‘Zero profit,’ rain or shine
Thousands of professionals declare losses or no earnings to the tax office year after year
Whether in recession or growth, or with bailouts and pandemics, thousands of professionals and single-owner companies declare zero profits or losses for years: About 36.4% of sole proprietorships and 27.8% of professionals have declared zero profits or losses for at least five years.
According to data from the Independent Authority for Public Revenue and the Finance Ministry, of the 19,131 one-person companies that started before 2019 and have submitted an income tax return for all five tax years (2018 to 2022), 6,970 declare zero profits or losses for each year.
Also, of the 612,413 professionals who started before 2019 and have submitted tax returns for all five tax years (2018 to 2022), 170,338 report zero profits or losses year after year.
From 2018, when the bailouts ended, but also in 2019, which was considered a good year for the market, as well as later, in the years of the pandemic and the energy crisis, they declared losses or zero profits, not for one year but at least five.
The question is how they survive, assuming everything they say is true. The tax office could accept that one year they are financed by their family, the second with a loan, the third by a friend, but five financial years is too much and, as tax officials report, “it doesn’t add up.” Most of these cases constitute blatant tax evasion, the same officials say.
The data available to the tax inspectors will be used to the maximum. The continuous losses presented by some companies and 170,338 professionals are being targeted by the audit mechanism. Sophisticated cross-checks with real data will be involved in inspections of some of the above.
To the question of why not everyone is checked, the answer is that this country only has 1,200 inspectors. Each auditor can only undertake about 20 such audits per year.
What will happen is that the most important cases to emerge from the big data analysis will be inspected, starting from professionals and businesses that declare losses over 100,000 euros for five consecutive years.
