With additional positive arrangements yesterday (25.11.2024) it was submitted to the House called Measures to boost income, tax incentives for innovation and business transformations and other provisions. Among the measures in the tax bill are the abolition of the ENFIA in listed real estate worth up to 400,000 euros, the zero VAT on new buildings, but also the increases in the salaries of the students of the armed forces, according to the Ministry of Finance’s announcement. The main additional provisions concern: Extension of VAT suspension for new buildings until 31.12.2025. Permanent exemption from the EFFIA of listed buildings worth up to 400,000 euros. Increase the salaries of Armed Forces Schools students in order to equalise themselves to the corresponding salaries of Security Corps Schools students. Exemption of legally liable persons or natural persons engaged in business activities from the payment of the corresponding income tax for those debts partially or completely deleted in the context of the extrajudicial conciliation. This is a re-establishment of a relevant provision in force until the end of 2020 and aims to contribute to their return to a healthy business course. It concerns income tax due from 1.1.2024 onwards. It is possible for jointly responsible persons (e.g. members of a legal person with debts) to serve a lost liability arrangement of the legal person to whom they participate. Natural persons are thus allowed to repay the debt under the same conditions as the legal person would repay, through a revival of the arrangement. In addition to the above, the tax bill includes 12 tax reductions and measures to boost the income of citizens as well as provisions to modernise tax legislation and the administrative model governing AADE with a view to becoming even more effective. In addition, provisions are included for: the provision of incentives for mergers and acquisitions of enterprises, the strengthening of innovation and strengthening of start-ups, the extension of tax incentives for scientific and technological research and the introduction of new spending limits for the development and innovation of businesses and investors, its modernisation, the introduction of tax-free amounts of up to EUR 300 per month for tips and exemption – as a whole – from insurance contributions, the strengthening of the resilience of the Greek economy towards the effects of climate change. 1. Twelve tax reductions in 2025 The draft law includes measures announced by the Prime Minister to the ICU, namely the following interventions: It is recalled that insurance contributions have already been reduced in recent years by 4.4 percentage points by this Government. This additional reduction will benefit both employers (by further reducing non-wage costs) and private and public sector workers by increasing their net earnings. – Abolition of the profit charge for all natural persons (free professionals, self-employed persons as well as employees paid by ‘block’). – Income tax exemption for 3 years for immovable property previously declared empty or allocated for short term lease. In particular, it concerns dwellings: up to 120 sq.m., for which at least three-year lease contracts will be concluded between 8 September 2024 and 31 December 2025, which in tax years 2022, 2023 and 2024 (if the lease is drawn up in 2025) had been declared as vacant properties (form E2) or have not been declared as leased properties either as principal or secondary residences of the lessors, or as privately used or free of charge real estate (types E1 and E2) or had been allocated exclusively for short-term leases and concluded short-term leases have been declared to the Tax Administration. – Exemption from insurance tax (15%) of health contracts for children up to 18 years old. In the case of a family or group contract, the tax shall be reduced proportionately to the number of minor members covered. – Double reduction of the amount of ELF from 2025 (from 10% to 20%) for homes of natural persons, taxable value up to 500,000 euros, insured for natural disasters (fire, earthquake, flood). Insurance is required to cover the previous year with a duration of at least 3 months. If the duration of the insurance of the preceding verses is less than 1 year, the reduction of the ELF shall be adjusted proportionately. – Remove fixed telephone fee (5%) for optical fibre connections (≥00 Mbps). – Tax exemption of voluntary business benefits for young parents. In particular, exceptions are provided for the calculation of wage income: for an allowance of up to EUR 5,000 for each child acquired by the worker and paid within 12 months of delivery, increased by EUR 5,000 for each additional child, for the provision of up to EUR 5,000 per year granted by employers to workers in order to cover costs incurred by infants and children. – Taxing fees for doctors’ on-calls at a rate of 22%. The monthly net benefit for doctors is estimated at 150 euros and in many cases exceeds 200. – Provide incentives for mergers and acquisitions of enterprises related to ‘small’ entrepreneurship, total cost of EUR 40 million (see below). – For 2025 there is also provision, by law already passed, for reductions in stamp taxes in a number