Greece Summary 2014
Investment basics:
Currency – Euro (EUR)
Foreign exchange control – There are no restrictions on imports and exports, but the export of foreign exchange must be made through a licensed commercial bank. There is no obligation to convert imported foreign currency into Euro.
Accounting principles/financial statements – IFRS or Greek GAAP. The application of IFRS is compulsory for corporations with listed shares or securities; and for corporations that are consolidated for accounting purposes with a company that uses IFRS if it represents at least 5% of the consolidated turnover, consolidated assets or consolidated results (after minority rights). IFRS is optional for all other corporations or limited liability companies. Greek GAAP
applies in all other cases. Financial statements must be prepared annually.
Principal business entities – These are the corporation (SA), limited liability company (EPE), general partnership (OE), limited liability partnership (EE) and private limited company (Private Ltd).
Corporate taxation:
Residence – A company incorporated in Greece or effectively managed in Greece at any time during a tax year is considered Greek resident for tax purposes for that tax year.
Basis – Resident entities are taxed on worldwide income; nonresidents are taxed only on Greece-source profits.
Taxable income – Corporate tax is imposed on a company’s total annual profits before the distribution of dividends, profits, fees to directors and profits to employees. Normal business expenses are deductible.
Taxation of dividends – Dividend distributions approved in 2013 are subject to 25% withholding tax. The rate for distributions after 1 January 2014 (including distributions between domestic companies) is 10%. No withholding tax applies if the conditions of the EU parent-subsidiary directive are met (10% minimum holding for an uninterrupted period of 24 months). Similarly, a lower rate may apply under an applicable tax treaty.
Capital gains – Capital gains derived by corporations are taxed as normal business income at the 26% corporate income rate.
Losses – Losses may be carried forward for five years. The carryback of losses is not permitted. Losses from earlier years are offset in priority to losses of subsequent years. Tax losses carried forward may be forfeited where there is a change in ownership of more than 33%, unless it can be proved that the change took place for valid commercial reasons.
Rate – As from the 2014 accounting period, profits are taxed at 26%. The rate for partnerships with double-entry books is also 26%; for partnerships keeping simplified accounting books, progressive rates apply (26% for income up to EUR 50,000 and 33% on the excess).
Surtax – No
Alternative minimum tax – No
Foreign tax credit – An ordinary foreign tax credit is available for income tax paid abroad. See also under “Participation exemption.”
Participation exemption – Dividends received from (domestic or foreign) subsidiaries qualifying for the participation exemption (i.e. at least a 10% shareholding and a holding period of at least 24 months and in the case of a foreign subsidiary, the subsidiary must not be resident in a “black listed” jurisdiction) are exempt from corporate tax. If the participation does not meet the requirements for exemption, a limited foreign tax credit is granted for any tax withheld at source. The participation exemption can be claimed from the beginning of the holding period, provided the receiving company provides a letter of guarantee for the amount of income tax that would otherwise have been payable on the dividend income.
Holding company regime – No
Incentives – Certain investments qualify for subsidies. New legislation on tax investments and incentives is expected during 2014.
Withholding tax:
Dividends – See above under “Taxation of dividends.”
Interest – The statutory withholding tax rate on interest is 15%, unless reduced under an applicable tax treaty or the interest is exempt under the EU interest and royalties directive.
Royalties – Royalties paid to a foreign entity without a PE in Greece are subject to 20% withholding tax, unless the rate is reduced under a tax treaty or the royalties are exempt under the EU interest and royalties directive.
Technical service fees – Technical service fees paid to a foreign entity without a PE in Greece are subject to 20% withholding tax, unless the rate is reduced under a tax treaty. The foreign company may elect to be taxed as if the income were attributed to a PE, in which case the tax withheld will be credited against the final tax liability in respect of such income.
Branch remittance tax – Under the new Income Tax Code, it appears that profits remitted by a branch to its foreign head office are no longer subject to withholding tax.
