01 Dec How taxpayers can reduce their income tax just before the end of the year
The tax law in Greece has a lot of laws and provisions making the completion of the tax return look like a minefield of taxes and penalties. The time for the tax returns 2022 may still be late but now is the right time, even before the end of the year, for provident taxpayers to see their tax situation and possibly take the actions they need to avoid unpleasant tax surprises. As we have been saying in the Karabelas’ Office for years, no taxpayer should pay what he does not owe, but for this, someone often needs to be provident.
We will see below some “professional” moves that every taxpayer should make to ensure that his/her tax return will not be unfairly high.
The trap that taxpayers often fall into is the amount they will have to raise in payments by bank which means the amount of 30% of their income. All taxpayers who fail to raise the required amount and are not covered by the few exceptions will be required to pay additional tax as a penalty. As a precautionary measure, every taxpayer can find the amount he has already accumulated in card payments either from the digital applications of the banks, or from the detailed lottery ticket statement that exists in the AADE. Probably making specific expenses before the end of the year (i.e. things that will be paid in January anyway) will be a lifesaver for some.
Presumptions of subsistence and maintenance and acquisition of property
One case that creates oversized imputed incomes is the presumption of maintenance of real estate, since the audit in the Tax Office asks to see certificates of power failure in houses declared as vacant. So if you own your inherited home in your hometown that you use for a week at Easter, you risk being taxed as the owner of a costly cottage. In another version people who have been with one or the other way with properties of many square meters in their possession, probably through some inheritance they will need to justify imputed incomes for the total dwelling when in fact they are using a small part of it.
So, in addition to cutting off the electricity supply for properties that are vacant, taxpayers have other ways to stop the evidence of property maintenance. They can always capture the concessions of their properties or parts of their properties. Please note the concession of part of a property because there is a relevant provision that provides that the remaining part of the property cannot be declared as empty.
As far as the cars and boats the legislator provides as a solution their immobilization for unused minibuses and thus avoids the burden on vehicles that are not actually used.
Presumptions of acquisition of property
Usually, to acquire assets such as properties and vehicles, larger funds are required that taxpayers with the through income cannot cover with the incomes of a single year. In such cases it is very important to reflect the monetary donations given by parents to children, grandparents to grandchildren or vice versa, which are conditionally tax-free. A particularly important detail is that the declarations of donations are submitted on time but also within the same tax year that will cover documents.
There are also indirect donations that should also be declared. For example, a grandfather who pays the grandson’s rent himself, while the lease is in his name this deed is an informal donation that can be declared. So it is not enough just to make the donation, even if it has no tax it will have to be declared within the year to have a tax impact.
Discount due to donation to foundations and charitable organizations
The amount of the tax is reduced by twenty percent (20%) on the amounts of donations to entities recognized by the Ministry of Finance if the donations exceed during the tax year the amount of one hundred (100) euros. The total amount of donations cannot exceed five percent (5%) of taxable income. Especially for donations to charitable foundations and registered Civil Society Organizations, the amount of tax is reduced by forty percent (40%) on the donation amounts. It is very important for tax deductions to be recognized that the amounts of donations are deposited in special accounts of banks legally operating in an EU or EEA Member State.
Discount for expenses of property upgrades
For the expenses paid by taxpayers for energy, functional and aesthetic upgrade of their buildings, they are entitled to a partial tax deduction of a total of 40% and specifically 10% for 4 years. For the calculation of the deduction, only the costs for the work are considered, and not the costs for the procurement of materials. A prerequisite for the tax credit to apply is that the legal documents are issued, and their payment is made by bank means.
Tip for experienced investors
Taxpayers with investments in securities, bonds, shares, derivatives, entrepreneurs with participations in businesses, bond loans and generally taxpayers with a complex financial footprint should contact specialized tax advisors to fill in their tax return to reflect correctly the movements of capital.
This article was published on insider.gr.