of transactions (interests on corporate loans, building permits, use, marriages, insurance contracts, etc.), a total budget cost of EUR 30 million. It is recalled that by law passed by the House recently, the return of the EPC to agricultural oil was permanent, a measure of a total budget cost of EUR 100 million per year. – Extension of VAT suspension for new buildings until 31.12.2025. The aim of the provision is to stimulate the real estate market and attract investment, while the regulation also works for the benefit of real estate buyers, including natural persons who intend the property for private housing use. In addition to the above, the bill provides: Extension until 31 December 2026 of the suspension of tax on capital gains from the transfer of real estate. A 50% reduction in the minimum amount of net income from the exercise of business activity for self-employed persons who have their primary residence in municipal communities with a population of less than 1,500. The annual increase in the limits of each scale of the Pensioner Solidarity Contribution (E.A. P.) in a manner corresponding to an increase in the amount of pensions. Permanent exemption from the ESF for property rights on buildings of up to 400,000 euros. This provision aims to strengthen the owners of preserved buildings which are heavily burdened for their maintenance. 2. Measures to boost the income of citizens Following the Prime Minister’s announcements to ITH, the following are set out: – Extraordinary financial aid to pensioners with a personal difference of over 10 euros. It shall be granted until 31 December 2024 as follows: EUR 200 for a pension up to EUR 700. EUR 150 for a pension from EUR 700,01 up to EUR 1,100. EUR 100 for a pension from EUR 1,100,01 up to EUR 1,600. – Extraordinary financial aid of EUR 200 by 31 December to vulnerable social groups, in particular: the beneficiaries of the disability benefit of e-EFKA, the beneficiaries of the absolute disability allowance for pensioners of the former OGA who receive only the basic pension if they have a life-long disability rate of 100%, the beneficiaries of the disease allowance and the incapacity of pensioners of the State, the beneficiaries of the extra-institutional allowance granted by the e-E.F.C.A., the beneficiaries of the OIEKA’s disability allowance, the uninsured elderly persons, Especially the beneficiaries of the OPEKA child allowance will receive an additional instalment, providing an additional 50% of the monthly allowance to the beneficiaries of the minimum guaranteed income. Overall, EUR 243 million of the above exceptional aid amounts benefit 1.9 million citizens. In addition, it provides: Increase special nighttime compensation by 20% of uniforms from 1 January 2025. Reform from 1 January 2025 of the student pay framework of the Armed Forces Schools. The aim is to strengthen the income of the students of the Armed Forces Schools and to harmonize it with the salaries of the students of the respective Security Corps Schools. In particular it is foreseen that the wage classification of students of Higher Military Educational Institutions (S.A. I.) increased from 10% to 37% of M.C. 25 of the 1st Division and Students’ Schools of Permanent Petty Officers increases from 8% to 16% of the Second Division 17 M.C. Payment of an incentive to achieve budgetary targets to officials of the Greek Statistical Authority based on the achievement of specific quantitative objectives determined on the recommendation of its President. The incentive may be paid to both civil servants and uniform staff. The CDC. shall be calculated on the basis of the basic salary and the liability allowance, shall not be offset by the personal difference and may not exceed, per year, 15% of the sum of the annual basic salary and the liability allowance of each employee and shall be subject to the insurance contributions and other deductions of additional remuneration. 3. Clear and predetermined deadlines for tax returns, discounts to consistent and penalties to state officials in the event of negligence For the first time, a clear and predetermined time frame for the submission of tax declarations is established. In this way, issues with the outstanding issues, tensions and extensions of statements are dealt with in practice, making the most of the proposals of the main stakeholders, namely the Economic Chamber of Greece. Specifically: – The submission of tax returns will take place from 15 March to 15 July of each year, for both natural persons and legal persons. – A discount is provided for those who pay the entire amount of income tax until 31 July and if they submit their tax return, as follows: 4% discount for anyone submitting a declaration from 15 March to 30 April. 