«Residents who earned wages up to EUR 1,000 before taxes in 2016 will be able to recover part of non-taxable allowance by submitting income declaration,» explains expert of Swedbank Institute for Finances Evija Kropa.
According to results of a survey carried out by Swedbank Institute for Finances, every second resident or 57% of respondents intend to submit income declarations.
One-third of respondents said they do not intend to submit declarations this year. 13% of respondents have doubts. 54% of respondents mentioned having no plans to submit an income declaration, saying that they have had no declarative expenses in the past year.
«Such an idea can be misleading, because this year residents have the option to recover over-paid PIT not just for medical expenses, education and savings on private pension, but also child hobby clubs and non-taxable allowance,» the bank’s representatives explain.
Residents with low income (up to EUR 280 a month after taxes) have the least amount of interest for submitting income declarations (about 35%). Residents with medium income (EUR 500 to EUR 700), on the other hand, are more prone to recovering over-paid taxes (70%).
«Often people claim they do not have a lot of money to plan, but the relationship is exactly the opposite – the less money a person has, the more careful planning is required. The time for submitting income declaration should be considered a method for increasing one’s budget using savings created for the person by the state. This is the moment for overcoming obstacles, because lack of interest in this case means losing potential income. It is important for residents to remember that recovery of over-paid taxes is allowed by law,» Kropa notes.
What to know about non-taxable allowance?
Although nearly half of residents (46%) are informed about the option to recover over-paid tax for differentiated non-taxable allowance, only a small portion of society (15%) it serves as stimulus to submit a declaration. At the same time, a large portion of society is poorly informed about changes that apply to differentiated non-taxable allowance. For example, it is unclear for 14% of residents what amount they can recover from taxes. 50% of residents say they were never informed of such an option, according to results of Swedbank’s survey.
«Residents who earned wages up to EUR 1,000 before taxes in 2016 are able to recover part of non-taxable allowance that was not applied with taxation at the moment of the payment of the monthly wage. It is especially important to use this option for small wage recipients. For example, residents with wages of EUR 380 a month before taxes without registered dependents and additional income can recover EUR 69 from differentiated non-taxable allowance,» Kropa says.
Results of the survey show that the lowest level of awareness is among residents for whom changes are introduced to reduce the level of inequality. Up to 54% of respondents with income of EUR 500 a month are poorly informed of the opportunity to recover over-paid tax. This creates doubts about this system’s efficiency. Residents’ general opinion is confirmed by previous concerns regarding the poor level of awareness among residents and the high administrative barrier that could potentially prevent residents from submitting income declarations and recovering money.
It is important to keep in mind that the recoverable amount depends on the size of additional income and other received benefits. To help calculate the recoverable amount, residents are invited to use the calculator provided by Swedbank’s Institute for Finances.
This year residents can recover expenses from child interest clubs
When submitting a declaration for justifiable expenses made in 2016, it is important to keep in mind that interest club activities for children under the age of 18 fall into this category. This allows parents to recover money spent on their child’s music, dance or sports activities, the bank’s representatives say.
According to data from Swedbank’s Institute for Finances, 73% of parents admit that their children attend different hobby and interest clubs. But only 66% of residents are aware of the option to recover overpaid PIT.
«The total recoverable amount for education and healthcare services per child is EUR 215 for 2016. This means the maximum amount parents can recover this year for each child is EUR 49.45. It is important to make sure that the paid PIT amount is not lower than the recoverable amount,» Kropa notes.