New tax procedures make it harder for independent businesses to evade taxes: Specifically targeted at freelancers and independent business owners

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The new taxation method of presumed income and the linking of cash registers with POS machines have been very effective, Finance & Economy Ministry and Independent Authority for Public Revenue (AADE) officials say.

Specifically targeted at freelancers and independent business owners, quite a few of whom declare income of up to 300 euros per month, the measures will be followed up with newer ones. The latter include obliterating the deviations between reported income and expenses based on declarations on myDATA platform, stepping up inspections ensuring the link of cash registers with POS devices, accepting payment through the IRIS system, and implementing the digital list of clientele.

Expenses without proof

A common tax evasion tactic was declaring excessive expenses without proof, which will stop as of January 1, 2025. As of October 1, 2024 and up to January 1, 2025, acceptable deviations between stated expenses and those filed on myDATA will be reduced radically, with the deviation obliterated fully in the new year.

According to a timeline, deviations in income will end as well as of January 1, 2025. From October 1 to December 31, 2024, the acceptable cap for expenses will drop to 5%, from the 10%-20%, based on filings on myDATA platform.

These measures will put an end to virtual transactions, since the only expenditures the tax service will recognize to reduce gross income are those that have been entered into the system. In addition, declared income may not be lower than what is reflected in receipts for purchases or services rendered.

Clientele list

In terms of businesses, the new system will allow the tax service to prefill the VAT declarations. This system is expected to further reduce state losses, something already seen in the reduction of the “VAT gap” by 3 billion euros, thanks to electronic transactions and payments.

MyDATA information from business owners will be automatically entered in tax declarations.

AADE’s introduction of a new digital process for professionals, the digital clientele list, will be combined with the cash register-POS link and the digital delivery reports and receipts, making it harder to hide income. The digital clientele list will be applied to specific professions, including car services, event planners, private schools, clinics, doctors, and lawyers.

Source: ANA – MPA

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