Tax deductions with electronic transactions

April 4, 2018

Employees, pensioners and farmers benefiting from tax-free threshold of income are not required to keep paper receipts in order to obtain the tax deduction of 1.900-2.100Euros, which leads to the indirect tax-free limit. Paper receipts are replaced by the bank’s monthly statements in which are listed the transactions carried out by taxpayers with credit or debit cards and payments.

This year, employees, pensioners and farmers have to spend money via credit /debit cards or via e-banking so as to secure the tax deduction of 1.900-2.100 Euros, depending on the amount of income as follows:

-10% for income up to € 10.000.

-15% for income € 10.000.01 – € 30.000.

-20% for income for more that € 30.000,01.

The maximum amount of receipts somebody has to collect is € 30.000, regardless of income is.

In the case of spouses with a single bank account where one taxpayer is entitled to a tax-free (e.g. salaried) and the other is not entitled to a tax-free (e.g. freelancers), the one tax free priviladged can use all the electronic payments allowance of the joint account to obtain the tax deduction.

Almost all subsistence costs are included in the list provided that they are made with Credit / Debit Cards or through e-banking, resulting in the establishment of this tax-free limit. Rents, loan installments, circulation taxes, property purchases, cars, pleasure boats, tax payments, and stock purchases are explicitly excluded.

Medical expenses in particular are out of the costs list, due to the fact that for these costs is expected  a 10% tax deduction if they exceed 5% of the income.