The noose is tightening for self-employed professionals who evade taxes – What’s changing

Tax evasion is a common phenomenon among self-employed professionals, as shown by tax return data, with many reporting losses or monthly incomes that do not exceed 300 euros!

The Ministry of National Economy estimates that if these undeclared incomes are uncovered, they could boost the state budget. Government interventions are beginning to show results, with the new audit system focusing on linking cash registers with POS devices and fully recording transactions through myDATA.

The goal is to eliminate discrepancies in declared income and expenses, while new digital applications, such as IRIS and the digital customer database, will help combat tax evasion.

End of undocumented expenses
Excessive expenses without real justification, which have been a common trick to reduce or eliminate profits, will cease to exist starting January 1, 2025. Until then, from October 1, 2024, the allowable discrepancies between declared expenses and those recorded in the myDATA system will be significantly reduced, aiming for their complete elimination.

According to the schedule, from October 1 to December 31, 2024, discrepancies in revenue will be eliminated, while the allowable limit for expenses will be reduced to 5%, from the 10%-20% range effective until the end of September. From January 1, 2025, the discrepancy limits will be fully abolished for both revenues and expenses, based on the data transmitted to the myDATA digital platform.

With the full elimination of these discrepancies, fictitious transactions will be eradicated, as the tax authorities will only recognize expenses recorded in the system for deduction from gross revenue. Additionally, declared revenues cannot be lower than those resulting from the receipts for purchases or services provided.

The elimination of acceptable discrepancies means that professionals will no longer be able to artificially inflate their expenses to reduce their taxable income. However, they will be able to add additional revenue and the corresponding VAT in cases where invoices were issued but not submitted to the Independent Authority for Public Revenue (AADE) due to technical issues or other exceptions, such as low annual turnover.

The new system paves the way for pre-filled VAT returns, as the tax administration will automatically calculate the tax amount due without taxpayer intervention. Locking in VAT returns is expected to contribute to reducing the “VAT gap,” the revenue lost by the state from uncollected Value Added Tax. The VAT gap has already been reduced by €3 billion, thanks to increased electronic transactions and payments.

The revenue and expense data entered into the myDATA platform will automatically be transferred to tax returns, making the process more transparent and efficient. Thus, after VAT, the codes on the E3 form, which determines taxable profits and income tax, will also be locked.

Allowable discrepancy limits
The allowable discrepancy limits for VAT, relative to the data recorded in myDATA, are as follows:

• July 1 to September 30, 2024: 10% for revenue and 20% for expenses.
• October 1 to December 31, 2024: 0% for revenue and 5% for expenses.
• From January 1, 2025: No discrepancies in revenue or expenses compared to the data recorded on the myDATA digital platform.

Digital customer database
AADE is introducing a new electronic process for professionals, implementing a digital customer database, allowing auditors to monitor taxpayer activity in real-time. This measure will be combined with the linking of cash registers with POS devices, digital delivery notes, and electronic invoices, making it nearly impossible to hide revenue.

According to the plan, the digital customer database will apply to:

• Professionals offering vehicle services, such as repair shops, electricians, body shops, tire services, parts sellers, car washes, and vehicle rentals.
• Event-related professionals, such as venues, halls, catering companies, and event organizers.
• Private schools, clinics, doctors, lawyers, diagnostic centers, and similar professions.

These professionals will be required to electronically record their customers’ details on a platform connected to AADE, also reporting the reason for the visit and whether it is for new or ongoing services.

IRIS
The informal deadline set by the Ministry of National Economy and Finance for self-employed professionals to register with the IRIS system expires on Monday, September 30, allowing them to receive payments from their clients. From Tuesday, October 1, the tax audit mechanism will begin cross-checks, and professionals or self-employed individuals who do not have IRIS will face a fine of €1,500.

This service has already registered more than 530,000 self-employed professionals and sole proprietors. Data shows a significant increase in the use of IRIS in 2024, with 1 in 2 citizens—over 3 million—who have activated web banking, now linking their accounts to this instant payment system.

So far, transactions via IRIS in 2024 have reached 34 million, with a total value of €3.7 billion, showing impressive growth rates of 150% and 116% compared to the same period last year.

Inspections
AADE has launched extensive inspections to determine whether businesses and professionals comply with the new transaction rules. The inspections focus on linking cash registers with POS devices, using new types of cash registers in the catering sector, and implementing the IRIS instant payment system.

The linking of cash registers with POS devices is a key element of these inspections, utilizing data from AADE’s e-send system to ensure that businesses submit the necessary receipts and sales details for card payments.

Taxi drivers, despite fierce reactions from the sector, are also under scrutiny. They are required to place a sticker on the rear right window of their vehicle, stating in both Greek and English that:

• The driver is obliged to issue a receipt at the end of the journey and accept card payments.
• The customer is not required to pay in cash.

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