Taxation of international executives
Tax returns and compliance
Termination of residence
Economic employer approach
Types of taxable compensation
Salary earned from working abroad
Taxation of investment income and capital gains
Additional capital gains tax (CGT) issues and exceptions
Tax reimbursement methods
Calculation of estimates/prepayments/withholding
Relief for foreign taxes
General tax credits
Sample tax calculation
All income tax information is summarized by KPMG Advisors AE, the Greek member of KPMG International, based on the Greek income tax laws 4172/2013, 4174/2013, 4223/2013, 4254/2014, 4307/2014, 4308/2014, 4312/2014, 4313/2014 and 4316/2014, 4330/2015, 4334/2015, 4337/2015, 4354/2015, 4389/2016, 4438/2016, 4446/2016, 4447/2016.
When are tax returns due? That is, what is the tax return due date?
As of 1 January 2016 personal income tax returns must be filed up to 30 June of the year following the year of income. The tax year for individuals is the calendar year (ends on 31 December each year).
By exception, individuals who submit an application for the transfer of their tax residence and have timely provided the required documents (please refer to the relevant section below) should submit their personal income tax return no later than the end of the tax year following the year related to their transfer request (i.e. no later than 31 December).
What is the tax year-end?
The tax year for income tax purposes is the calendar year (1 January - 31 December).
What are the compliance requirements for tax returns in Greece?
Greek residents file tax return with their local tax office (in the area of the taxpayer’s residence or principal place of business or location of permanent establishment). Tax returns are submitted via the internet by using a unique username and password.
If the same omission occurs within a period of five years, the penalty is doubled while in case of any subsequent occurrence of the same type of omission, the penalty is quadrupled.
In case of filing of an inaccurate tax return the following penalties are imposed:
In case of non filing of a tax return the penalty imposed is 50% of the tax that would apply in case of timely filing. The penalty for non payment of withholding taxes is 50% of the amount of taxes that were not paid.
Moreover, in the case of late settlement of the tax due, interest will be charged for each month of delay calculated at the rate of 8.76% annually, i.e. 0.73% for each month of delay.
Under Greek tax law, employers are under the obligation to withhold Greek payroll tax from the remuneration paid to the employees in Greece, on a monthly basis (in Greece salary is payable 14 times per year). The tax withheld is determined on the basis of a table setting forth personal tax withholding rates.
At the end of the year, the employer is obliged to report via the General Secretariat of Information Systems the annual taxable employment income (i.e. gross employment income minus the applicable social security contributions) by indicating separately the regular salary and the benefits in kind, as well as the amounts of income tax and solidarity contribution which were withheld during the tax year. For tax year 2016 the respective reporting deadline has yet to be announced. Respective amounts appear authomatically in the electronic form of the employee’s annual personal income tax return (Form E-1). Furthermore, the employer is also obliged to issue and provide to the employee an annual salary letter (either in hard copy or electronically) including the regular salary and any benefit paid to the employee during the tax year as well as the applicable payroll withholding.
The tax assessment note is usually issued immediately upon electronic submission of the tax return. However, if Foreign Tac Credit (FTC) is claimed via the annual Greek income tax return, the Greek tax authorities may commence an audit enquiry requesting specific documentation supporting the FTC and upon its completion, the tax assessment note is issued. The tax assessment note is not usually issued immediately when an income tax return or an amended/ supplementary income tax return has been submitted in hard copy.
Non-Greek tax residents should appoint a tax representative and file tax returns with the Non-Greek Resident Tax Office (provided that their tax representative’s tax office is in Athens) on condition that they earn actual Greek source income.
What are the current income tax rates for residents and non-residents in Greece?
Employment income tax table for 2017
|Taxable income bracket||Cumulative tax||Tax rate on income in bracket|
|From EUR||To EUR||EUR||Percent|
Special scales apply in case of (a) severance payments and (b) annuity payment in the framework of group pension plans.
Specifically, severance payments are taxed at source which extinguishes any further tax liability for the individual, based on the following progressive tax scale:
|Taxable income bracket||Cumulative tax||Tax rate on income in bracket|
|From EUR||To EUR||EUR||Percent|
Furthermore, amounts payable to beneficiaries that correspond to insurance premiums paid by a company for group pension plans for their employees are taxed at source as follows:
The above rates are increased by 50% in case of early redemption. The tax is withheld by the life insurance company.