Other – Certain other payments (such as management fees) to nonresident companies without a PE in Greece may suffer 20% withholding tax, unless the rate is reduced under a tax treaty.
Other taxes on corporations:
Capital duty – A 1% capital duty is payable on the nominal capital of corporations, plus an additional 0.1% surcharge for the benefit of the Competition Committee.
Payroll tax – Employers are required to operate PAYE withholding.
Real property tax – A new real property tax applies from 1 January 2014 and is levied annually on properties located in Greece. The new tax consists of the main and the additional tax. The main tax is calculated according to the size, location, zone price, surface, age, usage and other
characteristics of the property. The additional tax is
calculated at a rate of 0.5% on the total objective value of all of the company’s properties (except for those occupied by the company itself). There also is an annual special tax of 15% of the tax value of property, subject to certain
exemptions. The tax is not normally payable if the company identifies its shareholders up to the level of the individual or a qualifying investment firm/fund. A special real estate duty is payable to the municipal authorities at rates ranging between 0.025% and 0.035%.
Social security – Employers must contribute to the Greek social insurance fund at a rate of about 28% of the gross salaries of their employees.
Stamp duty – Stamp duty of 1.2%, 2.4% or 3.6% applies, depending on the transaction.
Transfer tax – Real estate transfer tax (RETT) is imposed on the value of the transferred property at a flat 3% rate. A municipality surcharge equivalent to 3% of the RETT also applies. When VAT is due on the purchase of new buildings, the above taxes are not levied.
Other – Special tax regimes apply to shipping companies, coordination centers, real estate investment companies and mutual funds.
Anti-avoidance rules:
Transfer pricing – Transactions between related parties (domestic and foreign) must be carried out on arm’s length terms and transfer pricing documentation must be prepared.
Thin capitalization – Thin capitalization rules disallow a deduction for interest paid to affiliated entities. From 1 January 2014, the restriction is based on a more sophisticated definition of “net interest” (interest payable less interest received). Generally, net interest is deductible up to 60% of EBITDA after tax adjustments for the 2014 tax year; 50% for the 2015 tax year; 40% for the 2016 tax year and 30% for the 2017 tax year and subsequent years.
Controlled foreign companies – From 1 January 2014, CFC rules operate to provide broadly that the undistributed passive income from affiliates (e.g. dividends) of a foreign subsidiary satisfying certain conditions will be attributed to and taxed in the hands of its Greek resident controlling shareholder (direct or indirect ownership of at least 51%). The application of CFC rules results in the taxation of “deemed” income as business profits.
Other – Transactions with black-listed offshore and beneficial tax regimes are subject to anti-avoidance provisions that could result in the disallowance of expenses for tax purposes.
Disclosure requirements – Filing and publication of annual financial statements are required.
Administration and compliance:
Tax year – The accounting year generally ends on 31 December or 30 June. Subsidiaries of foreign groups may use other year-end dates.
Consolidated returns – Group taxation is not available; each company must file a separate return.
Filing requirements – Greece operates a self-assessment regime. Corporate entities must file a tax return between 1 February and 30 June in the year following the relevant accounting year. An advance payment of corporate income tax is also required, equal to 80% of the tax due for the preceding year (100% for banks).
Penalties – Penalties apply for late filing, inaccurate returns or failure to file.
Rulings – Binding rulings are not available, but a taxpayer can submit a question to the Ministry of Finance for the administration’s nonbinding view on the issue.
Personal taxation:
Basis – Individuals resident in Greece are taxed on their worldwide income. Nonresidents are subject to tax on their Greek source income only.
Residence – An individual is resident in Greece if he/she is present in Greece for more than 183 days within any 12 month period. The individual is regarded as a Greek tax resident for the calendar year during which that 12 month period ends. Exceptions apply to individuals who visit Greece exclusively for tourism, medical, therapeutic or similar personal purposes.
