All rights reserved. It has to do with the economy's structure, the high number of self-employed workers, the small average size of companies. mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; if (typeof(window._mpspixZ) != 'string') { Eager to show a tougher face to a disgusted public, the Greek government is on a crusade. Legal uncertaintyfor taxpayers and employees of the tax administration, The lack of political will to address theproblem, Structural distortions of the Greek economy. The shadow economy is the sum of undeclared economic transactions in an economy. 98% of Greek Pool Owners Lie on Their Taxes Blame The Speculators? return false; When a journalist, Kostas Vaxevanis, published the list last year, he was charged with infringement of privacy but was acquitted and is now being retried. And, of course, among all this complexity, there existopportunities and incentives for corruption. var foresee_enabled = 1 ", "Tsipras' comments last night that a deal was close were encouraging, but we've been here before so probably better to not set the bar too high," he said, adding, "the divide between Greece and the creditors still remains quite wide.". Fitzpatrick retained a leading role in the partnerships that owned the ship. let cEnd = document.cookie.indexOf(';', cStart); Taxing yacht owners, for instance, only encouraged them to moor their boats elsewhere, emptying Greek marinas. We want to hear from you. Friedrich Schneider, the chairman of the economics department at Johannes Kepler University of Linz, studies Europes shadow economies; he said that Greeces was at 25 percent last year and estimated that it would rise to 25.2 percent in 2010. Greece has entered into DTTs with the following countries, providing beneficial income tax provisions compared to internal income tax legislation: Albania, Armenia, Austria, Azerbaijan, Belgium, Bosnia-Herzegovina, Bulgaria, Canada, China, Croatia, Cyprus, the Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Hungary, mps._ext = mps._ext || {}; TL;DR:Tired of trying to figure out READ THE REST. According to research by the Ministry of Labour, 27% of those working undeclared had asked theiremployers to allow it. There are many people with a house, with a cottage in the country, with two cars and maybe a small boat who claim they are earning 12,000 euros a year, Mr. Plaskovitis said, which is about $15,900. At the end of 2012, 56 billion, or about $77.3 billion. The tax is calculated as a percentage on the rents received. license. About 30 billion euros is believed to be drifting through the country, off . Economist Evangelos V. Vasilakos, a former general director for armaments at the Greek Defense Ministry believes that defense contractors should not be part of the largely unaccountable offshore economy. The islands host about 500,000 active companies, about 40 percent of all the worlds offshore firms. The first 12.000 is taxed at 15%, which means that if you earn 12.000 from rent, the tax you will pay is 1800. But drama over management of the Christina O ensued, and they ended up in the London Court of International Arbitration. if (result && result.geo && result.geo.country_code) { Froso Stavraki, who has been a tax collector for 27 years and is now a high-ranking official in the union, readily concedes that there is some corruption in the ranks. Tax Evasion in Greece - The Full Study (PDF, in Greek). Who will be eaten first? Date.now() : (function() { return +new Date })(); They made Christina GP one of the partners. A press representative from the Greek prime minister's office told CNBC that the document was "likely" to be official, but was unable to say so for sure. But still, that feeling is out there.. Pushing, shoving and angry words followed, and eventually the frightened inspectors were forced to flee. The tax administration is planning to uncover undeclared swimming pools across Greece with the use of aerial photographs taken by Google Maps and the electronic cross-checking of the findings with the data from the land register and the E9 tax form. Efforts to overhaul the tax system, many accountants say, have created such a confusing jumble of laws that it will take months, if not years, to understand them. Swimming Pools, Pool Swimming Pool Cleaners, Intex . For any amount between 12.001 euro and 35.000 euro, the tax applied is 35%. If they go to the mechanic, it is one price without a receipt and quite a bit more with it, Mr. Bakouris said. "host" : 'mps.cnbc.com', } There areseveral other tricks companies use to avoid paying VAT and fraudulently reducing declared profits. "We exchanged views and, at the end of the day, the realistic proposals on the table are those of the Greek government. As a subscriber, you have 10 gift articles to give each month. console.log('PUB-GDPR-CHECK all blocked. Of course, high tax rates have other serious consequences, beyond their reduced efficiency. Growth is the only way to achieve fiscal consolidation. "You need more than that to pay your rent in that neighborhood," he said. There is a threshold, predicted by the so-called "Laffer curve" (named afterthe economist who drew it on a napkin in orderexplain the phenomenon to Donald Rumsfeld and Dick Cheney, members of the administration of US President Gerald Ford in 1974) above which tax revenues decline. Data is a real-time snapshot *Data is delayed at least 15 minutes. Following Wednesday's meeting, Juncker said the "intense work" would continuea sentiment echoed by Luxembourg's Finance Minister. fetch('https://geo.cnbc.com/info/').then(res => res.json()).then(result => { A permit from the government however costs upwards of . if (document.cookie.length > 0) { In the coming weeks, he said, we are going to be closing down companies, restaurants and doctors offices because they have not paid taxes.. Auditors insist on a full audit, he said, when settling for the basics and moving on would no doubt yield better results. 