Firms using tricks to reduce non-salary costs

Firms using tricks to reduce non-salary costs

Growing non-salary expenses are forcing hundreds of businesses to look for ways to contain their costs without reducing their employees’ incomes, with some resorting to consultancy companies for that purpose.

The most popular choice among Greek employers is Article 39 of the law on social security, which allows a corporate official to be named an “associate” and register with the tax authorities as such. His social security contributions will then drop from a rate of 41 percent for salaried workers to just 26.95 percent, which is then shared between the employer and the employee. Even the tax discount is maintained, given that the official will continue to be seen in tax (not social security) terms as a salaried worker.

Such a switch can either increase the net revenues of the associate up to 8 percent (if the boss decides to maintain the employer’s cost unchanged) or reduce the employer’s social security cost by 10 percent (if the enterprise cuts its expenditure without affecting the executive’s revenues).

Regardless of the tricks employed, high salaries in Greece are becoming a rarity: While in 2012 the number of salaried workers with an annual revenue of 130,000 euros or more came to 615,216, in 2016 this number shrank to just 404,753, according to income tax declarations.

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