn €30,000 and need €6,600 in receipts, but provide €8,000 in receipts, which is €1,400 more than demanded, you get 10% tax credit of €140 (€1,400 x .10).
*The 10% credit has been criticized since we now pay 13-23% VAT on nearly everything except newspapers, theater and books.
What receipts should I save?
Receipts with an AFM (tax number), transaction date and amount for all consumer goods and services, such as:
Goods: Clothes, shoes, food (supermarket, bakery, sweet shops, manavis/green grocer, butcher, fishmonger), toiletries, furniture, appliances, pharmaceuticals and any medical-related equipment or supplies not covered by insurance, cosmetics, jewelry, linen, electronics, online purchases, computer/printer, office and school supplies, gifts, cigarettes, alcohol, books.
Services: Hairdresser, taxi, tolls (road, bridge), parking, restaurant, taverna, cafe, take-out/delivery, household repair (plumber, electrician, painter), entertainment (bars, clubs, cinema, museum/sites, theater, concerts), travel (hotel), auto repair, florist, gym, dance school, swim center, therapy, house cleaning, psychiatry, dietitian, nutritionist, spa/massage, accountant, notary (not associated with inheritance or charitable donations), funeral costs not covered by insurance, wedding and baptismal, heating and cooling, driving schools, photocopying, stamps and postal/courier fees.
Nearly everyone should be issuing receipts, and those who aren’t are committing tax evasion. See “VAT/FPA in Greece” to understand which rates apply to what categories and who should be issuing receipts and when.
What is not counted in this category:
— High-priced items such as boats, swimming pools, aircraft, cars, real estate;
— Tuition, insurance, property transfers, medical services (doctors/hospitals), lawyer’s and attorney’s fees, transport tickets (plane, bus, train);
— Lottery, casino fees, gambling;
— Utilities (electric, water, home telephone, card/contract mobile phone);
Some of these items do not qualify as part of the 10-30 percent evidence necessary because they are declared on a different line of the tax form.
How will taxpayers in Greece submit receipts?
According to the government circular, taxpayers can submit receipts two ways.
a) He/she can put hard-copy receipts in a folder or sealed envelope labeled with their AFM/tax number and submit it with their tax returns. In cases where the AFM/tax number, purchase amount or company name is unclear on the receipt, taxpayers can retrace it or attach the receipt to a piece of paper and write the information next to it. *Keep a copy of all your receipts.
b) Electronic/online tax filings will not demand an e-form or submission of receipts as originally stated. However, auditors will be examining and flagging certain taxpayers, or selecting people at random, then calling on them to come in person to the tax office and have their receipts inspected
must be accompanied by a e-form, where the taxpayers is required to itemize all receipts. *Keep the originals on file and have them ready.
It is not presumed you qualify for tax-free status. Income-spending ratios are also be examined,and thousands of taxpayers have been questioned and called in for audit by the Financial Crimes Squad (SDOE).
The finance ministry allows you to trace over the receipt if the writing is faded but not dark enough. However, receipts having vital elements that are faded beyond recognition or are unreadable will be excluded.
What if the vendor or business does not give me a receipt?
You must ask for one. If they refuse, you can call the tax evasion police hotline at ‘11012.’
Why this doesn’t work 100 percent
Greeks send cash to support parents or minor/adult children living in Greece or abroad, though accountants rightly argue that this wasn’t deductible under the old system either.
People complain that receipts printed on thermal paper are useless, but the print doesn’t disappear unless you’re keeping them in direct sunlight, next to the stove or on top of the radiator/heater. I still have thermal receipts from 2005 that are in perfect condition.
Dozens of online businesses have set up shop selling counterfeit receipts.
Farmer’s market vendors, gas/petrol stations, kiosk (periptera) owners and taxi drivers are all required by law to issue receipts but not all do. See “VAT in Greece.”
Who is legally excluded from submitting receipts?
Prisoners, residents in nursing homes, Greek civil servants and military serving outside Greece.