'cag[attribution_source]' : 'Reuters' , //begin OneTrust Redirect CNBC_Comscore = 'Markets'; But it remained unclear how aggressive the investigation was. Taxmen Have Little Clue of Offshore Companies Owned by Greeks For properties with swimming pools, another tax-related amount occurs. Seller collects sales tax for items shipped to the following states: State . Rather than instilling a sense of fairness, the more aggressive tax collection program in some ways appears to have aggravated the problem. 'adunits' : 'Default' , What were the tax inspectors doing here? For years, economists have pointed to rampant tax evasion as one of the countrys most serious problems, depriving the government of money it badly needs. As part of efforts to plug fiscal gaps, including a shortfall of more than 1 billion euros at state-run health insurer EOPYY, the bill sets annual spending limits on outlays to diagnostic clinics and healthcare facilities. According to the relevant academicliterature, there are three parameters that determine the level of tax evasion in an economy: Whether or not a citizen or a business will evade taxes is a decision that is essentially affected by these three factors. Personal Income Tax Rates in Greece. Personal income tax rates in Greece are progressive up to 45%. . In Greece in 2011 the last year for which analytical official data from the GSPW are available 5.7 million tax returns were filed, a number that has remained more or less constant for the pastten years. Thisphenomenonhas a relatively smallimpact ontax revenues in most developed countries for one simple reason: The number of very small businesses in those economies is lower, and the self-employed representa smaller percentage of the workforce. They discovered a total of 16,974 swimming pools. On Thursday Tsipras announced that he would not be in Brussels on Friday, as previously planned, to continue negotiations, an EU official said. A lot of Greeks, he said, listed luxury cars as company cars, a practice that would be challenged in the future. )+[a-zA-Z]{2,}))/; The extensive use of plastic' money and the extension of electronic transactions have been tested in many countries (from South Korea and Argentina to the Netherlands and Sweden). You can find the tax rates in Greece as of 2020 in the tables below: Capital Gains Tax For individuals, if the capital gain is from a sold real estate property, the tax will be at a flat rate of 15 percent. var CNBC_Premium = CNBC_Premium || {}; var setAdblockerCookie = function(adblocker) { CONTENT_SELECTION_AND_MEASUREMENT: 7, The legendary Supreme Court JusticeOliver Wendell Holmes famously said that taxes "are the price we pay for a civilized society". var dynamic_yield_enabled = 1 SOCIAL_MEDIA: 8 })(); Greece Bailout To Tax Its Ability To . In this study, wecooperated with Ernst &Young in order to map out the problem of tax evasion in Greece, analyze all available data to reach conclusions about the problems scale and nature, and arrive ata series of policy recommendations to help curb it. Some of the most aggressive tax evaders, experts say, are the self-employed, a huge pool of people in this country of small businesses. } But what we have got now is not simplified. Both men were named directors of Christina GP in the company documents but they used a nominee firm, Stockcorp, as shareholder. Around 60% of global trade takes place within multinational groups with intra-group transactions, where there is ample room for tax avoidance. The paper quoted a senior finance ministry official as saying too much time had been wasted on investigating past fraud and that the focus should now be on new cases. Yet signs of wealth abound. There was a third and even more secretive company, Belchamps Management Limited, which for several years used bearer shares meaning that the owners of the shares were not officially registered anywhere. More than 30% of income taxes are uncollected. Nearly half of them (49%) featured declaredincomes below 12,000. According to a European Commission study, this limit for countries within the EU is at 54% forindividual income tax and at 72% for income tax on legal entities. The secretary general of state revenues at the Greek Finance Ministry, Charis Theocharis, said that ICIJs findings were of great concern, and that the government will examine the information to see if evidence regarding illegal activities or irregularities arises.. head.insertBefore(mpsload, head.firstChild) ", Last week, a Burger King franchise owner from Texas closed more than two dozen locations around Detroit, Michigan. So tax investigators studied satellite photos of the area a sprawling collection of expensive villas tucked behind tall gates and came back with a decidedly different number: 16,974 pools. Others point out that, classical history aside, Greece is actually a relatively young democracy. At the time the F-16 contract began in 2003, a BVI entity called Bounty Investments Ltd. owned 33 percent of ISI Hellas S.A. As a general rule, as we saw above, the "rich" have been payingmost of the country's taxes until recently. 