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New Government Overhauls Greek Tax System

tax-office-620x300The new Greek government is preparing an overhaul of the tax system, starting with a Large Property Tax (LPT) that will include real estate, bank deposits, luxury goods, works of art, with a tax-free threshold of 300,000 euros, and the abolition of the Single Property Tax (ENFIA).
The new tax system aims at increasing state revenues while being more fair and simple, and at the same time serve as an answer to criticism from European partners that the rich don’t pay taxes in Greece.
The plan foresees an increase in the income tax-free threshold to 16,000 euros per year for households with two underage children and 19,000 for families with three children. For single taxpayers, the threshold will stand at 12,000 euros and increase depending on the number of children.
A consumption tax is planned for luxury goods, such as expensive vehicles, boats, aircraft, helicopters, swimming pools etc.
A number of tax exemptions will be granted, based on the taxpayer’s income. For example, there will be a tax discount of 20 percent on rent costs for those with an annual income of 15,000 euros or less, but not for those with an income of 80,000 euros.
There will be a revision on tax exemptions, incentives and special tax statuses. There are currently 700 tax exemptions that reduce the annual budget by about 3.6 billion euros. Special consumption taxes will also go back to the drawing board.
For the calculation of the LPT, all assets of the taxpayer will be added. This eliminates the single property tax that now applies to real estate only. It will apply to those with assets of 300,000 euros or more and will be separate from the income tax. For instance, an unemployed person may have inherited a large property or valuable artwork. They will have to pay LPT.
There will be progressive tax brackets for the LPT and the target for annual revenues will amount to at least the European Union average in property taxation takings.
The calculation of real estate value will be done yearly, based on real market values that will be updated annually.
Regarding indirect taxation, there will be a decrease of value added tax on basic foods such as bread, milk, pasta, as well as on services such as renewable energy sources.

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