3% discount from 1 May to 15 June. 2% discount from 16 June to 15 July. – The tax is paid in 8 equal monthly instalments , the 1st of which is paid by 31 July. – Penalties are imposed on the Agency Commanders, the Public Secretaries and the General Secretaries of the Municipalities as well as on the Paymasters for any delays in sending data to the AADE necessary for the timely completion of tax returns. In particular, it is created by AADE Electronic Register of Obligations to Submit Annual Income Archive for the pre-filling and submission of tax returns. Registration on the Register is mandatory and concerns Public bodies and services which are required to send data to AADE for the purposes of completing tax returns. Through the new electronic register, all the necessary information will be provided to the ADE for the completion and submission of tax returns (e.g. salaries from paid employment, pensions, fees from business activity, taxes withheld, etc.). Each institution should transmit the data from 16 January to the last working day of February. – In the event of non-timely, inaccurate transmission of the above data to the ADE or non-registration on the Register, a fine of 2,500 euros is provided to the responsible persons. These are considered to be the heads of the legal persons of the State (e.g. EPKA, EOPY, etc.), for the State the service secretaries, for the municipalities the general secretaries and horizontally the heads for the clearance of payroll. In case of late transmission, the fine shall be increased by EUR 50 per day of delay. Finally, in the event of delayed activation of the digital platform by AADE, the fine will be imposed on the Governor and Deputy Governor of AADE with responsibility for digital transformation, as well as on the head of the respective organic unit, who have individual responsibility for paying the fine. – In addition, fines are provided for persons other than public sector entities (e.g. banks, listed, servicers, trainers, etc.) who are obliged to transmit or submit annually to the ADE data on cross-checking and pre-filling, where appropriate, the reported income from interest and dividends of companies listed in the Hellenic Central Reserve for Titles as well as expenditure incurred in tax returns of taxpayers as follows: Fine of EUR 20,000 for breach of the late initial transmission/send. A fine of up to EUR 20,000 that may be up to twice the amount for the infringement of the late dispatch of additional and/or corrective elements. If the gross revenue of the debtors exceeds EUR 1 million, then the above fines of EUR 20,000 are up to EUR 50,000. 4. Motivations in enterprises for mergers, acquisitions and scientific research and startup visa The draft law also includes provisions aimed at: the provision of incentives for mergers and acquisitions of enterprises, the strengthening of innovation and strengthening of start-ups, the expansion of tax incentives for scientific and technological research and the introduction of new spending limits that are deductible for business and investor development and innovation. Specifically: – A uniform framework is established for business transformations (mergering, divisions, branch contributions, securities exchange, business conversions), domestic or cross-border (within/outside EU under conditions) replacing relevant laws in force at the same time today and maintaining the relevant tax advantages, while complying with the respective Greek corporate legislation and EU Directives. – With regard to ‘small scale’ entrepreneurship – very small, small and medium-sized enterprises – by Law 4935/2022: The minimum share capital threshold of the new company resulting from cooperation/transformation is reduced to EUR 100,000 from EUR 125,000 currently in force to ensure a 30% tax exemption on profits. The possibility of transferring tax damage to transformed enterprises is established. – Provision is made, from 1 January 2025, to grant a special residence permit for an investment of 250,000 euros in a startup company registered on the National Register of New Generation Enterprises (Elevate Greece), provided that it leads to the creation of at least 2 jobs within the first year and that it retains the same total number of jobs for at least 5 years of the investment. – The incentives for scientific and technological research expenditure are extended. Interventions are introduced that build on the existing incentive of a horizontal overall reduction of 200 % for scientific and technological research costs. In particular, it is provided that the increases in over-deductions can reach between 250 % and 315% in the following cases: Works of collaboration with startups. Cooperation projects with research centres. Small and medium-sized “knowledge-intensive” enterprises, i.e. R&D expenditure > 20% of total. – The incentive for commercial exploitation of patents (patents) is extended. With the new regulation, in addition to the current three-year exemption of the company’s profits from the commercial exploitation of the patent, a 10% reduction in income tax is now foreseen for an additional 7 years after the end of the three-year period. – Tax incentives for business angels (angel investors) investing in new business are strengthened. From 300,000 euros to 900,000 euros the ceiling for deduction from taxable taxpayer income – investor, up to 50% of the capital contributed to startups registered on the National Register of Young People Business and the possibility of investment in ACP States is added. – An exemption from income tax is provided for intra-group dividends received by a legal person who is a tax resident of Greece from a legal person established outside the EU and for income arising from the surplus value of the transfer of instruments of participation to a legal person established outside the EU. – A modern tax regime of the Mutual Business Equity Funds is introduced. The tax regime of the ACP States is rationalised and simplified so that there is an incentive to create investment schemes based entirely on Greece, which are a key source of funding for innovative startups. 