Global expansion is a great way to grow your business and Greece offers many appealing opportunities. However, the tax laws can be complex and require time-consuming research. By using our PEO-service we will take care of the complicated legwork so that you can focus on your business goals in Greece.
Greece enjoys gateway access to over 140 million consumers in the Eastern Mediterranean and Southeast Europe – with a formidable shipping industry, and prominent and fast-growing regional markets. Greece Tax is also undergoing a major change, boasting 50% tax cuts for those wishing to take up new business or expand their business in Greece.
Dealing with tax matters is a major issue for companies seeking to develop an international presence, particularly as disciplinary measures can apply for non-compliance. We have made it our goal to keep track of the latest changes in the tax policies of Greece to always ensure complete compliance.
In this guide we include the basic facts regarding tax regulations and we hope to provide you with a flying start in Greece to make your business thrive.
Overview of Greece Tax:
- Individual Income Tax: Progressive (Income Tax and Special Solidarity Contribution: see table below)
- VAT: 24%
- Corporate Income Tax: Normal: 24% - Credit Institutions: 29%
- Employer Social Security Contributions (2021): 22.54%
Individual Tax Greece- Single, Married
Any individual earning an income in Greece must pay local taxes, regardless of their residential status. Permanent residents are also taxed on any income received from outside the country.
Besides income tax, individuals in Greece must also pay for social security, which amounts to about 16% of their income, as well as a special solidarity contribution with a maximum of 10% of their income (depending on the employee’s work sector). Additional tax is also added on capital earnings such as dividends, interest, royalties, and real estate.
Individuals must file their taxes annually – the payment deadline is June 30th of the following year. Filing tax returns is normally done online via the national tax portal (IAPR). For income tax return filing (single or joint), it is mandatory for a taxpayer to obtain a Greek tax registration number (also known as an AFM number).
Non-Greek tax residents are required to file their annual income tax return with the applicable tax authority for foreign residents. These residents may also have the option to appoint a Greek tax resident as their representative, based on a proxy document. Legal entities cannot be appointed as representatives.
Tax in Greece is worked out progressively (dependent on income), starting at 9% for those earning up to €10,000, and goes up to 44% for those earning over €40,000 – as shown below:
Income Bracket €0 – €10,000 - 9%
Income Bracket €10,001 – €20,200 - 22%
Income Bracket €20,001 – €30,000 - 28%
Income Bracket €30,001 – €40,000 - 36%
Income Bracket €40,001 and higher - 44%
For married couples: As of the 1st of January 2018, spouses can opt to fill out separate tax returns, following a binding statement that must be submitted to the tax authorities by the end of February of the following year. If spouses are filing taxes separately, and have dependent children, then requirements related to the taxable income of dependent children apply for the parent reporting the higher income.
Taxable income of dependent children is added to the parent declaring the higher total income (with exceptions). If parents declare equal total income amounts, the income of dependent children is added to the father’s taxable income. If there is no father, the income is then added to the mother’s taxable income. However, the taxable income of dependent children is only added if certain conditions are met.
Special solidarity contribution
In 2020, the special solidarity contribution was abolished for all other types of income except employment income and income from pensions. In 2021, this contribution was further abolished for income from employment in the private sector. Moreover, the contribution is calculated based on the following progressive tax scale:
Annual Income of 0 – 12,000: 0%
Annual Income of 12,001 – 20,000: 2.2%
Annual Income of 20,001 – 30,000: 5.0%
Annual Income of 30,001 – 40,000: 6.5%
Annual Income of 40,001 – 65,000: 7.5%
Annual Income of 65,001 – 220,000: 9.0%
Annual Income of 220,0001 and over: 10.0%
Greek Individual Tax Rules
Eligibility for Greek Income Tax, as well as other taxes, will depend on where you are residing. The residency is the country regarded as the permanent home of a person, or where the person lives most of the year.
A person is eligible to pay taxes if they are registered as a local employee or a self-employed individual and will be taxed on their individual income. If a person is registered as a “permanent resident”, then the taxes will depend on where the income is obtained.
If you are a non-resident in Greece, you are subject to paying taxes only on your individual income in Greece, due the Double Taxation Treaties. If you are married, you will be taxed separately, although there are some possible adjustments. If you are an EU member state resident, and 90% of your total income is from Greece, you can benefit from a variety of tax deductions and credits.
You must pay taxes in Greece if you:
- Have a permanent residence in Greece
- Have spent more than 183 days in Greece during the calendar year
- Are employed or are carrying out professional activity in Greece
- Have a business or investment in Greece
- If you are a partner in a limited liability company in Greece
- Receive an annual income of more than 3000 euros from salaries, self-employment, pensions, alimony, or agricultural activities
- If you own a car, a motorcycle, boat, or aircraft in Greece
- If you own property in Greece
- If you rent land/property in Greece
Greece has a standard VAT rate of 24%, which applies to most goods and services, as well as a minimum standard VAT rate of 15%. There is also a “super-reduced” VAT rate of 6% on goods such as books, newspapers, magazines, theatre tickets, and services such as the supply of electricity and gas, and district sales – there are certain regulations for goods and services to be within the reduced VAT rate bracket.
Due to COVID-19, Greece has temporarily cut the VAT rate to 13% for hotel accommodation services, medical services, food services, and food preparations to support the local economy.
Employers’ Social Security and statutory contributions
An employer’s social security contributions will depend on the fund(s) the employee is registered to, which may vary according to the sector and industry. Social security contributions are to be granted on an employee’s salary, and with-held to be paid by the employer every month.
As of 1 June 2020, social security contributions for the primary social security fund (EFKA) were with-held at 15.33% and contributed from the employee’s salary, and 24.33% was contributed by the employer. There is a monthly social security contribution cap for the EFKA, which is set as EUR 6,500.
However, to a change in law in 2020, as of 2021 the social security contributions for the employee and employer have been reduced. They are 14.12% for the employee and 22.54% for the employer.
Social Security Contribution
Employee: 15.33% (2020), 14.12% (2021)
Employer: 24.33% (2020), 22.54% (2021)
Greece Corporation Tax
Corporation Tax varies according to whether the company is foreign or domestic. Resident companies are taxed on worldwide income, whilst non-resident companies are taxed in Greece on their local-sourced income, at the same tax rate as resident companies.
The Corporate Income Tax for legal entities is 24%. Greek branches of credit institutions, however, are taxed at 29% if they are subject to a special “deferred tax asset” recognition condition for that given tax year.
Capital Gains are taxed at 24% as normal corporate income. From 1 July 2020, any capital gains derived in the sale of shares in an EU subsidiary are tax exempt if the contribution is greater than 10% and has been held for a minimum of 24 months.
Royalties, interest, and service fees paid to any foreign partners may be deducted under certain conditions and are taxed differently depending on the company/subsidiary type – but these taxes benefit from significant reductions, as Greece is a member of the Double Taxation Treaty.
Deductions & Tax Credits
All ordinary business expenses as well as expenses made for scientific and technological research are deductible – and as of 2020, any expenses relating to corporate social responsibility actions are also considered deductible from the tax year in which they were acquired.
Net operating losses may be carried forward up to 5 years to compensate company benefits, whereas carry-back of losses is not permitted. Start-up expenses are also tax-deductible with the year they have incurred if they do not fall within certain categories of assets.
Rentals of non-residential properties are also subject to a 3.6% stamp duty. Loans and interest may also be subject to a 2.4% stamp duty.
Learn more about Tax in Greece
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