This year, the Independent Authority for Public Revenue (AADE) will scrutinize over 2.8 million taxpayers reporting incomes between €10,000 and €20,000 to assess whether their declared expenses align with their income.
Utilizing artificial intelligence and cross-referencing data from banks, accounts, POS systems, and platforms such as Airbnb, tax authorities are meticulously reviewing all available information to uncover hidden income or misuse of state benefits.
The investigation isn’t limited to typical targets like freelancers; it also encompasses salaried workers, pensioners, and landlords who report low incomes but exhibit considerable consumer or asset activity. In several instances, the tax office found individuals with bank transactions or spending exceeding €100,000 annually who had reported incomes below €10,000.
These audits extend beyond mere indicators of lavish lifestyles. The AADE is exploring whether discrepancies between income and expenses can be substantiated through legitimate reasons. If they cannot, alternative income assessment methods will be utilized, including liquidity analysis, deposit tracking, cash flow examination, and evaluation of a taxpayer’s net worth.
Those with significant inconsistencies will be required to explain the discrepancies. If they cannot substantiate their claims, the undeclared income will be subject to a 33% tax, along with a 50% penalty on the additional tax and accrued interest charges.
Particular attention is being paid to individuals who may have artificially lowered their reported income to qualify for benefits, housing or student assistance programs, or tax exemptions. The AADE plans to cross-reference tax filings with bank balances, private school tuition, property and vehicle purchases, supermarket expenditures, private health costs, insurance payments, and data from digital platforms.
Numerous discrepancies have already been uncovered, with the initial audit wave revealing individuals whose spending was up to ten times greater than their reported income. The 2025 plan includes over 120,000 data cross-checks and at least 10,000 administrative tax reviews. Also under investigation are short-term rentals lacking a declared registration number, businesses with no VAT filings, and hotels with falsified reservation records.
The AADE’s dual aim is to identify undeclared income while ensuring that those declaring low incomes genuinely live within their means. This new audit initiative leverages advanced technology, database integration, and big data analysis to promote transparency and compliance.
Ask me anything
Explore related questions
