New Tax Increase: From 26% to 42% on Profits Over €2000
Starting in January 2025, a significant tax increase is set to take effect, raising the tax rate from 26% to 42% on profits exceeding €2000. This move is part of the government's strategy to bolster revenue in response to ongoing economic challenges.
Rationale Behind the Tax Increase
The government argues that this measure is necessary to enhance public services and support economic recovery. With rising inflation and increased public spending demands, officials believe that targeting higher profits will generate substantial additional income.
Potential Consequences
However, this decision has sparked concerns among investors and business owners. Many fear that the steep increase could drive investment away from the domestic market. Investors might seek out countries with more favorable tax regimes, or turn to less regulated alternatives, which could undermine the government's objectives.
Impact on the Economy
The long-term impact of this tax increase remains uncertain. While it may provide a temporary boost in revenue, the potential exodus of investors could stifle economic growth and innovation. Critics argue that the government should consider alternative strategies that encourage investment rather than deter it.
