What is changing in the tax landscape from 2024

The increase in the tax exemption threshold for families with children, the abolition of the default tax and the reduction of the subsistence allowance are gradually coming from the new year for millions of taxpayers. The above interventions in taxation along with salary increases (for civil servants) are expected to result in a significant reduction in fees which will be added to the reductions in the last four years. However, household disposable income has contracted in particular in 2022 as a result of punctuality, which still consumes significant resources from citizens. Although inflation is declining, basic material prices are at high levels and it is not known whether they will return to the previous low prices.

What will be in effect from the new year

1. An increase in the tax exemption limit from January 1, 2024 by 1,000 euros for families with children. Depending on the changes that will take place, the tax-free amount will be:

– 10,000 euros from 9,000 euros today for married couples with one dependent child
€11,000 out of €10,000 for married couples with two dependent children
€12,000 out of €11,000 for those with 3 dependent children
€13,000 out of €12,000 for married couples with 4 dependent children

The annual tax benefit resulting from the increase in the tax-free limit is €90 for employees, pensioners and farmers with one child and rises to €220 for taxpayers with two or more dependent children

2. The gradual abolition of the demonstration fee until 2027. According to the plan, the demonstration fee, which currently ranges from 400 to 1000 euros, will be reduced:

– 20% in 2025 and its price will range between 320-800 euros
– 30% in 2026 to be limited to 224 to 560 euros and
– In 2027, foundation fees will end completely after 15 years.

It is noted that profiteering fees were imposed in the note years on companies and professionals regardless of whether they had profits or losses. Abolition was also recommended by Brussels, whose review it supports, as it could improve the structure of the tax burden on the self-employed, encourage voluntary tax compliance and support investment. Specifically, they state that “for individual entrepreneurs, Greece charges an annual fee of €650, regardless of whether or not they make a profit, plus personal income tax and other taxes. This leads to very high and effective tax rates for companies that have Turnover is low and acts as a barrier to entry for new firms into the markets.” Today, the following are exempt from the demonstration fee:

– Companies that have increased the number of their employees for at least three months during 2022 will not pay retirement fees this year. Specifically, in these companies, while clearing tax returns to be filed in 2023 (2022 income), no introductory fee will be charged, provided that:

– Its total income should not exceed two million euros per year.

They increased the average annual number of full-time workers at least 3/12 year-on-year.

– Commercial establishments and freelancers who practice their activities in villages with a population of up to 500 people and on islands with a population of less than 100, unless they are tourist places.

– Individual commercial projects and individual practice of the free profession, as long as 5 years have not passed since starting work for the first time.

Those who run a single business or independent profession and have a disability equal to or greater than 80%.

3. Reduction by an additional unit of insurance premiums and non-salary costs. It is noted that contributions have decreased by 4.4 units in recent years.

4. Reducing subsistence allowances by 30% on average from 1/1/2025. Today, even if a person has no income, the tax office calculates the minimum subsistence amount. For any taxpayer who received income from any source (for example, even from interest on deposits, child benefits, etc.), the current legislation provides for the application of a minimum presumption of subsistence:

€3,000 if he is single, married, or part of a cohabitation agreement and chooses to file his declaration separately from his wife, husband, or the other party to the cohabitation agreement. From January 2025, the above assumption is limited to 30% and will be set at €2,100.

– 2,500 euros if he is married or entered into a cohabitation agreement and chooses to file a joint declaration with his spouse or with the other party to the cohabitation agreement. The above assumption will be set at 1,750 euros.

– In turn, the assumptions that apply today to accommodation and cars will also be limited.

According to the tax return statistics filed in 2021 for 2020 income, 1,748,934 out of a total of 6,529,279 were taxed, which is 26.8% based on assets such as real estate, cars, yachts, swimming pools, etc. Not based on declared income. The total taxable income of these taxpayers increased by €5.96 billion and amounted to €9.03 billion against the €3.07 billion they showed in their tax returns.

5. Reducing the capital increase tax from 0.5% to 0.2%, in addition to reducing the stock exchange tax by 50%.

6. A 3%-4% increase in pensions from 1/1/2024.

7. Increasing the salaries of civil servants and restructuring their salaries from 1/1/2024.