A new bill to reach Parliament this fall will provide taxpayers with incentives to seek receipts from sectors that rank high in the tax evasion chart. This will start applying from next January.
Sources say that dozens of categories of self-employed professionals will enter the Finance Ministry’s list, and that taxpayers who use cards or e-banking to perform transactions will have a generous discount on their income tax.
Ministry officials even say that the discount will cover the amount of the value-added tax, which self-employed professionals often offer to cut from the price in order to avoid issuing a receipt. This way the state will both collect the VAT due and the revenues will become legal, increasing the taxable income of professionals who usually declare takings below 10,000 euros per annum.
The state will effectively give up its VAT requirement from taxpayers through the tax discount and make money from taxing the declared receipts of the self-employed.
For the ministry’s plan, the list being prepared by the secretariat of taxation and fiscal policy includes – among others – the following professional categories: education, entertainment, health services, car repair shops, property repair services, hairdressers, travel services, small food stores, lawyers, gyms, plumbers and all construction-related professionals.
Taxpayers will see the discounts they are to receive from the receipts from the above services after the clearance of their tax declaration.
According to a study by the Foundation for Economic and Industrial Research (IOBE), there are dozens of professional sectors that have shown high rates of tax evasion and avoiding electronic transactions: While services had a 59.7% share in private consumption in 2019, their share in the value of card payments stood at just 31.3%.
The use of cards is particularly low in domains such as education and repairs, while despite recent progress there is still great scope for improvement in food service.