George Dalianis with the collaboration of Nancy Kallianiotis, Katerina Muselimi and George Papadimitriou*
On-the-spot checks are only the beginning. The new digital reality now allows for the ex post identification of cash payments, while companies in focus and tourism are invited to face real operational problems daily.
The use of electronic means of payment is now a key tool of tax policy to combat tax evasion and reduce the illegal economy. The obligation to repay transactions over EUR 500 through a banking instrument has been known for several years. But what has changed radically is not the provision itself, but the way in which it is now controlled.
During this year's tourist season, there is a significant Intensification of tax controls by ADE in catering, entertainment, hotels and retail businesses in general. On-the-spot checks focus not only on the issuance of tax data but also on how to repay transactions, with particular emphasis on cash receipts above the legal limit.
But the real change is elsewhere.
On-the-spot checks are now only the visible side of the control mechanism. With the interconnection of POS with tax cash machines, the universal application of electronic books (myDATA) and the continuous collection of digital data, AADE now has the possibility to carry out targeted electronic cross-checks and to identify, even several years after a transaction took place, cases where payments of more than EUR 500 were made in cash.
In other words, the infringement no longer depends solely on the presence of a controller within the store. The transaction itself leaves a digital footprint, which can be the subject of a later audit assessment. The transition from traditional on-the-spot control to digital control is perhaps the most important development in recent years in the way the tax administration operates.
This development confirms the concerns expressed by ARTION as early as 2023, with a scientific article by the former Director General for Tax Administration Vasiliki Iliopoulou, when it was noted that the real challenge would not be legislative regulation itself but its application to the day-to-day operation of the companies. Today, with intensification of controls and the possibilities of electronic crossings, those concerns prove more timely than ever.
This new reality imposes even greater attention on businesses. At the same time, however, it highlights an essential issue which does not seem to have been sufficiently addressed by the current framework: there are many cases in which the company wishes to collect through POS, but this becomes objectively impossible for reasons not due to its own behaviour.
The problem occurs mainly in catering businesses, bars, nightclubs, beach bars and hotels, where transactions are often carried out in late hours, with large amounts and under special circumstances. In most cases the tax item has already been issued, the transaction has been entered in the accounts and the corresponding revenue is to be taxed normally. The only issue is how to pay.
It is therefore worth considering whether it is right to treat cases of real tax evasion in the same way and cases where electronic payment becomes objectively impossible.
Indicative examples from the day-to-day operation of enterprises demonstrate the problem:
First example: An account of 680 euros is issued in a restaurant. The company requests payment via POS, but the customer's card is rejected because it does not have a sufficient balance. The rest of the company only have cash. The proof has been issued, the transaction has been declared, but the firm is faced with the risk of imposing a fine.
Second example: An account of EUR 920 is issued in a beach bar. The payment effort shows technical malfunction in the banking network and the POS does not complete the transaction. Customers have the corresponding amount in cash only. The firm does not seek to circumvent the law· simply unable to complete the electronic payment.
Third example: An account of 1,250 euros in the early morning hours is issued at a nightclub. The customer, having consumed alcohol, is unable to complete the transaction, his card is blocked after repeated failed efforts and has only cash. The company has already issued the legal tax element and has properly recorded the revenue, however it is in the face of a real business deadlock.
A common feature of all the above cases is that there is no withholding transaction, no taxable material is hidden and the State is not damaged in the statement of revenue. There is only an objective failure to complete payment by the intended means.
ADE's transition to a digital cross-breeding system is undoubtedly an important step towards more effective tackling tax evasion. At the same time, however, the practical application of the legislation highlights the need for a more functional approach to the cases of actual failure to pay electronic payments. Where proof has been issued, the transaction has been declared and the undertaking has sought payment through POS, it is appropriate to examine whether the current framework should provide for exemptions or documentation procedures for incidents which are proven not to be due to its fault.
Technology now offers tax administration extremely effective means of control. The next step, however, should be the establishment of a framework that combines the effectiveness of controls with the principle of proportionality, separating the cases of real tax evasion from those where non-electronic payment is a consequence of objective circumstances rather than the choice of the undertaking. This will achieve the dual objective: effective fight against tax evasion, without imposing disproportionate sanctions on consistent companies operating in good faith under real market conditions.
On the issues of electronic crossings, tax evasion control and more generally dealing with a tax audit, detailed processing is done in our book "Tax Controls Guide", released from Keybook Publications.
* George Dalianis is CEO of ARTION S.A. & founder of ARTION Group, Economist of Taxation.
Nancy Kallianioti is a Shareholder and member of the Board of Directors of ARTION SA. & CEO of ARTION Mykonos
Katerina Muselimi is a Shareholder & CEO of ARTION Mykonos
George Papadimitriou is an external associate of ARTION MYKONOU
This text is informative and does not replace specialised advisory services in any case.
For more information you can contact ARTION S.A. (Oedipus 1-3, Halandri|+30 210 6009062| www.artion.gr).
