The clause that implicitly calls for tax evasion

Freelance professionals in Greece may declare as low an income as they wish in order to avoid paying taxes, solidarity levies and social security contributions. This year’s tax statements showed that 89 percent of them declared annual takings below 7,000 euros. One might assume that declaring a very low income ought to entail lower pensions, but that is not the case.

The minimum pension system introduced by former social security minister Giorgos Katrougalos last year rewards those who declare very low incomes, including tax dodgers. Furthermore, a regulation passed by Parliament in the summer, which will be amended soon, gives professionals the right to declare one annual income for taxation purposes and another when it comes to pension contributions.

That means a professional with extra revenues – even if he/she declares takings of 5,000 or 6,000 euros per year to the tax authorities – will be able to visit his/her social security fund and voluntarily undertake the obligation to pay higher contributions with the obvious motive of securing a higher pension.

The clause is clearly aimed at bringing cash into the social security funds. A ministerial decision is expected on the matter in the next few weeks.