A total of 606 million euros in revenue will result from government intervention in the matter of taxation freelancersas can be seen from the specialization of the measures taken on Tuesday afternoon by the government’s economic staff.
The main objectives of the bill are:
- The holistic and multi-level approach to the problem of tax evasion.
- Tax justice.
- The disclosure of taxable material with the final goal of further strengthening expenditure on Education and Health as well as reducing tax rates.
The main axes include the use of new technologies for crossings and more effective controls, limiting the use of cash in transactions, implementing measures for more transparent and effective controls, regulating the short-term rental market and a new, fairer taxation system for freelancers.
Reference point of the new system is the minimum wage.
It is specifically provided that the profits from business activity of the self-employed, together with any income from salaried work, cannot be less than a minimum wage, which is determined in an objective way at a point that reflects the minimum contributed value of the personal work of the self-employed in his business .
Determination of minimum wage
The minimum wage is determined as follows:
- The minimum wage cannot be less than the greater of:
a) the minimum (basic) salary increased by 10% for every 3 years of work as self-employed, after the first 3 years and
b) the highest annual salary (up to 30,000 euros) that the self-employed person pays to his staff
- The minimum wage, as defined above, is increased in 2 ways, cumulatively:
A. with an amount equal to 10% of the annual payroll costs (salary, employer contributions, benefits in kind) of the staff employed by the self-employed in his business, with a maximum of 15,000 euros.
B. with a coefficient when the annual turnover of the self-employed is significantly greater than the average annual turnover of the SSC:
- 35% for those whose annual turnover is greater than 100% of the average of the annual turnover of the largest income tax authority
- 70% for those whose annual turnover is greater than 150% of the average of the annual turnover of the CA with the highest income
- 100% for those whose annual turnover is greater than 200% of the average annual turnover of the KAD of the largest incomes, with a maximum of 50,000 euros.
Field of application
The new system will apply to sole proprietorships, excluding farmers and the self-employed with APY (“blocks”).
Admissions – reductions – exemptions
- For the calculation of the minimum (basic) salary, any three years accumulated by the taxpayer since the first start of his work are taken into account, regardless of the KAD. The minimum (basic) salary increases by 10% for every 3 years of work as self-employed, after the first 3 years, with a maximum limit every three years
- When calculating the minimum wage, any income from salaried work of the self-employed is taken into account.
- The time during which the freelancer had a work stoppage is not taken into account when calculating the minimum wage.
- Freelancers with a start-up business will have the following minimum wage reductions: 100% for the first three years, 67% for the 4thThe time and 33% for the 5thThe time.
- When the self-employed person carries out his activity and has his main residence in villages with a population of up to 500 inhabitants and on islands with less than 3,100 inhabitants, the minimum wage will be reduced by 50%.
- When the freelancer has a disability equal to or greater than 80%, it will be reduced by 50%.
- The minimum wage is a rebuttable presumption that can be challenged by the taxpayer based on facts or evidence (eg, military service, hospitalization, incarceration, etc.).
For those who declare real incomes higher than the minimum wage, a 50% reduction in the pretense fee will be applied immediately from 2024. While those who declare incomes lower than the minimum wage, they will have a 25% reduction in the pretense fee. The application fee will be abolished in two years.
Implementation result – public revenue
In total 735,320 freelancers:
- The 138,000 will have a reduction in the tax burden by 560 euros on average each.
- The 124,000 will have no charge or relief.
- The 473,000 will pay more tax, on average +1,444 euros each.
The State currently collects 1.709 billion from the taxation of the self-employed. euros (1.331 billion from the income tax and 378 million from the business tax). With the implementation of the new system, it is predicted that revenues will increase by 874 million euros, while if the abolition of the pretense fee is taken into account, revenues will increase by 606 million euros.
Application result – social benefits
An overall reduction of 100 million in self-employed allowances is expected. The benefit to the budget will go towards increasing these allowances.
Examples of application of the new taxation system
- Newly self-employed with 3,000 declared income. He had a tax of 270 euros and will continue to have the same tax without change
- Self-employed with declared 50,000 euros, will have a gradual reduction from the abolition of the pretension fee of 650 euros
- Formerly self-employed with 1,500 euros declared, he had 135 euros in tax and 650 euros in fees. Total 785 euros. With the new system we consider 14,196 as income and it will have an increase in burden by 1,038 euros
- 4. Self-employed with zero declared income and high turnover. Today he only pays an application fee of 650 euros. With the additions of employer costs and high turnover it goes to 25,833 euros of taxable income and has an increase in taxation of 4,083 euros.
- Self-employed with declared 7,000 euros and 200,000 turnover, he had 630 euros in tax and 650 euros in fees. Total 1,280 euros. With the new system we consider 14,196 as income and because it has a large turnover it will be increased by 70% to 24,133 euros of taxable income. In total, it will have an increase in the tax burden of 2,977 euros.