5. Changes in the administrative model of ADE to move even faster and efficiently The responsibilities shall be redistributed between the Commander and the Management Board. The Management Board will not be involved in the day-to-day operation of AADE while at the same time gaining more institutional role, taking over the institutional control of the Commander and the Deputy Governors as well as the preparation of annual evaluations of their work. 3 Subcommanders positions are created to assist the Commander’s work by covering specific areas. The 3 posts concern the organization of functions, legal affairs and digital transformation. The possibility of a second renewal of the Commander shall be established. Provision is made for recruitment of certain directors-general and from the private sector in areas such as digital transformation and communications. F) Discharge of tips up to EUR 300/month from tax and in their entirety from insurance contributions It is first introduced tax-free up to EUR 300 per month for tips received by employees (indicative to catering, personal care, etc.) with immediate application from 1 November 2024. At the same time, for the total amount of tips, workers and employers are exempt from insurance contributions (unless otherwise provided for by individual or collective agreements). At the same time, the bill also contains an anti-abuse provision designed to prevent any replacement of the agreed salary with tips in order to avoid taxing part of it. In such a case the employer shall be fined at 22% of the salary reduction, compared to the agreed one, for a year from the time of the reduction. If the salary is returned to the initial level towards the reduction, then the fine is also suspended. 6. Measures to strengthen the resilience of the Greek economy towards the effects of climate change Beyond the increase – from 10% to 20% – of the discount of the ENFIA for those properties secured against natural disasters, the draft law provides for a series of further interventions aimed at strengthening the resilience of the Greek economy towards the effects of climate change. In particular it shall be provided for: Compulsory company insurance with annual gross income from EUR 500,000 or more. Compulsory vehicle insurance for natural disasters based on their current commercial value. A climate crisis resilience charge shall be introduced in tourist accommodation per day use and per room or apartment in the months of April to October as follows: For hotels: 1-2 stars, 2 euros, 3 stars, 5 euros, 4 stars, 10 euros, 5 stars, 15 euros, in furnished rooms – apartments, 2 euros, in properties available through short term rental, 8 euros. If the properties available through short term rental are single houses of more than 80 sq.m., a durability charge of 15 euros is imposed on self-serviced accommodation – tourist furnished villas (vills), 15 euros, self-serviced accommodation – tourist furnished houses, 8 euros, if their surface area is less than 80 sq.m. and 15 euros if it is over 80 sq.m. For the period November – March the durability fee shall be as follows: For hotels: 1-2 stars, 0.5 euros, 3 stars, 1.5 euros, 4 stars, 3 euros, 5 stars, 4 euros, in furnished rooms – apartments, 0.5 euros, properties available through short term rental, 2 euros. If the properties available through short term rental are single houses of more than 80 sq.m., a durability charge of 4 euros is imposed on self-serviced accommodation – tourist furnished villas (vills), 4 euros, self-serviced accommodation – tourist furnished houses, 2 euros, if their surface area is less than 80 sq.m. and 4 euros if it is more than 80 sq.m. Revenue from the imposition of the fee shall be used to cover costs of prevention and rehabilitation of natural disasters, climate change adaptation projects and infrastructure improvement costs to support the country’s tourism product. 4) Enforcement of the public cruise fee. The fee is based on foreign visitors and is imposed on each landing at a port in the country passenger cruise ship and is shaped from 1 to 20 euros, depending on the port and time period. Revenue collected will be allocated to the municipalities on the administrative boundaries of which ports and the Maritime and Island Policy and Tourism Ministries are located, in order to be used to build and improve infrastructure as well as to strengthen tourism. In addition, other provisions promote a number of important initiatives such as: Suspension of new residences in the 1st, 2nd and 3rd Municipal Community of the Municipality of Athens for short term rental for one year. Specifically, from 1 January 2025 to 31 December 2025 registration for properties located in the 1st, 2nd and 3rd Municipal Community of the Municipality of Athens is not allowed. In the event of non-compliance, a