IKA Facts please

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Jeffstclair
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IKA Facts please

Postby Jeffstclair » Thu Sep 06, 2007 11:01 pm

hello
this is my first posting on this forum a question I have been living here for 3 years now renovating a house myself in a remote village and I heard on another forum that in theory I should have to pay IKA health insurance tax on any work that I have done ,Is this true ? This mean that my mate o Yannis over the road has to pay IKA when he asvestis his apothiech !!!
Does anyone know the facts ? I understood that IKA was only due when one employed a tradesman to do work for you am I wrong ?? Jeff

filippos
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Postby filippos » Fri Sep 07, 2007 12:13 am

It used to be the case that any work by whomever, including DIY, officially had to be assessed for IKA and the relevant payments made. You're supposed to get approval for most work anyway even stuff like adding an open pergola with a tiled roof ('cos you might fill it in later to make extra living space).

This may still be true but a couple of years ago I was told that the rules had been relaxed and now for DIY one merely has to advise the IKA office of the work being undertaken and the time allocated to the job - a schedule you're supposed to stick to. No IKA to pay but, apparently, heaven protect you if a friend is caught helping 'cos it will be assumed he's being employed even if he/she is just standing around and chatting.

I think it's possible that if you come to sell the house and there's a stack of unapproved improvements or additions that's when problems could arise. A potential buyer's stroppy lawyer says, "Whoa, hang on a minute ..." (In Greek, of course). But, then, if the buyer likes the house how much will he care but it could be a price bargaining point.

But, if you upset someone and they "rat" on you and IKA come along and add up the cost of all the work you've done they might say you should have a) paid €xxxxx on which the IKA is €yyyyy and, worse, b) to pay out that amount of money you must have earned €zzzzzz this year and you'll have to pay income tax on that .... .... ....

Double check and ask at an IKA office. "If I wanted to do this work myself etc., etc."

Filippos.

O Giannis is unlikely to have problems unless someone "rats" on him 'cos who's to know he's thrown a bucket of asvesti at his apothiki wall

latsida

Postby latsida » Fri Sep 07, 2007 11:16 am

Dont know who your informant was filippos,but the IKA officials have recently visited this village checking on everyones work to their properties.
even if you DIY IKA has to be paid.I know we cant understand this, but really it is a building tax

Kathleen
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Postby Kathleen » Fri Sep 07, 2007 1:32 pm

I seem to remember that Leonie, who used to be a regular on the other site had a substantial bill to pay when she sold a house prior to moving.

Her husband had undertaken quite a few jobs on a DIY basis and tax was levied on the work he had done.

Kathleen

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Postby filippos » Fri Sep 07, 2007 5:29 pm

latsida wrote:Dont know who your informant was filippos,but the IKA officials have recently visited this village checking on everyones work to their properties.
even if you DIY IKA has to be paid.I know we cant understand this, but really it is a building tax
My informant was a local (Greek) jobbing builder so it wasn't official and I did say it may still be the case that IKA needs to be paid. It could also be that that 1. the IKA officials in different areas interpret the rules differently or 2. there's so much new building going on around us in Apokoronas that they only have time to check that or 3. they'll get around to it one day.

Bearing in mind Kathleen's post I'd repeat my advice to check with a local IKA office and get a ruling. Maybe it's only certain types of DIY work that get charged, for example construction work of some sort rather than painting and decorating. (If so I could have a problem as I've built a couple of walls although, fortunately, they're replacements and look like they've been around for a long time as I re-used original stone and didn't clean it.)

Filippos.

tmarres
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Postby tmarres » Sat Sep 08, 2007 10:31 am

Hi,

How much % is the IKA by the way?

thanks

latsida

Postby latsida » Sat Sep 08, 2007 10:47 am

Before starting the work you go to the IKA office with your plans and they work out the cost by the metre. eg.tiling ,painting, contruction, etc.you are given a reasonable time limit to complete the work ,which if you exceed they may consider you are doing extra and you could be fined for this.If you employ someone you will have to pay their IKA contributions as well.I have friends who have recently sold their house and they had to pay 2000 euros for work he had done before it could be sold,also another friend in this village who built a pergola and had to pay IKA on it when they sold .Obviously many people make improvements and only realise they have to pay when the come to sell the house.

Carolina
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Postby Carolina » Sat Sep 08, 2007 10:50 am

Remember that IKA is Greek National Insurance, so when you pay IKA for a house build you are paying compulsory National Insurance stamps for the tradesmen.

You get plans drawn up to build or renovate a house and when these get passed you are issued with a building licence. The cost of IKA due is then worked out by the size of the build, ie. the approximate number of days work ( = stamps) required by various tradesman to carry out the build. This is to avoid dodging paying national insurance for the workers. A percentage of the IKA paid goes to the workers as their national insurance contributions and the rest goes straight into the IKA fund. For the sake of IKA the owner of the property is like an ‘employer’ and is responsible for IKA being paid for the workers.

