Several countries around the world are looking to transition into a cashless economy. Some countries are actively forcing this change by banning banknotes. Greece seems to be the next country on the list to do so, as some changes will be coming in 2017. Taxpayers will only receive deductions when payments are made through debit or credit cards. A rather “soft” approach to ending cash, but a clear hint of what the future will hold for Greece.
What makes these new guidelines intriguing is how they will apply to employed and unemployed people alike. Purchases for good, electronics, footwear, and clothing will all need to be paid for with payment cards. That is, assuming consumers want to be eligible for tax deductions in the future. Cash purchases will not be eligible, even if a receipt is provided.
Greece Enforces Soft Ban on Cash
But even doctor and pharmacy visits will only become deductible when using a payment card. Most consumers pay for these expenses with cash, but they will no longer receive a tax deduction if they do so in 2017 and beyond. A rather unwelcome change for sure, and one that will create a lot of friction.
Moreover, utility bills, rent, loan repayments and other expenditures will not be accepted for tax deductions. Toll and transport tickets are not accepted either. This means Greece removes the largest amount of monthly expenditures from tax deduction moving forward. Rest assured this decision will not go over well with the general public.
Things only get worse, as the higher annual incomes will receive a higher tax allowance. This means the rich will benefit most from this new scheme, whereas the rest gets “punished”. Taxpayers who do not meet their required expenditure through payment cards will receive a penalty. This penalty equals to 22% of the missing difference. Additionally, virtually every taxpayer will need an accountant to keep track of these expenses moving forward.
Some citizens are exempt from the compulsory use of payment cards, though. Anyone over 70 years old, living in remote areas, of suffering from over 80% disability doesn’t need to adhere to these rules. However, they will be required to collect receipts for all transactions and submit those to the authorities.
Last but not least, Greece is reducing the cap for cash transactions. As of a week ago, this cap was 1,500 euro but has now been reduced to 500 euro. Any purchase over this amount will need to be made with a payment card. It remains to be seen how the population will respond to these new “challenges”, though.
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