Filing status – Married persons file a joint return but each spouse is taxed separately on his/her share of the income.
Taxable income – Each category of income is taxed separately. This includes employment income, business income,
income from capital and capital gains on the alienation of real property and securities.
Capital gains – Capital gains tax at 15% applies to gains arising from the sale of real estate, securities (listed/unlisted) and derivatives.
Deductions and allowances – Very limited deductions are allowed for expenses but certain allowances are available.
Rates – Rates are progressive up to 42% (for income exceeding EUR 42,000). Dividends received by a resident individual are subject to a 10% withholding tax which represents the final tax payable on the income.
Other taxes on individuals:
Capital duty – No
Stamp duty – Stamp duty may be levied on certain transactions; the usual rate for individuals is 3.6%.
Capital acquisitions tax – Except for transfer taxes (e.g. on real estate), acquisitions can result in income tax if they
cannot be justified by the taxpayer’s declared revenue (deemed income).
Real property tax – A new real property tax applies from 1 January 2014 and is levied annually on properties located in Greece. The new tax consists of the main and the additional tax. The main tax is calculated according to the size, location, zone price, surface, age, usage and other characteristics of the property. The additional tax is
calculated on the total objective value of all the taxpayer’s properties if their total value exceeds EUR 300,000. The additional tax rate ranges from 0.1% to 1% depending on the value of the properties.
Inheritance/estate tax – For close relatives, an inheritance tax ranging from 1% to 10% is levied on the “tax value” of real property after the deduction of a tax-free amount. The latter varies depending on the taxpayer’s relationship with the deceased. For other heirs, the applicable rates range from 0% to 40%.
Net wealth/net worth tax – No
Social security – Employees must contribute approximately 16.5% to the social insurance fund.
Administration and compliance:
Tax year – Calendar year
Filing and payment – Individuals must file a tax return between 1 February and 30 June in the year following the relevant calendar year. The actual filing date is governed by an annual Ministerial Decision and usually depends on classification of the taxpayer and the last digit of the tax identification number.
Penalties – Penalties and interest apply for late filing, failure to file or inaccurate filing of a return.
Value added tax:
Taxable transactions – VAT is imposed on the sale of goods, the provision of services and the supply of new buildings, when Greece is the place of taxation, in accordance with the place of supply rules. VAT is also due on intra-community acquisitions or imports of goods from non-EU countries and on the receipt of services either from EU or non-EU based suppliers.
Rates – The standard VAT rate is 23%, the reduced rate is 13% and the super reduced rate is 6.5%. A 30% reduction in these rates applies to supplies on certain Aegean islands. Specific supplies are exempt and may or may not have the right to deduct input VAT.
Registration – Nonresidents making taxable supplies of goods or services in Greece are required to register for VAT purposes. There is a threshold of EUR 35,000 for nonresidents carrying out distance sales. There is no registration threshold for Greek residents.
Filing and payment – Periodic VAT returns are submitted on a quarterly or monthly basis, depending on the type of books kept by the VAT payer. A return will be considered duly submitted when either: i) the full amount of VAT payable, together with any additional taxes; or ii) at least EUR 10, is paid to the state. In the latter case, the VAT due is generally paid in two installments; the first one (that should be equal to 50% of the VAT due after deducting the amount paid at the time of the submission of the return) is due by the end of the month within which the return was filed and the second one (for the balance of VAT due) by the end of the following month with an additional tax of 2%. Annual clearance VAT returns are also filed. A statistical declaration (Intrastat) and EC Sales/Acquisitions lists must be submitted with regard to intra-community transactions.
Source of tax law
Income Tax Code, VAT Code, Inheritance and Donation Tax Code, Stamp Duty Code, Books and Records Code.
Tax treaties
Greece has concluded more than 50 tax treaties.
Tax authorities
Ministry of Finance
International organizations
EU, WTO, OECD