Budget 2025: Tax and contribution relief, wage and pension increases – All income measures in the draft tabled in Parliament

The central axis of draft 2025, which was tabled today (7.10.2024) in the House, is the strengthening of disposable income for workers and pensioners, with a package of measures extending from reductions in taxes and insurance contributions to wage and pension increases. The total income measures, among other things, are included in the preliminary draft budget which is expected to be discussed in the relevant Parliamentary committee, before concluding the final text in the following month. They include ongoing actions of 2024 as well as new ones which will start to apply from next year. These measures were announced by the Prime Minister at ITH, specialized by the leadership of the Ministry of Finance and included in the Medium-term Financial Plan 2025-2028 which the financial staff submitted to the Commission along with the draft budget. In particular, as stated in the text, the main permanent budgetary interventions implemented in 2024 and the new ones, to be implemented from 2025, are the following: reduction from 01.01.2025, by one percentage point, of insurance contributions. In particular, this reduction is analysed at a reduction of 0.5% in workers’ contributions and 0.5% in occupational health contributions, with the annual net cost for 2025 of EUR 440 million. It is noted that with this reduction in insurance contributions their cumulative reduction from 2019 amounts to 5.4 percentage points (from 40.56% to 35.16%), abolition from 01.01.2025 of the profit charge to freelancers, following a 50% reduction in 2024, at a cost of EUR 113 million for 2024 and 238 million for 2025, extension of the return of the LIC to agricultural oil for 2024 and permanentisation from 2025, with a new system based on actual consumption, at a cost of EUR 82 million for 2024 and EUR 100 million for 2025, an increase in pensions based on the rate of change in inflation and GDP, a cost of EUR 424 million for 2024 and an additional 401 million for 2025, restructuring of the public sector payroll from 01.01.2024, with the increase in salaries of all civil servants, with special emphasis on low-paid employees, with a cost of EUR 424 million for 2024 million for 2024 million for 2025 and additional EUR 401 million for 2025, with the public sector officials and responsibility. The total annual gross cost (including employer contributions) is EUR 1,067 million. In addition, a new increase in the basic salaries of all civil servants will take place as from April 2025, so that the contribution to the State does not fall below the level of the private sector’s minimum wage. The gross cost of the new intervention for 2025 is initially estimated at around EUR 143 million. However, it is noted that the final cost depends on the final increase in the minimum wage, strengthening the income of the physicians of the NSI by increasing their compensation for on-call calls by 20% of 01.01.2024 at a cost of 45 million euros and by introducing an increased incentive to attract and stay in troubled and barren areas from September 2024 to 2025. In addition, from 01.01.2025 the autonomous taxation of compensation for the services of the doctors of the NSO is introduced at a rate of 22%, at a cost of 40 million euros, an increase from 2024 of the special compensation for Navy ship crews on mission and for personnel of the Armed Forces carrying out special missions, at a cost of 15 million euros and an increase of 1.1.2025 of compensation for the night employment of uniform staff (Greek Police – ELAS, Fire Corps – MS, Port Corps – Greek Coast Guard – LS-ELAKT, Armed Forces), at a cost of 25 million euros. In addition, aid of EUR 243 million will be granted in December 2024 to around 1.9 million beneficiaries, including: pensioners with a personal difference, who will receive aid ranging from EUR 100 to EUR 200, depending on the amount of their pension and for pensions up to EUR 1,600, beneficiaries of an OPEKA child allowance, who will receive an additional monthly installment, beneficiaries of an AME allowance A OPECA and e-EFCA disability benefits, which will be supported by EUR 200, uninsured seniors, who will receive an aid of EUR 200 and beneficiaries of a minimum guaranteed income for which an increased monthly payment is foreseen by 50%. In addition to the financial interventions mentioned above, there are institutional interventions, such as the further increase in the minimum wage from April 2025, more than 6.4% (from EUR 780 to EUR 830) in April 2024. It is noted that the total increase in the minimum wage from 2021 to 2024 was 27.7% (from EUR 650 to EUR 830). In addition, since January 2024, three-years have been frozen, releasing the wage evolution of private sector employees, while the abolition of a 30% reduction in pensions for employed pensioners contributes to their significant reinforcement. At the same time, the reform of social benefits is under way, both through increases in their amount and through targeting the relevant eligibility criteria, taking care of those who really need it in this way. Also, as noted in the draft, the government is moving on to a number of important interventions to strengthen investment, growth and innovation with a view to creating well-paid jobs. In addition to the significant resources available through the increased RDF and the RDF, significant incentives are introduced for innovation, mergers and acquisitions, through interventions, of an estimated total budget cost of EUR 41 million per year, as follows: new cases of increased rates of deduction from gross income of enterprises, currently 200 %, are introduced for scientific and technological research costs, which are up to 315% for investments in small and medium-sized knowledge-intensive enterprises, tax incentives for the commercial exploitation of patents (patented), with more years of tax-free profits, tax incentives for investors (angel investors) are being extended, with an increase in the limit to EUR 900,000 on capital brought into newly created enterprises, reduced to EUR 100,000 the minimum share capital limit of the new company resulting from cooperation/transformation, to ensure a 30% tax exemption on profits and the possibility of transferring tax losses to new companies. In addition, the outdated form of the stamp (since 1931) is abolished and a digital transaction fee is established for a certain number of transactions with a view to simplifying them, reducing bureaucracy and developing the measure for hundreds of transactions. The main transactions in respect of which the fee is abolished relate to contractual interest on business loans, insurance transactions, loans, bank credit for importers, establishment and increase of capital for non-profit legal persons, various licenses for professional or business start-ups, use of industrial facilities, tourist office licenses and a number of other transactions. The financial cost is estimated at EUR 32 million per year. Further, and in order to turn the investment interest from investment in real estate to productive investments, it will be granted from 1.1.2025 residence permit in the form of Golden Visa for an investment amount of 250,000 euros in a startup business, a member of the National Register of Young Enterprises. In order to develop the digitisation of the Greek economy and high-speed broadband via fiber optics, the fixed-line fee of 5% for optical fibre connections, 100 bbps or more is abolished. The financial cost is estimated at EUR 24 million per year. In addition, in order to strengthen the ports, infrastructure of the respective municipalities receiving a high number of tourists and the country’s tourist product in general, a cruise fee per cruise passenger is imposed. The annual benefit is estimated at EUR 52 million. Revenue will be allocated by 1/3 to the municipalities where passengers are landed, by 1/3 will be entered in the budget of the Ministry of Shipping and Island Policy for the purpose of carrying out the necessary port projects and by 1/3 will be entered in the budget of the Ministry of Tourism to support the country’s tourism product. In addition, according to Law 5131/2024 (A’ 128) on the restructuring of the Greek Company of Shares and Property SA (SYPYP SA), 50% of the revenue collected from port and port infrastructure exploitation contracts will be available for the implementation of upgrading projects in the country’s ports, resulting in further upgrading of the tourist product and the everyday life of citizens. Finally, the creation of the new National Investment Fund (Growthfund) as a new investment tool, with initial funds of around EUR 300 million, aims to strengthen high added value investments for the Greek economy.