All tax breaks under review
Gov’t to sift through over 1,000 taxation exemptions, some of which encourage evasion
The government will review all tax exemptions, including the discounts enjoyed by the 676,000 self-employed. In addition to tax exemptions for self-employed professionals and businesses, the various expenses that reduce the taxes of a number of professional groups, or completely exempt them from tax obligations, will also be looked at.
The ultimate goal of the National Economy and Finance Ministry is the electronic recording of all tax exemptions, so that their cost to the budget can be checked and also exactly how many taxpayers they concern. According to government officials, scattered tax expenditures will be reviewed and in some cases “permanent” exemptions will be created, which will mainly strengthen weaker social groups and investments.
For example, in the context of stimulating business activity, the 9% import rate is reduced by 50% for businesses’ first three years of operation as long as their income does not exceed 10,000 euros. Another example: The fee for practicing a profession does not come into force until the individual has been practicing for five years, during which time their advance tax payment is also reduced by 50%. Although these measures support those who start a business, they also create the conditions for declaring low incomes that do not exceed €10,000, to keep enjoying their favorable tax status.
Research shows that calculating the cost of tax expenditure related to, for example, inheritance tax or the taxation of gambling winnings is impossible, since these taxes and the related process are not computer-supported.
The volume of tax expenditure submitted last November to Parliament showed the amount of tax exemptions amounts to 26.7% of tax revenues and reached €12.88 billion, up from €8.9 billion in 2021. The cost may be higher, as in some cases the losses cannot be measured.
Data analysis produces some impressive findings: Personal income tax receipts last year amounted to €10.3 billion, while the exemptions from this category exceeded €5 billion. Today tax exemptions number 1,047, while in 2021 they amounted to 967.
