Majauskas promises higher taxes to bailiffs: live like a kidney in fat

Last week, M. Majauskas examined the fees paid by lawyers, this week he shared information about the salaries of the bailiffs and in the future he intends to be interested in the income of notaries or farmers.

Currently, some 115 bailiffs are engaged in individual legal activities. Their number and areas of activity are determined by the Minister of Justice of the Republic of Lithuania, the information from the State Tax Inspectorate (STI) is shared by M. Majauskas.

According to STI data, the total number of bailiffs in 2019. Individual operating income amounted to LTL 27.2 million. On average, a bailiff reported income of € 234,000 per year and paid an income tax of € 17,000.

“The vast majority of bailiffs have declared that they have incurred significant costs, thus reducing their tax base, which is subject to a maximum of 15%. tariff. Therefore, calculating the average effective income rate that the bailiffs pay from the income received, it was only 7% ”, says M. Majauskas.

The bailiff with the highest income in 2019. declared 725 thousand euros of income and paid 4.8 percent of the personal income tax on them.

“By way of comparison, the employment tax rate is 20%, and for an amount greater than 87 thousand. EUR – 32 percent. Meanwhile, the ten bailiffs who declared the highest income received an average of 543 thousand from their main activity. and paid only 6.2 percent. of income received or 15 percent. after the deductions allowed ”, says M. Majauskas.

Only 8 bailiffs received less than 100,000. The revenue of 108 bailiffs exceeded this cartel.

“Like lawyers, bailiffs are subject to a preferential tax regime. In my opinion, this procedure should only apply to the self-employed with middle income. The state must continue to promote private initiative by reducing bureaucratic barriers and creating a fiscal environment attractive, ”says M. Majauskas.

He is convinced that tax breaks should not apply to “high earners”. Delfi has already written that lawyers’ salaries have come to the parliamentarian’s attention; they would expect to collect an additional 5 million from them. taxes in euros.

Sheriffs also seem to enjoy the tax benefits and live like kidneys full of fat. We will consult with the Government and await the proposals of the Tax Working Group of the Ministry of Finance. I am convinced that only by working together can we guarantee a fair tax system in Lithuania, ”says M. Majauskas.

According to STI data, in 2019, 107.6 thousand people engaged in individual activities, most of them received less than 35 thousand euros of income after allowed deductions.

According to M. Majauskas, the tax environment for these people should not change.

“Meanwhile, several thousand people with significantly higher incomes should pay taxes at a higher rate. (…) It is not a question of political philosophy of the left or right, but of the basic hygiene of the tax system. Most wage earners have to pay the highest taxes; This is the case in all developed countries, the same procedure should also be applied in Lithuania ”, says M. Majauskas.

Chamber of Sheriffs: The Sheriff pays the salaries of 7 employees and pays 34 percent. taxes

The Lithuanian Chamber of Bailiffs ensures that the income assessed by M. Majauskas is not only that of a bailiff, but also that of an average of 7 employees, and that more taxes are paid. Also, the bailiffs are responsible for their actions with their property.

“Honorable Member of Parliament, M. Majauskas, is not the first politician who has been deceived by the form of the bailiffs’ activities. For tax purposes, a bailiff is a person who exercises an individual activity. However, income, The working capital necessary for the activity is not obtained by a bailiff, but by the entire bailiff’s office. The office employs an average of seven more people with a bailiff. Taxes paid by the bailiff to the state (VAT, GPM and Sodra for them and their employees) in 2019. averaged 34 percent. revenue collected. Meanwhile, according to experts, companies pay the budget on average only 27.5 percent. taxes (benefits and dividends) “, says the Chamber of Bailiffs of Lithuania.

The average amount of income tax paid by the bailiff mentioned by the politician-€ 17,000 per year or € 1,416 per month- would correspond to the GPM paid by an official who would be paid € 7,080 on paper. It is not difficult to determine this by using bailiffs.

“However, the GPM paid by the sheriff is only a part of the fee he pays. The sheriff, unlike a state official, also pays income and Social Security taxes for the office staff. The sheriff also pays he is subject to a disproportionately higher material responsibility: he is responsible for the actions / omissions of the bailiff with all his assets, but not with the amounts of one or three salaries, as is the case of the public function, “the comment said.

Bailiffs can make the usual deductions allowed to other economic entities, to which the costs of compulsory professional liability insurance and the membership fee of the Lithuanian Chamber of Bailiffs also contribute.

“The Lithuanian Chamber of Bailiffs is ready to participate in all discussions on the issue of taxation of bailiffs’ activities, as all exchanges of views are helpful. To avoid misleading interpretations on matters of income of bailiffs bailiffs, it may be worth considering changing the form of bailiffs’ activities, ”suggests the Lithuanian Chamber of Bailiffs.

The bailiff earns income only when he actually recovers the amounts of the imposed debts. Recovery takes an average of up to two years.

“Recovery is often difficult or even impossible due to evasion and insolvency of the debtor. In case of default, the bailiff does not earn a penny and has to cover the costs of managing the debt from his salary. Therefore, the activities of the bailiffs are financially extremely risky. The income of the individual months can fluctuate a lot and some months can not be profitable ”, assures the organization of bailiffs.

Previously, Kęstutis Lisauskas, a tax expert and tax practice partner at EY, estimated that sole proprietors generally have significantly more favorable tax rates than employees, and that taxation may vary in some cases.

“If you take a person with the same amount of income who works under an employment contract, you will see that that person pays 32% of GPM, while a lawyer pays 15%,” said K. Lisauskas.

I would argue that the taxation of all individual activities should be reviewed.

“It is common in the world for the tax burden on the self-employed to be somewhat lower than on employment, because a self-employed person is still exposed to more risks and does not have the same guarantees as a self-employed person. But those differences are not so great. Especially in high-income modes, one of the basic principles of taxation is the ability to contribute. If there is a progressive tax system for labor relations, then it should also exist for individual activities, ”said K. Lisauskas.