Greece’s economic team is preparing a package of tax and social security cuts aimed at self-employed professionals and small and medium sized businesses, marking a shift from the government’s approach over the past two years.
The changes are expected to be unveiled at the Thessaloniki International Fair, an annual trade exhibition where the Greek prime minister traditionally announces the government’s economic policy priorities for the coming year. This year’s fair is widely seen as an early campaign platform, with national elections approaching.
For more than two years, the government defended presumptive taxation, a system that assumes a minimum taxable income for self-employed professionals regardless of what they actually report, as its central weapon against tax evasion. The policy proved deeply unpopular, with professional associations, chambers of commerce and small business groups arguing since its introduction that it applied a blanket standard to widely varying circumstances, pushing many professionals into paying tax on income higher than what they actually earned.
The government held firm on the policy despite the criticism. Officials maintained that without a minimum taxable threshold, authorities could not address the large number of professionals who were declaring income far below their actual economic activity. That argument has not changed, nor has the government’s belief that significant tax evasion persists among the self-employed. What has changed is the willingness to address the fallout from the reform.
What is on the table
The measures under discussion would not dismantle the presumptive taxation system but would soften its impact. The most likely scenario includes either freezing the next scheduled increase in presumptive income, which is tied to adjustments in the minimum wage, or cutting it by 10 percent to 20 percent for specific categories of professionals. The finance ministry is also reviewing the added charges tied to years in business, payroll costs and revenue, along with expanding exemptions for new professionals and those operating in areas with weak economic activity.
Also under consideration is the full abolition of the business fee for companies, a flat annual charge that business groups have long criticized because it applies regardless of whether a company turns a profit. The fee was already scrapped for self-employed professionals in an earlier round of reforms.
The government is also weighing a cut to the corporate tax rate on business profits, from 22 percent to 20 percent, along with a further half percentage point reduction in employer social security contributions, intended to lower labor costs and improve business competitiveness.
Perhaps the most consequential change under review is a reduction in advance tax payments, a system requiring businesses and professionals to prepay a portion of their estimated tax bill for the following year before actual income is known. The advance payment rate for self-employed professionals could drop from 55 percent to 40 percent, according to the ministry’s current scenarios, while the rate for small businesses would likely settle between 50 percent and 60 percent depending on their size and revenue. Business groups regard the change as significant because it eases the pressure to prepay tax and improves cash flow.
A shift in political messaging
Over the past two years, the government’s economic priorities centered on improving tax compliance, even when that meant pushing through measures that provoked strong pushback from professional and business groups. With elections approaching, the emphasis is moving toward strengthening the small business sector and easing burdens that industry groups said were holding back growth.
Many of the measures now being considered were among the standing demands of professional organizations as far back as 2024. At the time, the finance ministry’s response was that fixing the tax system and meeting fiscal targets came first. Those same proposals are now returning as central elements of the package expected at the fair.
The final scope of the measures will depend on the government’s assessment of public revenue and available fiscal space in the coming weeks, before the package is finalized. Whether businesses view the shift as the natural evolution of a reform that has run its course, or as a delayed response to complaints raised for two years, is likely to be one of the central political and economic questions surrounding this year’s Thessaloniki International Fair.
Source: OT.gr
