Supreme Court to Decide on Controversial Flat-Rate Taxation for Freelancers

The Supreme Administrative Court is set to rule today on the new tax regime for freelancers. The court will determine the legality of the flat-rate taxation system and ultimately its constitutionality, affecting approximately 700,000 professionals. This contentious system has sparked strong reactions from professional associations, which describe it as ‘unfair and leveling.’ In response, the tax administration defends the measure as a necessary tool to combat tax evasion, especially in sectors where income concealment is common. Today’s hearing is of particular interest, as the court’s decision could alter the current tax regime. If the regulation is deemed unconstitutional, restructuring the tax framework for freelancers will be inevitable. According to data from the Independent Authority for Public Revenue (AADE), about 50% of freelancers were subject to flat-rate calculations in 2024. Lawyers, brokers, hairdressers, taxi operators, and architects declared gross incomes up to €25,000, while plumbers, electricians, and carpenters reported incomes 20%-30% higher. Pharmacists, tobacco sellers, and fuel retailers topped the earnings list, whereas watchmakers and jewelers ranked lowest with an average annual turnover of €5,050. Despite these figures, relief may come this year for many freelancers due to adjustments in flat rates combined with the complete abolition of the Business Tax. These changes are expected to either limit or entirely eliminate additional burdens caused by the increase in minimum taxable income from €10,920 in 2023 to €11,620 in 2024 due to the minimum wage adjustment. Beneficiaries include those operating in areas with populations under 1,500 residents, whose taxable income decreases by 50%, and those employing workers or earning above-average revenues. Simply through the removal of the Business Tax, the total tax burden will decrease by €325. For those using ‘block’ systems, benefits range from €400 to €500.