Tax Cuts, Income Increases, and Reduced Imputed Taxation: Greece’s Financial Plans for 2025 and Beyond

These measures, which go beyond the 48 interventions announced by the Prime Minister two weeks ago, include tax relief for households and businesses, and adjustments to existing policies to expand their reach and benefit more people.

The Ministry of National Economy and Finance has indicated that 75% of the government’s pre-election pledges have already been fulfilled just a year and a half after the elections, largely due to the announcements made at the Thessaloniki International Fair (TIF). Now, preparations are already underway for a new wave of measures set to roll out from 2025 onward.

These measures, which go beyond the 48 interventions announced by the Prime Minister two weeks ago, include tax relief for households and businesses, and adjustments to existing policies to expand their reach and benefit more people.

Preparations have already begun, and before the end of 2024, committees and working groups will be formed to evaluate and present recommendations for how these new measures will be implemented.

What’s Coming Next

While specific details are still under development, the new measures on the horizon include: tax reductions, increases in net income, the elimination or rationalization of austerity-era burdens, and changes to vehicle circulation fees.

Here are some specifics:

1. Reduction of imputed taxation by 30% (on average) for 2025 incomes: The Prime Minister did not mention this at TIF, but by the end of the year, a special committee will review data from this year’s tax returns to address how to provide relief to approximately 1.5 million taxpayers who are annually caught in the imputed income trap. The changes will apply to incomes earned from January 1, 2025. This will particularly benefit low-wage earners, retirees, students, and unemployed individuals who face tax burdens due to property or car ownership. Examples:

• A single person with an income of €9,000 and imputed income of €11,000 (due to renting a house, owning a car, and a vacation home) would normally pay €33 in taxes, but because of imputed income, they pay €343. With a 30% reduction in imputed income, their taxable income drops to €7,700, and they would only be taxed on the €9,000, saving €310 in taxes.
• A married couple with an income of €12,000 and imputed income of €15,000 (due to their home, two cars, and a vacation home) would normally pay €563 in taxes, but with the imputed income, they pay €1,463. A 30% reduction lowers the imputed income to €10,500, allowing them to be taxed only on the €12,000, saving €900 in taxes.

1. Reduction or elimination of imputed income for professionals: Although four minor adjustments have been announced for 2025, the Ministry’s economic team is working towards abolishing the imputed income requirement that was introduced this year. This will be facilitated through POS systems and myDATA, which provide real-time, accurate VAT filings and income declarations for professionals. Without inflated or false expenses, the imputed income system will become unnecessary, allowing professionals to be taxed solely on their actual income.
2. Phasing out of the business levy for all by 2027: The 2024 tax year will be the last time 700,000 professionals subject to minimum taxable income will pay the business levy. In 2025, the levy will only apply to companies (€1,000), salaried workers who are paid through invoices with up to three employers (€400-500), and a small number of professionals who successfully contest their imputed income (€650). The government is committed to fully eliminating the business levy for everyone by 2027, likely in two stages: individuals will benefit first in 2026 for 2025 incomes, while legal entities (companies) will be exempt a year later, in 2027 or possibly 2028.