Examples of how it actually works, courtesy of Kostas:

- Manolis gets a licence to build on his plot and employs builders to do the job. His IKA bill for the build is worked out by IKA at 6,000 euros. At the end of each month he pays the workers IKA stamps for, say, 22 days each per month. He pays this money to IKA, in his name for his house licence number (adeia), and assigns the ‘stamps’ to his workers, in their names. At the end of the build the amount of IKA he has paid must have reached at least 6000 euros.


- Yiannis renovates an old house. He gets permission (adeia) from the planning authorities and they calculate how much IKA is due – i.e. how many days work are involved to do this job. Yiannis then employs John and Jim to do the work and the IKA he must pay should be assigned monthly as ‘stamps’ to John and Jim.

If you do the work yourself:
You may (we are not sure about this) ** be allowed to pay the IKA stamps (or some of them) into your name. For this you will need a personal IKA national insurance number (requires just a simple registration with the IKA office), and not be employed and paying, or claiming, IKA elsewhere.

** update, just checked this out. You are not allowed to pay IKA stamps in your own name for your own property. If you are already registered and established with IKA as a worker who has builders stamps (there are different types of stamps for builders as opposed to office workers etc) then you are granted a discount on the IKA costs for the build or work on your own property. So it sounds as though what Filippos was told may have meant that the owner does not have IKA stamps BUT he must still pay the IKA.

Alternatively – here’s the twist – you can SELL on some stamps. So, for example if you are unable to put the stamps in your name (as above) you still have to pay the IKA on your build/renovation. If you don’t assign the IKA you pay to any workers it will just go straight into the cavernous IKA pot. There are many workers out there who are clamouring to get enough stamps to keep up their national insurance health book etc. and those who fall short will be willing to pay you to have the stamps assigned to them. The cost of each stamp is normally around 40 to 60 * euros per day (depending on whether they are a labourer or ‘mastoras’) and can be sold on for half price or therabouts. So, for example, if Georgos from your village, and any other Georgos etc, needs 20 more stamps for the year to ensure his health book, doro etc, and his work has dried up, he will be willing to pay you a couple of hundred euros for you to assign those stamps to him.
* edit here - 20 to 25 euros is the amount they are usually sold for.


To answer Jeff’s question – theoretically you should have permission to build/renovate and the amount of IKA you will pay is automatically worked out when you get this permission. This is a set amount and must be paid regardless of whether or not you carry out the work yourself.
I don’t know who Filippos spoke to but it sounds like hearsay and I believe that it’s wrong – certainly it seems the rules are becoming more stringent, rather than being more relaxed. Ten or so years ago IKA did not enforce payments and most labourers were casual workers with no national insurance.. the system was overhauled around the same time as the tax reforms when compulsory returns amd 'assumed income' were introduced (I can't remember when that was - was it about 2000 ?).

As for O Yiannis and his asvesti – he is not building and so doesn’t require planning permission to paint the wall of his apothiki, therefore no IKA to pay. :wink:
Last edited by Carolina on Sat Sep 08, 2007 2:50 pm, edited 1 time in total.

Jeffstclair
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Postby Jeffstclair » Sat Sep 08, 2007 1:06 pm

Thanks all of you out there who responded to this question.
It seems that this is a minefield ! my next question is a tricky one .
So if for arguments sake one is paying national insurance in the UK, one should still pay IKA in Crete and then by some odd and very time consuming process involving getting translations of IKA forms sent to the good old inland rev, claim back the money from ....... now my train of thought runs out to whom does one claim back the cash . as you cannot pay NI in two countries at the same time and anyway why should you .{ Sorry very long sentence} Your thoughts on this Filipos , Latsida, and Carolina, and anyone
Jeff

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Postby Kilkis » Sat Sep 08, 2007 1:15 pm

Carolina wrote:As for O Yiannis and his asvesti – he is not building and so doesn’t require planning permission to paint the wall of his apothiki, therefore no IKA to pay. :wink:


Can you take it a little further, Carol. Would it be safe to say that if the work does not require a building permission then you don't need to pay IKA? For example, if my house needs redecorating I am pretty sure I don't need building permission to do it. Suppose a window broke and I replaced the double glazed unit. I doubt if I would need building permission. Presumably I would not need to pay any IKA for these jobs?

Warwick

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Postby Carolina » Sat Sep 08, 2007 2:55 pm

Jeffstclair wrote:Thanks all of you out there who responded to this question.
It seems that this is a minefield ! my next question is a tricky one .
So if for arguments sake one is paying national insurance in the UK, one should still pay IKA in Crete and then by some odd and very time consuming process involving getting translations of IKA forms sent to the good old inland rev, claim back the money from ....... now my train of thought runs out to whom does one claim back the cash . as you cannot pay NI in two countries at the same time and anyway why should you .{ Sorry very long sentence} Your thoughts on this Filipos , Latsida, and Carolina, and anyone
Jeff


I have just updated my post above, so if this question is regarding paying your own IKA stamps for your renovation work then it doesn't apply.

