Freelancers who are one step away from submitting their tax return and wish to challenge their tax presumptions can do so in two ways: either by filling out the special codes of form E1 and providing the tax office with detailed information about their income and asset status, or by submitting an application citing objective reasons.
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In the first case, taxpayers will go through an “audit sieve” covering a five-year period in depth, while in the second case they must prove that their professional activity was reduced either for a specific period or for the entire previous year. In any case, actions to challenge the minimum income are carried out after the issuance of the clearance certificate with the presumed tax and, for those who are vindicated, the AADE recalculates the debt by sending a new clearance note.
Specifically, the steps and supporting documents for canceling tax presumptions by case are as follows:
1. Challenging minimum income with audit request: Taxpayers who wish to challenge the minimum amount of income from their business activity request an audit to prove the accuracy of their declaration for income lower than the presumed amount by filling out codes 443-444 of form E1 during the timely submission of the income tax return. They then enter the AADE electronic platform which is expected to open at the end of April and no later than 60 days from the deadline for submitting the income tax return must complete a questionnaire about their asset status and living conditions of themselves, their spouse and protected family members.
Specifically, in the questionnaire they must declare:
-Bank accounts (personal or business)
-Investments/participations in Greece and abroad
-Bank safe deposit boxes
-Investments in artwork, precious stones, collections
-Cars, motorcycles, pleasure boats, aircraft
-Available cash
-Available cryptocurrencies
-Electricity and water supply service numbers for main, country and secondary residence as well as electricity and water expenses
-Fixed and mobile phone bills
-Debit, credit or prepaid cards
-Car and two-wheeler insurance
-Life, health, pension, death insurance programs etc.
-Home insurance contracts
-Expenses for schools, tutoring, sports activities, nutrition
-Domestic and international travel
Based on the above information, the tax administration will proceed with a thorough audit having the ability to extend it over a five-year period and for other taxes while the professional is obliged to provide any available supporting evidence to verify the correctness and accuracy of what is stated in the questionnaire. At the same time, the tax administration can determine income based on any available evidence or indirect audit methods. The audit can be conducted within 12 months of notification of the order and upon completion, a corrective tax determination act is issued certifying any additional tax amount or writing off or refunding tax that has been certified. However, the “exhaustive” audit process carries serious risk that professionals may be charged with extra tax and fines, which is why only 0.3% of the total chose to follow this method of challenge in previous years.
2. Exemption from presumptions for objective reasons: Professionals who believe they are wronged by the presumptive taxation system due to reduced professional activity submit an application to the head of the service responsible for receiving the income tax return, providing in electronic form the necessary supporting documents to prove their claims. The basic reasons they can invoke are: military service, imprisonment, hospitalization, pregnancy, birth/adoption/foster care, natural disasters, license revocation, prohibition of operation and cases of force majeure (e.g. serious health problem).
