Freelancers in Greece will face significant tax reforms in 2025 as part of the government’s broader fiscal policy overhaul. These changes, primarily targeting the self-employed and small businesses, aim to create a more balanced and fair tax system while addressing long-standing issues of tax avoidance. Here’s a breakdown of the key changes and what they mean for freelancers and small business owners.
Abolition of the Business Levy
One of the most significant tax changes for freelancers in 2025 is the abolition of the business levy. This annual tax, which could reach up to €1,000 for individuals and small businesses, has been a longstanding financial burden. From 2025, this levy will no longer apply to freelancers,. However, this abolition will not extend to legal entities and their branches, which will still be subject to this tax.
Adjustments to Imputed Income
Freelancers who are taxed based on imputed income will see three critical changes in 2025. These adjustments aim to correct inefficiencies that have plagued the system since its implementation, particularly for those operating in rural areas or small communities.
- Reduction of Minimum Taxable Income: For freelancers based in areas with fewer than 1,500 inhabitants, the minimum taxable income will be reduced by 50%. Currently, this reduction only applies to those living in areas with fewer than 500 inhabitants. This change will particularly benefit professionals in small villages and rural communities.
- Adjustment of Salary Benchmark: The method of calculating the minimum imputed income for freelancers based on a comparison with the highest-paid employee’s salary will be altered. Previously, this benchmark was used at the beginning of the income calculation process. From 2025, the highest employee salary will only be considered after other criteria, such as turnover, have been factored in, potentially reducing the overall taxable amount.
- Increase in the Average Turnover Threshold: The threshold for calculating additional income based on the average turnover of a business category (ΚΑΔ) will be revised. The average turnover for 2023 will be adjusted upwards, reducing the impact on freelancers with high turnover and preventing excessive increases in their imputed income for 2024.
New Electronic Invoicing Rules
Starting in 2025, freelancers and small businesses will be required to use electronic invoicing exclusively through the myDATA platform. This change will completely eliminate paper invoicing and close loopholes for tax avoidance, which were previously exploited by underreporting income or overreporting expenses.
The new system will ensure that VAT returns and income declarations are automatically populated based on real-time data collected through the myDATA platform. This will mean:
- No more deviations between reported income and expenses and the actual figures logged in the digital system.
- Pre-filled tax declarations for freelancers, reducing the possibility of errors or intentional misreporting.
- Tighter control on allowable expenses, limiting tax-deductible claims only to those supported by verifiable invoices.
This shift towards full digitalization is expected to reduce the administrative burden on freelancers while also helping the government crack down on tax evasion.
Increased Minimum Imputed Income
One of the most controversial aspects of the upcoming tax reforms is the increase in the minimum imputed income. With the expected rise in the minimum wage from €780 to €830, the minimum imputed income for freelancers will increase correspondingly from €10,920 in 2023 to €11,620 in 2024. While this change is intended to reflect rising living costs, it could result in higher tax liabilities for those whose actual income is lower than the imputed threshold.
Conclusion: A Mixed Bag for Freelancers
The 2025 tax reforms for freelancers in Greece are a mix of relief and adjustment. The abolition of the business levy will offer significant financial relief, particularly for those operating in smaller communities who will also benefit from a 50% reduction in the calculation of the imputed income. However, the mandatory use of myDATA and the general increase in minimum imputed income may pose challenges for those unaccustomed to full digitalization or with lower earnings.
Freelancers in Greece should prepare for these changes by becoming familiar with the myDATA system and seeking professional advice to ensure they maximize their tax benefits under the new regime.
Eurofast team stays abreast of recent changes affecting businesses. If this information has triggered your attention and you need more details, please write to our experts in Greece at athens@eurofast.eu.