New Tax Scales – Presumptive Living Expenses – Employment Benefits – Business Activity

1. Introductory Overview of the New Tax Framework

The period 2025–2026 marks the most significant reform in recent years in personal income taxation: a new income tax scale, targeted reductions for young individuals and families, reform of real estate taxation, and extensive amendments to presumptive living expenses and employment benefits.

These changes were enacted under Law 5246/2025, supplemented by circulars, administrative decisions, and subsequent legislative provisions.

2. New Income Tax Scale from 1 January 2026

• 9% for income up to €10,000
• 20% for €10,000.01–20,000
• 26% for €20,000.01–30,000
• 34% for €30,000.01–40,000
• 39% for €40,000.01–60,000
• 44% for income above €60,000

2.1 Special Provisions for Young Individuals and Families

• Individuals up to 25 years old → 0% up to €20,000
• Ages 26–30 → 9% up to €20,000
• Additional bracket reductions for families with dependent children.

Withholding applies from January 2026 payroll.
For freelancers and farmers, implementation occurs upon tax return assessment in 2027.

3. New Rental Income Tax Scale from 1 January 2026

• 0–12,000 € → 15%
• 12,000.01–24,000 € → 25%
• 24,000.01–36,000 € → 35%
• > 36,000 € → 45%

4. Presumptive Living Expenses & New Exemptions (from 2025)

Reduced objective living expenses for primary/secondary residences, passenger cars and leisure boats.

New mothers are exempt from minimum imputed income for the year of childbirth/adoption/foster care and the two following years.

5. Employment Income — Definitions and Benefits

Employment income (Article 12 ITC) includes any benefit in cash or in kind arising from dependent employment or equivalent relationships (Board members, managers, IKE/EPE partners, dependent service contracts).

Benefits in kind (Article 13 ITC) are valued and included in taxable income, including company vehicles, public transport cards, meal vouchers, accommodation/travel expenses, electric vehicle charging.

Amendments under Law 5078/2023 introduced expanded exemption limits.

Group insurance policies and Occupational Pension Funds are subject to differentiated tax rates depending on duration, benefit type and early redemption (+50% surcharge).

Special exemptions include travel/meal/accommodation expenses, meal vouchers (up to statutory limit), public transport cards, low-emission vehicles, and tips up to €300/month from 1 November 2024 (non-regular).

Withholding tax is monthly; benefits in kind are incorporated in annual assessment. Payment of withheld tax is due by the end of the second month following payment.

6. Business Activity (Article 21 ITC)

Business income arises from systematic economic activity with profit intent or isolated transactions qualifying as business activity.

Criteria include profit intent, transaction frequency, asset type, holding period, and connection to professional activity.
Burden of proof lies with the Tax Administration.

Real estate sales rule: ≥3 similar transactions within a given period indicate business activity.

Exclusions: inheritance/gift transfers, long holding periods, isolated transactions without profit intent.

7. Electronic Expenses — 30% Requirement

Individuals must conduct electronic expenses equal to 30% of income (up to €20,000 expenses). Failure results in additional 22% tax on the shortfall.

8. Compensation – Uncollected Remuneration – Special Rates

Dismissal compensation (severance pay):

• 0% up to €60,000
• 10% €60,000.01–100,000
• 20% €100,000.01–150,000
• 30% above €150,000
  (Taxed separately per installment.)

Seafarers:
Officers 15%
Crew 10%

9. Reform Map 2025–2026

• Income tax scale reform (9%–44%) – 1.1.2026
• Rental income reform (15%–45%) – 1.1.2026
• Reduced presumptive expenses – 2025
• New mothers exemption – 2025
• Modernization of employment benefits – 2023–2024
• Tips exemption up to €300/month – 1.11.2024

10. Conclusion

The new framework reduces the burden on middle-class employees, pensioners and self-employed individuals, supports families and young taxpayers, reforms presumptive expense assessment and business qualification criteria, and increases compliance obligations (especially electronic expenses).

Understanding both the new tax rates and the doctrinal provisions (Articles 12 and 21 ITC) is essential for proper tax compliance, particularly for professionals, property owners, corporate executives and taxpayers with complex income profiles.