ECONOMY

Tax rates reworked for bailout

tax-rates-reworked-for-bailout

The new tax bill that forms part of Greece’s third bailout is due to be announced by the Ministry of Finance in October. The new measures, which Deputy Finance Minister Tryfon Alexiadis is charged with introducing, anticipate among others higher tax rates for income from property rental as well as an increase in farmers’ tax rates. Until now, farmers have enjoyed a particularly privileged tax status compared to other professions, in several cases avoiding tax altogether due to existing exemptions.

For farmers, the income tax rate will increase steadily from 13 percent to 20 percent in 2016 and 26 percent in 2017. Tax contributions by farmers have been comparatively low, particularly in the last few years. For example, a trader with an annual income of 10,000 euros paid the state 4,030 euros annually in income tax. For the same amount earned, a farmer would pay 1,657.50 euros in tax annually.

Other tax increases applying to farmers include the special consumption tax for transport fuel. From October 1, this rate will rise from its current 0.066 euros per liter to 0.200 euros/liter. By October 1, 2016, the rate will be 0.33 euros/liter.

From October 1, the annual tax on property rental income under 12,000 euros will increase from 11 percent to 15 percent. For incomes over 12,000 euros per annum, the tax will rise from 33 to 35 percent. That means a landlord with a current annual rental income of 12,000 euros paying 1,320 euros in tax to the state annually will pay 1,800 euros under the new rates. The tax paid on an annual rental income of 20,000 euros will go from 3,960 to 4,600 euros annually.

Other measures include the streamlining of the heating oil allowance. The aim is to reduce the cost of this allowance by half in the 2016 budget.

The tax scale for inheritance and parental benefits is also up for redesign, as well as the re-examination of the provisions which govern them.

The ENFIA property tax will be increased in order to compensate for tax shortfalls due to reduced property values.

Current legal obstacles will also be lifted to allow tax authorities to access taxpayers’ business premises, including homes declared as commercial property.