fine of 50% of the income obtained from short-term leases from 1 January 2025 until the check is not less than EUR 20,000. In the event of a new infringement within the same tax year, a fine equal to the amount of rent received which is not less than EUR 40,000 shall be imposed. Exemption from Enfia years 2025, 2026 and 2027 for the properties of the Municipality of Soufli, Eastern Macedonia and Thrace. Organizing provisions for the operation of the Anti-Corporate Revenue Authority from Criminal Activities. The quantitative increase in asset statements audited annually, the improvement of quality and the strengthening of the effectiveness of its work require stability and enhanced independence guaranteed by the provision of organic positions and a uniform wage regime, against exclusive staffing through postings. The procedures for granting financing in the form of a loan are promoted to cover housing needs of first residence and energy upgrading of properties through the Recovery Fund (Home Office programme). In more detail, the terms, conditions and procedure for granting loans and interest subsidies to natural persons, criteria and methods of checking eligibility conditions are defined, etc. In addition, the bill also provides for an increase in house repair grant for the project “Renovate – Rent” and its retroactive application. More specifically, there is an increase in the grant of repair and renovation costs on the property included in the programme of up to 13,500 euros from 10,000 euros today that include the required materials and work. The subsidy is now 60% of the expenditure incurred from 40% today. Issues relating to concessions concluded by the TT shall be settled. I.P. D. concerning port functions and services of port and other facilities. In particular, it is provided that in each sub-delegation contract, it should be stipulated that a percentage of the annual financial compensation provided for, which may not exceed 20%, will be paid by the sub-concessionaire to the relevant Port Authority S.A. in exchange for the powers exercised by it in respect of monitoring the proper operation of the port included in the concession agreement. Establishing and enriching the digital platform – geogate “valuemaps.gov.gr – Objectual identification of real estate values on a map”, which is the digital display register of the object identification system of Real Estate Values (APA) to obtain information on starting prices, volatility factors in starting prices, maps, price tables and how to calculate real estate value. The platform presents all data related to these zones and provides a function for calculating the objective value of the properties. Interventions in the context of registration of certified assessors in the Register of Certified Estimators of the Ministry of National Economy and Finance and in procedural matters of the Disciplinary Board. In particular, the applicant’s non-condemnation for false expertise is added as a condition for inclusion in the Register. In addition, the aim is to update and modernise the framework for the functioning of the Disciplinary Council, while issues such as the limitation of disciplinary offences are regulated and all the necessary procedures and procedures are established in the context of the disciplinary procedure. Concession of use of agialou, beach and marine area of the area “Zakynthos Shipwreck” to the Municipality of Zakynthos, after the main rescue work of the wreck is done by the State, without in exchange for its management, protection and exploitation. In this context, the Municipality of Zakynthos also undertakes to carry out maintenance and rehabilitation projects and projects, facilities and infrastructure. An entry ticket is also established for the Municipality of Zakynthos and is an income that is necessarily used for the financing of projects serving the development needs of Zakynthos, and in particular the area “Zakynthos Shipyard”. 15% of the ticket is assigned by the Municipality of Zakynthos to the Ministry of National Economy and Finance and the same percentage is attributed to O. Ph.Y. WP. C.A. In the case of incorrect or delayed registration of data in the Fuel Monitoring Information System Heating and where such registration has been corrected within 15 days of the expiry of the deadline or the performance of a call for an apology, no fine shall be provided for the stations. The abolition of certification by an independent assessor and the provision of a guarantee, guarantee or collateral as a condition for the provision of debt to the Tax Administration. It also applies to the arrangements already granted from 28.10.2023. Finally, the draft law included, following public consultation, the following additional provisions: Provision is made for the granting of a simple use of agialou and beach section to a municipality or municipal company. This provision covers the case of concession to municipalities of the simple use of a part of the sea and a beach to exploit them by themselves. In addition, the alternative possibility of granting simple use of the sea and the beach to special public-owned development companies of the municipalities is provided, including the exploitation of municipal