Non-residents are taxed only on Greek-sourced income.
The determination of residency status in Greece is based primarily on the center of vital interests as well as on a “number of days rule”. Specifically if an individual maintains his permanent or main residence or habitual residence or center of vital interests, namely his personal or financial or social relations in Greece, then the residence of the respective individual for tax purposes is Greece. An individual who is present in Greece for a period exceeding 183 days, inclusive of any short term period of residence abroad, is considered as Greek tax resident as of the first day of his arrival in Greece.
The rules governing the individual’s income taxation will be determined by reference to the individual’s tax residency status (i.e. Greek tax resident or non-Greek tax resident).
The taxability of employment income of non-Greek residents is determined by reference to the applicable double tax treaty for the avoidance of double taxation (if any).
On the assumption that the individual is registered as a non- Greek tax resident and in case of future tax audit, the Greek tax authorities might require tax residency certificates for the individual in order to evidence/support that the individual is tax resident (and therefore subject to tax on the individual’s worldwide income) in another jurisdiction/state. An individual who is not in a position to provide the requisite documents will automatically be classified as a Greek tax resident by the tax authorities, who will seek to assess tax on the individual’s worldwide income plus penalties (if applicable) for inaccurate filings (when due).
The definition of tax residence is introduced on the basis of the Organisation for Economic Co-operation and Development (OECD) Guidelines as of 1 January 2014 onwards. The concept of usual (permanent) residence is determined for tax purposes in Greece if someone resides in Greece for more than 183 days in total including his/ her short term stay abroad.
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.
Taxable income is classified into four categories:
Married persons are subject to tax separately on their own income but are required to file a joint tax return. However, the joint filing is not mandatory for civil unions and partnerships (of the opposite or same sex). In any case, they are too subject to tax separately on their own income.
Additionally, all individuals over 18 years of age, who earn income, are obliged to file an income tax return irrespective of whether they are subject to tax or not.
Each income category is separately computed and subject to tax.
For each category the tax rates are indicated below.
For employment/ pension income a progressive tax scale is applicable to both Greek and non-Greek tax residents, with no tax free bracket, as provided in the table below:
|Income bracket||Tax rate||Tax per (Percent)||Aggregate income||Aggregate tax|
|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
exceeds the threshold
EUR 10 per
EUR 1 000 of income
Collection of expense receipts
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 acknowledged as expenses for specific groups of goods and services as determined by the Greek Law. In particular, expenses that must be effected via electronic payment in order to secure the tax credit are as follows:
A tax of 22% is imposed on the difference between the amount required and the amount declared, when the minimum amount of expenses is not effected via electronic payment.
Business activity income, including private agricultural business, is subject to the same progressive scale as employment income which is provided below:
|Income bracket||Tax rate||Tax per (Percent)||Aggregate income||Aggregate tax|
However, for new private businesses and entrepreneurs with commencement date as of 1 January 2013 onwards and for the first 3 years of their operation the tax rate of the first scale is reduced by 50 percent provided that the annual gross business income is up to EUR 10,000.
Income earned from private agricultural business is subject to the same tax credit as employment/ pension income. (i.e. respective tax credit is not available for business income).
Capital gains arising from the transfer of listed securities and derivatives are taxed at the rate of 15% on condition that the following are cumulatively met:
Capital gains arising from the transfer of real estate is not subject to tax until 31 December 2017.
According to Greek law, all employers must register their employees with the relevant Greek social security fund on commencement of employment in Greece. In addition to the basic social security funds, employed persons must also be covered by a supplementary insurance fund. A new fund is established named “Unified Social Security Fund” (E.F.K.A.), which, as of the commencement of its operation on 1 January 2017, absorbs the existing main social security funds (i.e. I.K.A. – E.T.A.M., E.T.A.P. – M.M.E., E.T.A.A., O.A.E.E. etc.). The above rates apply for E.F.K.A. fund covering the salaried employees. It should be noted that not all the categories of the working force are covered by the same social security rates as the salaried employees. Further investigation is required in case the individual performs other kinds of entrepreneurial/business activities.
