BUSINESS

All taxpayers are set to see their incomes grow from the new year

PROKOPIS HATZINIKOLAOU

Self-employed professionals without a labor contract are taxed from the first euro of their net income declared to the tax authorities.

TAGS: Taxation, Finance

The income of all taxpayers (salaried workers, pensioners, farmers and self-employed professionals) is due for a boost as of January 1, when reduced tax rates come into effect.

For the first time in over a decade individuals and corporations alike will see a reduction to their income tax burden, with a further cut being possible when the government announces its decision on the gradual abolition of the solidarity levy in mid-2020.

The tax breaks are greater for taxpayers on low incomes, families with children and freelance professionals, while they will be more limited for middle-range earners, as Prime Minister Kyriakos Mitsotakis admitted recently.

On a monthly basis, the tax cuts for unmarried or married salaried workers without children will reach up to 13 euros, dropping to 11 euros for salaried workers with one child. The monthly easing comes to 14 euros for taxpayers with two children, and in the cases of workers with three children, their monthly savings will come to 23 euros.

For example, a salaried worker earning 10,000 euros a year currently pays 300 euros in tax. From January the annual tax will drop to 123 euros, down by 177 euros per year.

Notably, this concerns incomes up to 20,000 euros per year, as for the income brackets between 20,000 and 50,000 euros the tax breaks are significantly smaller. This is due to the changes implemented to the way the new tax discount (the tax-free ceiling) is calculated.

Among the big winners of the new tax law are freelancers: When their 2020 incomes are examined after the submission of their tax declarations in mid-2021, they will see a reduction to their tax burden which in some cases will exceed 1,300 euros per year. This will be thanks to the slashing of the introductory tax rate from 22 percent to just 9 percent. Therefore, those who declare yearly incomes up to 10,000 euros will see their tax shrink by 60 percent or 1,300 euros, dropping from 2,200 to just 900 euros.

It is reminded that self-employed professionals who do not have a labor contract are taxed from the first euro of their net income declared to the tax authorities, as they do not enjoy the privilege of a tax-free ceiling that salaried workers and pensioners have.

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