64% of the self-employed declared income below the tax-free limit of 12,000 (they declared a mean income of just 4,300). const COOKIE_REGEX = /groups=([^&]*)/; This website uses cookies to ensure you get the best experience on our website. Sign up for free newsletters and get more CNBC delivered to your inbox. Other measures in the bill include a luxury tax that will be levied on houses with swimming pools and owners of high performance cars, expected to bring in about 100 million euros annually. If Greece is ever going to get its public finances in order and escape grinding budget austerity, it will have to do a better job collecting taxes. The document proposes hiking taxes on luxury items such as planes, helicopters, gliders and swimming polls to 13 percent from 10 percent. if (cEnd === -1) { You own a property (see below). After they protested in September, the number of auditors was raised to 50. TIL that with only 324 households declaring ownership of a swimming pool on their tax form and fearing tax evasion, Greek authorities turned to satellite imagery for further investigation of Athens' northern suburbs. TL;DR:Still trying to figure out what READ THE REST, We thank our sponsor for making this content possible; it is not written by the editorial staff nor does it necessarily reflect its views. For 2015 it was calculated to make up around 22.4% of Greece's GDP which, in absolute numbers, comes out to about40 billion. People are so angry and so poor, said Nikolis Geniatakis, who has run his restaurant here on the main square for the last 34 years and who watched the confrontation from across the street. According to Tzoni, ship owners in Greece use offshore entities routinely because they facilitate business with foreign partners. if (typeof window === 'undefined') return; Mr. Plaskovitis said that tax collectors had already begun using technology to crosscheck claims and that they had taken steps like asking luxury car dealerships for list of their clients. Just four out of 107 offshore companies investigated by ICIJ are registered with tax authorities as the law usually requires, particularly when the firms hold assets or conduct business in Greece. According to a recent report by the European Union and the International Monetary Fund, Greeks owe about $70 billion in unpaid taxes to the state, about a quarter of the countrys gross domestic product. The buyers of the bonds remained anonymous and are part of the mystery surrounding the transaction. Athenians declared taxes at a local office. function isEEARegionCheck() { Whatever the reason, Kostas Bakouris, the president of the Greek arm of the anticorruption organization Transparency International, said that Greeks were constantly facing the lure of petty corruption. Boing Boing is published under a Creative Commons mps.insertAd("#" + slotid, adunit) Tsipras said a deal was "close" and that the talks were "constructive." } For most cases of owners who have to pay property taxes in Halkidiki, only ENFIA applies, and the amounts are relatively low for the area. It has to do with the economy's structure, the high number of self-employed workers, the smallaverage size of companies. Marina Walker Guevara is the deputy director of ICIJ. Direct taxes bring in around 20 billion, while indirect taxes (VAT, fuel tax, tobacco tax, etc.) An article in Eleftherotypia recently reported that the Lagarde list investigations and other high-profile cases were about to be moved from an elite auditing unit to local tax offices. Financial Police Raids at Popular Tourist Resorts Reveal Rampant Tax That kind of wholesale lying about assets, and other eye-popping cases that are surfacing in the news media here, points to the staggering breadth of tax dodging that has long been a way of life here. The tax-free limit has also been abolishedfor the self-employed, who now have to pay a larger percentage of tax in advance. (function(){ function getOneTrustCookie() { The partnership ended up paying nearly 66 million ($60 million) for the ship. For countries likeGreece, the thresholdof individual income tax is at 39% - very close to the current rate. var postLoadFunctions = {}; Documents obtained by ICIJ reveal that the single shareholder behind the mysterious entity was Apostolos Vakakis, chairman of the retail conglomerate Jumbo SA, one of Greeces largest companies. In Greece in 2011, there were 220,000 businesses that declared less than 1.2 million euros annual profit, and just 901 businesses that declared greater income. of Two of the offshore companies in the ICIJ data were used to buy and refurbish one of the worlds most storied yachts the Christina O, where the Onassis family once entertained John F. Kennedy, Marilyn Monroe and Winston Churchill, among other celebrities and statesmen. Interoperability Systems International Hellas S.A. is one of the companies that since 2003 has participated in a $242 million contract for the production of electronic warfare equipment for Greek F-16 fighter jets. if (!_qs) { Transfer pricing within the EU and the so-called carousel fraud (or "missing trader" fraud), which are analyzed in thestudy, are the most common. The request is expected to be approved by the IMF, the newspaper said. But he insisted that Greece's alternative proposals and ideas were the most viable. var mpscall = { "Our aim is to have the bill voted by parliament by July 19," a finance ministry official told Reuters.