7th August 2020
There’s no doubt that contracting in Greece holds a certain appeal. The cultural heritage, warm climate and incredible coastline certainly make it an attractive destination for professionals working overseas. And while the current situation means that a direct relocation might be delayed for a number of expats (for now at least), as international travel restrictions ease, more experts are considering global opportunities once again. However, while most of the world may have ground to a temporary halt during the pandemic, global authorities didn’t, and measures to drive compliance have continued to be pushed ahead. In Greece, there are a number of tax developments that contractors need to be aware of should a move to this destination be on the cards in the near future.
Stringent tax determinations
Indirect audit methods – or IAMs – were introduced in Greece back in 2012 and have evolved since then both across the country’s own tax legislation and a variety of EU and non-EU jurisdictions. For those unaware of how these work, in essence they are varying methods used by revenue bodies to accurately determine the tax liability of a business or individual by collating information and tracking financial data beyond tax returns or other official records.
Designed to single out tax evasion, the assessments used through IAMs are often based on circumstantial evidence rather than specific transaction information and, as the International Monetary Fund explains, can be hugely valuable ways of identifying non-compliance:
“Auditors in many administrations only check that a taxpayer’s declaration reflects the figures in their books of account. However, if tax administrations rely solely upon taxpayer declarations, business records, and books of account to determine liability, taxpayers could limit their liability by creating records that do not truly reflect their financial position, or by merely opting not to maintain books and records and not filing tax declarations, avoid a tax assessment. Therefore, indirect methods have been developed to assist auditors in objectively determining tax liabilities when the books and records are either unavailable or do not adequately reflect the taxpayer’s financial affairs. Indirect methods of income measurement can also be valuable in risk assessment and testing the veracity of taxpayer claims.”
IAMs and contractor compliance in Greece
For contractors operating in Greece, the use of IAMs by the local tax authority makes it crucial that you have all of your documentation in order as you could face action should it be deemed that your tax determination and reports aren’t up to standard. As outlined in this article in International Tax Review, “any adjustment of the gross revenue of the audited person for income tax purposes is taken into consideration for the assessment of other taxes, duties, and contributions, based on the applicable legislation.”
Of course, as with any global compliance rules, implementing IAMs isn’t a simple process and there are a number of caveats that authorities have to follow. But as a rule of thumb, they can be applied for income tax auditing when:
- Accounting books aren’t maintained
- Tax records aren’t drafted in line with the Tax Procedures Code
- The tax payer does not submit accounting or tax records on request
One of many tax measures
Clearly Greek authorities are taking matters very seriously in order to clampdown on non-compliant behaviours, but the use of IAMs is just one of many steps that are being taken. In July, reports revealed that Greece and Australia would be co-operating to close existing tax loopholes that have previously been utilised to reduce payments made to both jurisdictions.
The two countries have recently been working with the OECD to advance their reporting protocols to automatically exchange information across borders to tackle tax evasion and avoidance. At the moment, Greek nationals are taxed on their worldwide income, so if they are working in Australia, for example, they should declare their overseas income back home. In order to drive this, the two jurisdictions have agreed to share financial information of individuals working in each destination, effectively allowing Australian authorities to share with Greece the international earnings of Greek nationals, making it much easier to identify falsified reports. Perhaps more importantly for contractors, individuals will have no idea that their information is being shared across jurisdictions, so you will be completely unaware if you’re under investigation until it’s too late.
Contractor tax compliance in Greece
Working in a foreign country can lead to any number of unforeseen problems, not least where compliance is concerned. Without expert help, it can be all too easy to make mistakes regarding tax, social security and immigration laws when contracting overseas – whether that’s in Greece or beyond.
The examples above are just a few of the most recent steps being taken by Greek authorities to clampdown on non-compliance, and these certainly won’t be the last developments announced. As governments worldwide seek to claw back much needed funds as the Covid-19 pandemic continues to impact local economies, it is highly likely that we will see more steps being taken to drive compliance. And with an increasing number of contract professionals being granted the opportunity to work remotely from their home country for a project overseas, the complexity of international tax compliance will only intensify.
That’s why it is crucial that contractors seek expert advice for their individual circumstances. Here at 6CATS International, we have a wealth of global tax experience. As a result, we know that contractors working around the world will need the expertise to get the right compliant solution. We have both global reach and local knowledge at our disposal to provide you with compliant, effective, contracting solutions wherever you are working.
Our friendly and approachable team are always on hand to offer support and advice. With some of the most experienced professionals in the sector, we have a wealth of knowledge to draw on and can advise on most countries around the world. So why not contact us today?
And if you want to join in with our discussions online and stay informed of some of the latest global tax compliance developments, connect with us on social media: