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New Bill on ‘Plastic Money’ Allows Consumers to Build-up Tax-free Allowance

The draft bill tabled in Parliament last week will usher in a new way for tax-payers to “build up” their tax-free allowance as of January 1, 2017, exclusively through the use of debit and credit cards. Only transactions and purchases using “plastic money” will be taken into account in order to accumulate the necessary limits, while the final amount needed will vary according to declared income.

The amounts that must be spent in order to get a tax-free allowance rise going up the income brackets, from 10 percent of total income for those earning up to 10,000 euros a year, to 15 percent for those earning between 10,001 and 30,000, and then 20 percent (up to a maximum of 30,000 euros) for higher income brackets.

This means that an employee earning 10,000 euros a year must spend 1,000 euros using credit and debit cards in order to get the full tax-free allowance and an employee earning 15,000 must spend 1,750 euros. For annual salaries of 20,000 euros, the amount rises to 2,500 euros, for 30,000 euros to 4,000 euros, while for 50,000 euros annual income, transactions of 8,000 euros are needed to get a full tax-free allowance.

If a tax-payer fails to meet the required spending limits using credit and debit cards, the difference will be taxed at a rate of 22 percent. For example, if a tax-payer with an annual declared income of 30,000 euros carries out transactions with credit and debit cards amounting to 3,000 euros in a year — instead of the required 4,000 euros — that tax-payer will be liable to pay 22 percent of the 1,000-euro difference, or an extra 220 euros in tax.

Source: greece.greekreporter.com