Additionally, for income earned as of 1 January 2016, a special solidarity contribution applies based on the following progressive tax scale:
|Taxable income bracket||Tax rate on income in bracket -For 2015||Tax rate on income in as of 2016|
|From EUR||To EUR||Percent||Percent|
We shall draw your attention that the special solidarity contribution is imposed on the total overall declared or deemed income, taxable and non-taxable. Specifically for tax year 2016 the above solidarity contribution tax scale is progressive. However, for tax year 2015 the applicable rate was imposed on the total income declared (i.e. in case of EUR 123 000 the applicable rate on the total income is 6%).
Above tax rates apply to non–Greek tax residents as well.
For the purposes of taxation, how is an individual defined as a resident of Greece?
Greek law states that Greek-source income is taxable in Greece, whereas individuals who are Greek tax residents are subject to tax in Greece on their worldwide income.
According to Greek tax legislation the residence of an individual for tax purposes is Greece, if respective individual has his permanent or main residence or habitual residence or centre of vital interest in Greece. Furthermore, an individual is considered as a Greek tax resident as of the first day of his residence in Greece if he/she resides continuously in Greece for a period exceeding 183 days, including short term stay outside Greece.
However, respective provision is not applicable in case of individuals who are present in Greece only for tourism, medical, medicinal or equivalent personal purposes on condition that their presence does not exceed the 365 days threshold.
Non-Greek tax residents are not allowed any deductions from their income, unless they are tax residents of the EU or the EEA and they earn more than 90 percent of their global income in Greece or they can prove that their taxable income is that low that they should be entitled to deductions.
Non-Greek tax residents, who report and are taxed in Greece only on their Greek source income, are no longer required to provide the Greek tax authorities with documentation supporting their non-Greek tax residence status.
Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.
The 183 days rule applies in Greece; however, no specific timeframe is stipulated (e.g. calendar year or twelve-month period). Respective provision is subject to wide interpretation and thus clarifications are required by the Ministry of Finance.
What if the assignee enters the country before their assignment begins?
The mere presence of the individual in Greece prior to the commencement of his/her assignment could have an impact in case the individual is eligible for treaty protection as the days of his/her physical presence might exceed the days in Greece permitted by the respective double tax treaty (if there is one).
Are there any tax compliance requirements when leaving Greece?
Yes, Taxpayers, who permanently relocate outside Greece and qualify to apply for the change of their tax residence status, should submit the relevant application and appoint a Greek individual as their tax representative.
The relevant application should be submitted no later than the last working day of the first ten days of March of the tax year following the tax year of their departure, to the taxpayer’s competent tax office.
The supporting documents providing proof that the center of the taxpayer’s vital interests is in the other country (e.g. a tax residence certificate, or a copy of the foreign income tax assessment note issued in the other country or, in the absence of such assessment note, a copy of the relevant foreign income tax return etc.) should be submitted no later than the last working day of the first ten days of September of the tax year following the tax year of departure.
Furthermore, assignees who received income for services rendered in Greece have the obligation to submit an income tax return for this income and pay corresponding tax and solidarity contribution thereon (if applicable).
What if the assignee comes back for a trip after residency has terminated?
Please refer to our comments above.
Do the immigration authorities in Greece provide information to the local taxation authorities regarding when a person enters or leaves Greece?
There is no specific protocol for the exchange of information between the tax authorities and the immigration authorities in Greece. However both authorities in the course of their procedures and/ or audits will seek confirmation of proper registration and may seek to cross reference any information received.
Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
It depends on whether the assignee continues to receive income for services rendered in Greece or he/she has other reasons to have filing obligation, that is, the purchase / ownership of a house in Greece, assets, etc.
Soecifically, foreign tax residents are obliged to submit a Greek income tax return only if they earn actual Greek source income, regardless of whether it is taxed (i.e. subject to tax scale, at source etc.) or is tax exempt.
Do the taxation authorities in Greece adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Greece considering the adoption of this interpretation of economic employer in the future?
Greek tax law does not specifically provide for the economic employer approach. However, the Greek tax authorities may adopt such approach on a case-by-case basis depending on the actual circumstances surrounding each case.
Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
There is no de minimus number of days before the Greek tax authorities will apply the economic employer approach. Physical presence in Greece is the basis for applying the 183-days rule.
What categories are subject to income tax in general situations?
The overriding assumption is that remuneration for services provided in Greece (Greek source employment income) is taxed in Greece. Furthermore, the market value of any benefit in kind received by an individual or his relatives is added to his taxable income, provided that the total amount of these benefits exceeds EUR 300.source per tax year.
