The Tax Authority (AADE) is sending fines for explanations or audits to the first 800 taxpayers who declared incomes below €10,000 but had consumption expenses ranging from €30,000 to €200,000 in the same year.

Using electronic notifications and phone calls, the Independent Authority for Public Revenue (AADE) is initially asking them to provide explanations and submit the necessary documentation to justify the difference between the declared income and the consumption expenses. In cases where taxpayers’ explanations are not convincing and there is a lack of evidence, regular audits will commence to confirm the results of the cross-referencing and to impose taxes and fines for income concealment.

The cross-referencing by AADE began in September and was completed in November. A bundle of available data for expenses (over €10,000) was cross-referenced with declared incomes for 3.8 million tax returns. In total, 440,000 such cases were identified, of which 420,000 have minor discrepancies and may be audited in a second round. The remaining 20,000 taxpayers will need to provide explanations to the tax authorities, with the process starting with 800 serious cases.

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Specific data cross-referenced included:

• – Payments via various cards
• – Interest on deposits and bank accounts with cumulative movements over €100,000 during the year
• – Interest and installments on loans from consumer and housing loans to credit cards
• – Retail spending at various types of stores and supermarkets
• – Expenses for the purchase of assets from real estate and cars to leisure boats
• – Expenses for life, death, personal accident, and health insurance policies
• – Hospital expenses in private clinics
• – Tuition fees for private schools
• – Even expenses for utilities such as electricity, water, and telephone, if they exceeded €1,000.

On the other hand, the cross-referenced data from tax returns included:

• – 2,413,645 Tax Identification Numbers (TINs) with incomes up to €5,000
• – 1,343,890 taxpayers declaring incomes ranging from €5,000 to €10,000.

The first sample of 800 TINs for which audit orders have been issued was selected after the selection of cases. In other words, the audit did not start with those showing the largest discrepancies but with a sample of taxpayers in deviation brackets ranging from €30,000 to €50,000, from €100,000 to €200,000, and over €200,000.