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Ministry of Finance decided on a lower retirement benefits tax

24 March 2010 / 13:03:41  GRReporter
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Based on the principle “every rule is one to last” the Greek government presented two new adjustments in the tax bill one day before its final submission to parliament. At the end of last week the "final version" of the normative framework of the tax reform was presented. One of the changes affects the taxation of one-time benefits paid in the event of early retirement or dismissal, which proved to be a milestone in the new bill. 

The public was scandalized by the imposition of tax on the long-expected pension benefits, which the socialist government of Georgios Papandreou planned that all amounts paid over €30 thousand should be taxed on a scale of tax. The final changes to retirement benefits include an exempt amount of €50 thousand from the announced €30 thousand last week. From €60 thousand to €100 thousand the state will withhold 10% of the compensation, and from €100 thousand to €150 thousand the tax will be 20%. In the penultimate proposal of the Ministry of Finance the amounts paid to people in retirement over €150 thousand should be taxed with 40% tax. This item was changed to 30% with final changes in the tax reform announced by Deputy Minister of Finance Filipos Sahianidis. 

The new law also provides for repeal of the tax relief introduced by former Finance Minister Yannis Papatanasiou amounting to 40% of the tax due on interest paid, where the taxpayer has purchased a second home on credit up to 200 sq.m. or up to €350 thousand euros. The new law provides for deduction of interest on loans for purchasing a first home in 20% of tax due. This change will apply retrospectively and will apply to all citizens who have drawn a first residential loan after January 2009.

Tags: Greece economy retirement pension
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