Benefits, which are deemed to be employment income and are specifically stipulated by Greek legislation, include amongst others the following (the list is not exhaustive):
|PTRP in EUR||Rate %|
|0 – 12 000||4%|
|12 001 – 17 000||7%|
|17 001 – 20 000||14%|
|20 001 – 25 000||18%|
|25 000 and higher||22%|
|Age of Car||Discount Rate %|
|10 years and higher||50%|
However the reimbursement of accommodation, food and travel expenses incurred by the employee for the purposes of carrying out assigned employment duties should not be deemed to be employment income, on condition that proper receipts and expense report has been dully submitted.
Typical elements of an expatriate’s compensation package that are taxable include the following:
After adding up the various taxable elements of compensation, the employee is taxable on the net amount, which is defined as the total amount less the employee’s share of social security contributions. Please note that for Greek and expatriate employees registered on the Greek payroll, the Greek tax authorities should be provided with electronic information regarding the compensation data as well as the total taxes paid and withheld by the Greek employer as a result of the Greek employment. However, for Greek and expatriate employees who are not registered with the Greek payroll, the Greek tax authorities should be provided with a salary statement issued by their foreign employer reporting compensation received as well as taxes paid abroad.
Typical elements of an expatriate’s compensation package that are non-taxable (tax-exempt) include the following:
Are there any areas of income that are exempt from taxation in Greece? If so, please provide a general definition of these areas.
The categories of income, which are exempt from tax, are the following:
Are there any concessions made for expatriates in Greece?
Expatriates who are non-Greek residents are only subject to tax on income from Greek sources. Non-residents could have dual contracts and not be subject to tax on income earned for services provided outside Greece. In practice, most foreign nationals who are on expatriate assignments in Greece are considered non-Greek residents (assuming they have kept their tax residency in the home location) and may exclude employment income from working outside Greece on condition that such employment income does not relate to services provided in Greece.
Is salary earned from working abroad taxed in Greece? If so, how?
Greek tax legislation does not provide any relief to Greek residents who earn a salary outside Greece, except for certain classes of Greek civil servants who are required to fill a vacancy abroad.
Any other income of the taxpayer is normally added to employment income in order to arrive at taxable income.
Are investment income and capital gains taxed in Greece? If so, how?
Income from dividends is classified as capital income. According to Greek legislation, dividends are subject to tax at the rate of 10 percent. The aforementioned taxation exhausts the tax liability in case the beneficiary is an individual.
Income from interest is subject to tax at the rate of 15 percent that exhausts the tax liability in case the beneficiary is an individual.
Royalties are subject to tax at the rate of 20% that exhausts the tax liability in case the beneficiary is an individual.
Rental income is taxed at the rate of 15% for income up to EUR 12,000, 35% for income from EUR 12,001 up to 35,000 and 45% for income exceeding EUR 35,000.
Capital gains arising from the transfer of listed securities and derivatives is taxable at the rate of 15% as of January 2014 and on condition that it is not considered business profit and on condition that the following are cumulatively met:
Furthermore, a 0.2 percent tax is imposed on the sale of shares listed in the Athens stock exchanges or in foreign exchanges.
Benefits arising from the exercise of stock options of a value lower than the stock exchange value at the time they are exercised are considered as employment income and are subject to Greek income tax.
The benefit resulting from the exercise of stock options is calculated as the difference between the price paid by the beneficiary and the fair market value at the date of the exercise.
|Residency status||Taxable at:|
|Other (if applicable)||N/A||N/A||N/A|
* On condition that the stock options relate to services rendered in Greece and DTT exemption (if available) does not apply.
Both residents and non-residents may maintain foreign currency accounts with banks in Greece. Such accounts may be credited with any foreign currency which arises from Greece or abroad, including foreign bank notes and foreign exchange which is purchased with Euros. No tax relief is available for foreign exchange losses and foreign exchange gains are not taxable per se.
Due to capital controls, opening a new bank account is in principal forbidden by the law. Nevertheless, specific exemptions are explicitly provided. Moreover, the Special Committee of the Ministry of Finance is competent to allow the opening of a bank account after a reasoned request.
There is a capital gain tax on the disposal of real estate property in Greece at the rate of 15%. However, such provision will be in force as of 1 January 2018.
However, the capital gain from the transfer of real estate is tax-free if the following conditions are cumulatively met:
Please see Overview and Introduction regarding treatment of imputed income on the basis of living expenses or acquisition of certain assets.
A tax reduction of 10 percent of amount donated to organizations recognized by the Minister of Finance is permitted with the restriction that donations may not exceed 5 percent of the taxable income, while the amount donated within the tax year must exceed the amount of EUR 100.
Are there additional capital gains tax (CGT) issues in Greece? If so, please discuss? Not Applicable.
