Greece is scrapping two contentious surcharges on its "presumptive income" tax system that penalized sole proprietors and self-employed professionals, easing the tax burden on at least 155,000 businesses starting this year, Prime Minister Kyriakos Mitsotakis has announced.
Speaking at his annual news conference closing the Thessaloniki International Fair, Mr. Mitsotakis said the changes were an "adjustment to reality" rather than a giveaway, targeting professionals who comply with their tax and social security obligations rather than those still evading taxes.
Under Greece's presumptive income system, self-employed workers and sole proprietors are taxed on an assumed minimum income — roughly equivalent to the minimum wage — regardless of what they declare, a tool introduced years ago to combat rampant tax evasion.
But add-on surcharges of up to 10% for payroll costs and 5% for turnover above the sector average often pushed the assumed tax base far higher, hitting small restaurants, retailers, technical service providers and taxi drivers particularly hard.
The government is now eliminating both surcharges for compliant taxpayers.
Officials cited a restaurant with five well-paid employees as an example, saying it would save 2,534 euros ($2,730) annually. The reform is expected to cost the state budget about 170 million euros.
Athens argues the surcharges are outdated: Greece's VAT compliance gap has narrowed to 9% from 25% a few years ago, converging toward the European Union average, as digital tools from Greece's tax authority, AADE — including electronic invoicing and point-of-sale integration — make income harder to hide. Officials said greater use of artificial intelligence in tax audits could eventually phase out presumptive income assessments altogether.
By Yiorgos Pappous