Certain EU citizens from other member states residing in Greece are also exempt from submitting receipts, as are some foreign citizens though they may not be entitled to a tax-free status as a result. Please ask an accountant to clarify your case.
Elimination of separate taxation
Thousands of Greek taxpayers were previously placed in different categories of taxation according to profession or type of income. The government changed this. Those affected are: Architects, engineers, taxi drivers, farmers, farmers’ market (laiki) vendors, shipbuilders and truck drivers, plus those deriving income from horse races, severance pay, and rental accommodation and campsites. Banking, insurance, broadcasting and mail services as well as professions such as lawyers, notaries, writers, artists and journalists are likely to enter VAT-paying status from 2011, since exemptions were gained through protest and not social justice.
Income from bank interest, CDs and bonds in Greece will continue to be taxed separately at 10 percent, irrespective of the taxpayer’s nationality and place of residence.
Tax exemption for first-time homeowners is no longer calculated according to square meters but objective value.
For properties that have an objective value of €400,000 or more, tax will be assessed to both the purchaser and seller as of January 1, 2010.
If a new home in Greece remains unsold after five (5) years, a 23 percent tax will apply. Thus, the seller may pass this cost onto the eventual homeowner.
“Εγκύκλιος – μίτος στον Λαβύρινθο των αποδείξεων” — Eleftherotypia
“10 αλλαγές στους φόρους το 2011” — Ta Nea
“Οι αλλαγές στο φορολογικό σύστημα” — Eleftherotypia
“Αρχίζει το κυνήγι των αποδείξεων” — Eleftherotypia
“Αφορολόγητο με αποδείξεις 30%” — Ta Nea
“Αφορολόγητο αποδείξεων έως 12.000 – μετά μόνον μπόνους 10% ώς τα 15.000 €” — Eleftherotypia
“Κερδισμένοι και χαμένοι από την κατάργηση της αυτοτελούς φορολόγησης” — Eleftherotypia
“Ξαναζυγίζουν το «βαρύ» 30% αποδείξεις επί του εισοδήματος” — Eleftherotypia
“16 απαντήσεις για αποδείξεις, παρακράτηση, τεκμήρια” — Ta Nea
“Οι 5 «ζεματισμένοι» του νέου φορολογικού” — Eleftherotypia
“Νέα φορολογική κλίμακα για όλα τα εισοδήματα” — Kathimerini
“Taxpayers in Greece need fewer receipts” — Kathimerini
“Αυξήσεις στον ΦΠΑ, «ψαλίδι» σε δώρα και επιδόματα” — Eleftherotypia
“Αποδείξεις χωρίς ταλαιπωρία” — Ta Nea
“Σαφάρι αποδείξεων και ΦΠΑ παντού” — Ta Nea
“Κόκκινη γραμμή στα 40.000 ευρώ” — Ta Nea
“Πριμ για πρώτη κατοικία” — Ta Nea
“Οι οριστικές ρυθμίσεις για τις αποδείξεις” — Eleftherotypia
“Αποδείξεις: τι κρατάτε, τι αγνοείτε, ποια λάθη κοστίζουν” — Eleftherotypia
“Ποιες δαπάνες που δεν καλύπτουν τα ταμεία συμπεριλαμβάνονται στο αφορολόγητο των 12.000 €” — Imerisia
“Δεν αποτελούν τεκμήριο οι αποδείξεις για το αφορολόγητο” — To Vima
In the News
“No tax please, we’re Greek” — BBC
“Crisis-hit Greeks scramble for receipts” — Reuters
“Greek wealth is everywhere but tax forms” — NY Times
“Ever-changing Greek tax system a factor in crisis” — Boston.com
“Highlights: Greek finance minister unveils tax reform, wage policy” — Reuters
“Tax and spending policy ready” — eKathimerini
“First task of Hercules: Persuade Greeks to be honest about their taxes” — The Economist
“Playing cat and mouse with tax evaders in Greece” — Reuters
“Taxing the rich worldwide” — Tax Foundation
“More than half of Greeks dodge taxes?” — Kathimerini
Image capture from Ta Nea