Please refer to our comments below regarding the Real Estate Ownership Taxes and Transfer Taxes.
Are there capital gains tax exceptions in Greece? If so, please discuss?
Please refer to our comments above.
What are the general deductions from income allowed in Greece?
Certain personal deduction is available to Greek residents in computing their taxable income. Such deduction is the mandatory employee-portion of social security contributions on employment income. Furthermore, contributions to group private pension funds are also deductible items, since the annuity paid at the end of the program is taxed separately via a special scale.
What are the tax reimbursement methods generally used by employers in Greece?
The most common tax reimbursement method used by the employers in Greece is the tax equalization method. However, the concept of hypothetical tax is not recognized for Greek tax purposes.
How are estimates/prepayments/withholding of tax handled in Greece? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
Tax withholding is handled as Pay-As-You-Earn.
Employers are required to withhold income tax from salaries, wages and other remuneration paid to their employees. The amounts withheld are determined in accordance with the scale of ordinary income tax rates applicable to individuals.
Benefits in kind are not subject to payroll income tax withholdings.
Income tax must be withheld on a monthly basis b the employer. Furthermore, it must be emitted to the tax authorities by the end of the second month after the payment of the employment income which is subject to tax withholding.
At the end of the year, the employer is obliged to report via the General Secretariat of Information Systems the annual taxable employment income (i.e. gross employment income minus the applicable social security contributions) by indicating separately the regular salary and the benefits in kind, as well as the amounts of income tax and solidarity contribution which were withheld during the tax year. For tax year 2016 the respective reporting deadline has yet to be announced. Respective amounts appear automatically in the electronic form of the employee’s annual personal income tax return (Form E-1). Furthermore, the employer is also obliged to issue and provide to the employee an annual salary letter (either in hard copy or electronically) including the regular salary and any benefit paid to the employee during the tax year as well as the applicable payroll withholding.
Is there any Relief for Foreign Taxes in Greece? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
Income tax paid outside Greece by Greek tax residents on foreign-source income is offset against the tax payable in Greece up to the amount of Greek tax corresponding to such foreign-source income. The Greek tax attributable to the foreign-source income is determined on the basis of the Greek income tax rates applicable for each type of income.
What are the general tax credits that may be claimed in your country? Please list below.
|Taxpayers without children||EUR 1 900|
|Taxpayers with one child||EUR 1 950|
|Taxpayers with two children||EUR 2 000|
|Taxpayers with three children||EUR 2 100|
|Income threshold for full credit||EUR 20 000|
|Reduction in credit if income above the threshold||EUR 10 per EUR 1 000 of income|
As of 1 January 2017, the above tax credit is linked to a minimum value of expenses that must be incurred by individuals via electronic payment, depending on the individuals’ level of income. A progressive scale applies for the determination of the income tax reduction related to electronic transactions. In particular, expenses that must be effected via electronic payment in order to secure the tax credit are as follows:
- 10% of income for income up to EUR 10 000,
- 15% of income for income from EUR 10 000.01 up to EUR 30 000
- 20% of income for income exceeding EUR 30 000 with a maximum value (ceiling) of expenses of EUR 30 000, regardless of income level.
Certain conditions apply in case of non-Greek tax residents in order to qualify for the tax credits.
This calculation assumes a married taxpayer coming to Greece with two children whose three-year assignment begins 1 January 2017 and ends 31 December 2019. The taxpayer’s base salary is USD 100,000 and the calculation covers three years.
|Moving expense reimbursement||20,000||0||20,000|
|Interest income from non-local sources||6,000||6,000||6000|
Exchange rate used for calculation: USD1.00 = EUR 0.935 (27.01.2016)
Calculation of taxable income
|Days in Greece during year||365||365||365|
|Earned income subject to income tax|
|Net housing allowance||11,220
up housing allowance for calculation purposes
|Moving expense reimbursement||18,700||0||18,700|
|Total earned income||172,913
|Total taxable income||178,523
Calculation of tax liability
|Taxable income as above||178,523||164,438||178,523|
|Greek tax thereon|
|Domestic tax credits (dependent spouse/ children credit)||471||612||471|
|Foreign tax credits||0||0||0|
|Total Greek tax||-84,599
1Certain tax authorities adopt an “economic employer” approach to interpreting Article of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee assigned to work for an entity in the host country for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country employer but the employee’s salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the “economic employer” and therefore the employer for the purposes of interpreting Article 15. In case, article 15 relief would be denied and the employee would be subject to tax in the host country.
2For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the economic employer approach.
© 2017 KPMG Advisors AE, a Greece Corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.