The key to reducing the taxation of young professionals and young sole proprietors is to keep their income below 10000 euros because that is the limit.
So those who started operations from 2019 onwards and for the first three years of their business activity are taxed at a rate of 4.5% against 9% which applies to all other companies with annual gross income (turnover) up to 10,000 euros.
According to the provisions of the Income Tax Code, the net income earned by young traders and freelancers during the first three years of their activity is taxed at an extremely low tax rate of 4.5%, provided that the annual gross income in the previous year did not exceed 10,000 euros.
In particular, it is provided that for the first three (3) years of business activity by a natural person, the tax rate of the first tier of the tax scale is reduced by 50% as long as its annual gross income from business activity does not exceed 10,000 euros.
The following will apply in more detail:
- For those entrepreneurs and freelancers who started a profession in 2019, the application of the very low rate of 4.5% will apply only for the tax year 2021, which is their third year of operation.
- For those entrepreneurs and freelancers who started a profession in 2020, the application of the very low rate of 4.5% will apply for the tax year 2021 and for the tax year 2022.
- For those who started a profession in 2021, the application of the very low rate of 4.5% will apply for the tax year 2021, for the tax year 2022 and for the tax year 2023.
For the first time this year, those who turned 18 in 2021 and have to declare any amount of real or imputed income are invited to submit.
Specifically, he must submit a statement for the following cases:
- If he does not live in the same house as his parents but lives in a building in which he owns even a small percentage of full ownership or usufruct or in a building which was given to him free of charge by his parents or a friend.
- If he has in his name an asset that creates a presumption of subsistence (car, boat, etc.).
- If in 2021 he earned income from salaries, allowances, rents, casual employment, agricultural or business activities, capital gains from shares, bonds, mutual funds
- If he founded any business in 2021 or started as a freelancer
- He/She is married at the time of filing the tax return.
ATTENTION: Only young people who have reached the age of 18 by 2021, have no income, or assets that constitute evidence (residence, car, etc.), if they were hosted in the homes of parents, other relatives or are completely exempt from filing a declaration. friends, or if they are students and due to studies live in rent in a city other than the one in which their parents live.