Also I can't see how 'officially' you can be resident and working in two countries and paying national insurance in both at the same time??

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Postby Carolina » Sat Sep 08, 2007 3:06 pm

Kilkis wrote:Can you take it a little further, Carol. Would it be safe to say that if the work does not require a building permission then you don't need to pay IKA?

Basically that's correct.

Kilkis wrote:For example, if my house needs redecorating I am pretty sure I don't need building permission to do it. Suppose a window broke and I replaced the double glazed unit. I doubt if I would need building permission. Presumably I would not need to pay any IKA for these jobs?
Warwick


No you definitely wouldn't pay IKA for these jobs Warwick.

Kilkis
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Postby Kilkis » Sat Sep 08, 2007 3:48 pm

Thanks Carol

There is a Dual Taxation agreement, Jeff, but there is no Dual National Insurance Agreement.

I have been working in Greece for the last ten years and paying IKA here. For all that period I have also being paying voluntary NI contributions in the UK to protect my UK State Pension rights. Because I was working here I could pay at the Class 2 rate in the UK, which is only around £2 per week. There is an agreement on pensions, in which contributions in one country can be taken into account in the other, but you will not be able to claim back NI paid in the UK on the basis of IKA paid in Greece.

Under the pension agreement, each country only pays the fraction of the pension that would be due on the basis of the contributions paid in that country. This agreement, therefore, is only useful if you are below a threshold of entitlement and taking the other countries contributions into account could take you over the threshold.

For example suppose you were a Greek man who had worked 10 years in the UK and paid NI for all that time. Under current rules you would not be entitled to any UK pension. Suppose you had also worked 34 years in Greece and paid IKA for all that time. When the UK takes the IKA contributions into account you have 44 years contribution and become entitled to a full UK pension. The UK then pays you 10/44 of this amount, i.e. the fraction contributed in the UK. If you had worked 11 years you would be entitled to a pension just on the basis of the UK contributions. You would be entitled to 25 % of a full pension, which is 11/44, i.e. exactly the same if you take the IKA contributions into account.

Obviously this will all change if the current Pension Bill becomes law.

Warwick

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Postby filippos » Sun Sep 09, 2007 1:02 pm

Let's hope this atones for my possibly misleading post early in this thread.

The letter below and the Editor's response appear in the current issue of Athens News. It seems clear that one needs to get approval before doing any construction work and that IKA is payable.

Filippos.

Home repairs and IKA

I HAVE a question that is affecting many English people here. If we do our own work on our own houses, such as bricklaying, electrics or even complete house build in my case, do we have to pay IKA? It is proving very difficult to get a definitive answer from anybody.
We are not part of the Greek pension scheme and in my case have paid in vast amounts of National Insurance in the UK. I have been told that you pay this only once within the EU. If I do have to pay IKA. what benefits, it any. would I receive? Thank you.

Richard Read Messini.

Editor responds: The 'Athens News' contacted the social insurance foundation IKA headquarters in Athens, where officials confirmed you must still pay the IKA contribution you would have paid if you had employed someone to renovate your home if you do the work yourself. The amount varies depending on the job. Officials also said the local IKA branch must be consulted before any renovation work is done.

Paying IKA is mandatory, even for those who are not part of the Greek social insurance/pension scheme and who will not benefit from these contributions.

Those who bypass IKA risk paying a hefty fine.

Kilkis
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Postby Kilkis » Sun Sep 09, 2007 3:13 pm

Basically avoiding paying any form of taxation is endemic in Greece.

Under normal circumstances you would assume that you would employ a company to do the work for you and that company would pay its workers’ IKA. The government knows that this would not happen. IKA should be stopped at the rate of around 16 % from a workers wages. There is also an employer’s contribution, which is significantly more than this, I think around 30 %. Thus total IKA is around 46 % of gross pay. In Greece, however, everybody thinks in terms of take home pay. If the worker is paid €500 per month take home the employer would have to pay something around €275 per month in IKA. The employer simply sees this as an avoidable payment.

To get round the problem, the IKA due on a building project is assessed “objectively” as part of the building permission process, e.g. X square metres of brickwork takes Y man days and a bricklayer gets paid Z Euro per day etc, and the person who applies for the licence is responsible for making this payment. They don’t care who actually does the work. They don’t care if anybody gets any stamps for these payments. They don’t care if the actual work takes more or less time than is estimated, providing it doesn’t take more because you do more than is in the licence. To make sure the person applying for the licence pays what has been assessed you cannot get a permanent electricity connection until you have paid in full. To make sure you pay in a reasonably timely fashion the temporary electricity supply is cut off after 2 years and fines increase the IKA owed if it is paid late.

Warwick


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