property. Abolition of pensions to find the ceiling on remuneration for employees paid in accordance with the single payroll and uniforms. In more detail, amounts of principal and supplementary pensions paid by e-EFKA shall not be taken into account for the calculation of the remuneration ceiling. It is noted that the regulation has a retroactive nature as of 1 January 2024 and regulates the question of the retroactive search for additional amounts of salary paid due to the absence of a reduction by their employment agency in excess of the ceilings paid for their regular monthly remuneration. Tax treatment of the benefit acquired by legal persons, legal entities and natural persons engaged in business activities from the deletion of part or all of their debt. This regulation restores an exemption which applies to debt write-offs and relates to income tax due from 1.1.2024 onwards. The aim is to strengthen legal or natural persons engaged in business and found themselves in a difficult position due to their loan obligations, which they were unable to serve and which became delayed, contested, regulated or subject to the extrajudicial mechanism. Therefore, since it has been possible to remove some or all of their debt to a credit institution or other similar body under an extrajudicial conciliation agreement, exemption from income tax in the tax year actually taking place is expected to help restore them to a healthy business course and make future profits. Allows persons jointly responsible to serve a lost debt arrangement. The regulation provides for the provision of the above persons of the possibility to repay the regulated debt under the same conditions as the legal person would pay, through a revival of the arrangement. A supplementary budget of EUR 2024 is also being submitted under the bill for the financing of important infrastructure and projects under way. In particular, the public investment budget shall be increased by EUR 100 million in relation to the national budget to cover expenditure due to the rapid rate of implementation of the projects under the National Development Programme (NDP), in particular at regional level and by EUR 300 million in relation to the co-financed part for the repayment of projects for the previous NRF 2014 – 2020 programming period. Minister of National Economy and Finance Kostis Hatzidakis said: “With this bill we prove, once again, that what we say is what we do. Following the Prime Minister’s announcements to the ICU and our commitment that an important part of the revenue from the fight against tax evasion will be returned to the citizens through strengthening the social state and reducing taxes, we are moving on to a series of important reforms. A further 12 taxes are being reduced – in addition to the 60 taxes already reduced or abolished – measures to strengthen the income of citizens and especially vulnerable persons are being implemented, incentives are provided to strengthen businesses through acquisitions and mergers, the innovation of startups is strengthened and our tax legislation is further updated by changing to the system of reporting tax declarations and the administrative model of ADE. At the same time, additional positive provisions are added to the bill such as the permanent discharge from the ENFIA of preserved buildings worth up to 400,000 euros and the emulation of the salaries of the students of the Armed Forces Schools with the equivalent of the students of the Security Corps Schools. All of this, while proceeding to direct financing of infrastructure projects by submitting a supplementary budget of EUR 400 million for 2024. Without jeopardising the country’s budgetary stability, we continue with the same dynamic and perseverance the important reforms aimed at strengthening citizens’ incomes and improving their everyday lives.” State Secretary for National Economy and Finance Christos Dimas said: “12 new tax reductions and 12 wage increases are included in the tax bill. We are constantly continuing our policy of tax deescalation and promoting reforms aimed at further strengthening the income of citizens, households and professionals. The bill includes, among other things, tax incentives to strengthen companies investing in research and innovation, start-ups and interventions that facilitate transactions between citizens, free professionals and businesses with the State. We also promote tools that modernize tax administration and make the State more effective in curbing tax evasion, thereby increasing the state’s revenue significantly. I would remind you that more than 60 taxes have been abolished or reduced since 2019. The fact that our economy is developing at a steady pace, achieving a fairly high performance of the European average, allows us to implement a policy with rational tax cuts and this is the path we will follow in the coming years. Our goal is to continue with reforms more rapidly so that Greece becomes even more investment-friendly, more digital, with more and more quality jobs, less unemployment and lower taxes.”
New tax: The zero VAT on new buildings is extended until the end of 2025, without the remaining properties up to 400,000 euros
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