BUSINESS

Tax breaks coming in 2020

PROKOPIS HATZINIKOLAOU

TAGS: Taxation

Salaried workers, pensioners and self-employed professionals will see significant reductions in their tax bills in 2020, according to a draft law that reduces the lowest income tax bracket to 9 percent from 22 percent for incomes up 10,000 euros, maintains the income tax-free ceiling at 8,636 euros per year and offers deductions for families with children.

The bill, which is part of the government’s much-touted pledge to ease the pressure on households and businesses, will also include provisions on construction and reductions in tax rates on business profits.

The draft law is expected to be completed by the end of next week and submitted to Parliament by mid-October.

Overall, wage earners and pensioners will see an increase in their monthly earnings as of January as their monthly tax is reduced, while freelancers will see it when they clear their tax returns in 2021. More specifically, taxpayers with no children declaring income between 8,636 euros and up to 20,000 euros will receive discounts of up to 177 euros.

For example, according to the new system, a taxpayer with an income of 15,000 euros currently pays 1,400 euros in tax. As of 2020, that will go down to 1,223 euros.

If the taxpayer has one child, the tax is reduced to 1,133 euros from 1,350 euros (benefit 217 euros), while if the family has two children the tax is reduced from 1,300 euros to 1,043 euros – a gain of 257 euros.

Likewise, taxpayers with no child and an annual income of 20,000 euros currently pay 2,500 euros in tax. This will be reduced to 2,323 in 2020, a 177-euro discount.

However, if the taxpayer has one child, the tax will be reduced to 2,233 from 2,450 – a discount of 217 euros. If the family has two children the tax will be reduced from 2,400 to 2,143 – 257 euros less.

The tax break will reach up to 370 euros for those with three children and an annual income of up to 20,000 euros.

Moreover the country’s some 350,000 self-employed professionals will also benefit significantly from the new lowered tax bracket. Those who declare incomes of up to 10,000 will see their tax reduced by about 60 percent or by 1,300 euros.

This means that instead of paying 2,200 euros for this year’s income, they will pay 900 euros for income earned in 2020.

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