Service charge: How businesses are exempted from paying it

The pretension fee of 400-1,000 euros is expected to be permanently erased from the tax map in 2027, according to government announcements. But until then businesses and professionals have the possibility to avoid paying it every year provided they increase full-time jobs for at least three months a year.

This year, 66,000 businesses and professionals managed to exempt themselves from the memorandum measure because they made new hires last year. The data showed that 37,000 legal entities and 29,000 natural persons were exempted from paying the fee of 400 – 1,000 euros due to the new hires. However, this number cannot be ruled out to be finally higher due to the objections submitted until August 28, 2023 on the platform ERGANI of the businesses which although they had increased full-time jobs by at least 25% did not receive an email from AADE informing them that they are exempt from the pretense fee. The objections submitted by the taxpayers will be examined by a special committee and for the businesses that are found to meet the criteria, the AADE will proceed with the deletion of the pretense fee.

With this measure, businesses and professionals with a turnover of up to 2 million euros have the opportunity to avoid the pretension fee every year provided that they increase the average annual number of full-time employees, at least for one quarter of each year. This year businesses that increase by September 30, 2023 the number of full-time employees and maintain it for at least one quarter (by the end of December for new hires to be made on October 1, 2023) will automatically be exempted from the interest fee they must pay in 2024.

Businesses and professionals who did not pay the application fee this year due to new hires does not mean that they will be exempt from paying it in 2024. To be exempt again they would have to show at least a 25% increase in full-time jobs this year.

The legislation on the pretense fee

  • Beneficiaries of the exemption from the payment of the trade fee are natural persons carrying out a business activity and legal persons and legal entities, regardless of the way of keeping their books (simple or double-written), whose gross income during the tax year for which the exemption is granted does not exceed 2 million euros.
  • In order for taxpayers to be exempt from paying the business tax for a tax year, they must in the same tax year have increased their full-time jobs by at least 3/12 compared to the previous year.

How employment growth is calculated

  • For the calculation of the increase by at least three twelfths (or 25%) of the average number of employees of beneficiary enterprises with a full-time employment relationship, the average number of employees during the considered year is taken into account, which is compared with the average number of employees of the previous tax year.
  • The basis for calculating the average number of employees is the number of employees from 1/1 to 31/12 of the previous tax year, in relation to the number of employees from 1/1 to 31/12 in the year in question.
  • The average number of full-time employees of the company is calculated per month from the total number of employees employed under a full-time, indefinite or fixed-term contract for the entire year.
  • Full-time employees also include seasonal employees.
  • Especially in the case of a merger of companies, the average number of employees in the company resulting from the merger will result from the sum of the average numbers of employees employed in each of the merging companies for the time period of their last management year.
  • Also, a full-time employee, who is employed by the company for at least one day more than half of the calendar month, i.e. more than 15 days per month, is calculated on an annual basis as 1/12.