Note: The employee rate is scheduled to be reduced to 15.75% as of 1 June 2019 and to 15.5% as of 1 June 2022. The employer rate is scheduled to be reduced to 24.81% as of June 2019 and to 24.56% as of 1 June 2022.
As of 1 January 2015 personal income tax returns must be filed electronically up to 30 April of the year following the end of the relevant tax year. The tax year for individuals is the calendar year.
Under Greek tax law, employment income is taxable in the hands of the employee in the year in which the employee is entitled to claim such income, whereas income tax withholding should be effected by the employer. Employers are under an obligation to withhold Greek income tax on the remuneration paid to employees in Greece on a monthly basis (in Greece, salary is payable 14 times per year).
Amounts of payroll tax withheld on a monthly basis should be remitted by the employer to the tax authorities by the end of the second month following the month that income was paid, at the latest. 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 not been announced yet by the Greek tax authorities. 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.
Citizens of EU member states, of the states of the European Economic Area (i.e., Iceland, Liechtenstein, and Norway), and Swiss citizens must apply for the appropriate type of certificate of registration of EU citizens (i.e., for the provision of dependent employment services, for the provision of non-salaried services, etc.) if they wish to work in Greece or decide to take up residence in Greece. A stay of up to3 months does not require a permit. However, in practice, it may be necessary to obtain such a certificate even if the stay is shorter than three months.
The definition of permanent establishment is introduced on the basis of the Organization for Economic Co-operation and Development (OECD) Guidelines. Permanent establishment is defined as the fixed place of business through which the business of an enterprise is wholly or partly carried on.
The term permanent establishment includes mainly:
Citizens of countries outside the EU must apply for workvisas before arriving in Greece if they wish to work in Greeceand apply for a resident permit immediately upon arrival.
Because the application procedure for work visas is lengthy,the procedure should be commenced well in advance of theplanned date of arrival.
Some non-EU citizens may require visas to enter the countryeven for vacations or short business trips.
Greece has entered into double taxation treaties with 57 countries to prevent double taxation and allow cooperation between Greece and other tax authorities in enforcing their respective tax laws.
Indirect taxation provides close to 50 percent of the state’s tax revenue.
A value-added-tax (VAT) was introduced in Greece in 1987 and is one of the most important indirect taxes. The basic VAT rate applicable to most goods and services is 24 percent; other rates apply as well depending on the nature of goods/ services and/ or geographic location.
In accordance to the provisions of Law 4172/2013 and Law 4174/2013 the intercompany transactions with one or more associated enterprises are exempted from the documentation obligation, if they do not exceed the amount of:
The Transfer Pricing Documentation File, where appropriate, must be prepared, within 6 months from the closing date of the tax year of the enterprise. The aforementioned Documentation File is accompanied by a Summary Information Sheet which must be electronically submitted to the General Secretariat of Information Systems of the Ministry of Finance, within the same deadline that is provided for the preparation of the Transfer Pricing Documentation File.
Additionally, the Transfer Pricing Documentation File must be submitted upon an audit to the competent tax authority within 30 days upon request. Under the provisions of the Ministry of Finance, if the Greek tax authorities challenge a company’s intra-group transactions, then the following may occur:
Other Transfer Pricing penalties applying:
Services performed within Greece shall comply with the provisions of the Greek and EU legislation regarding the protection of personal data. Greece has incorporated European directives regarding the protection of personal data.
There are no foreign exchange control restrictions. However, all monetary transfers abroad must be effected through commercial banks in Greece. When approving such transfers, commercial banks are obliged to ensure that the payment has been subject to or are exempt from withholding tax.
Payments and other transfers relating to current transactions between residents and non-residents must also be made through commercial banks operating in Greece, which may ask for certain supporting documentation (related to the authenticity of the transaction) prior to making payments.
Nevertheless, according to capital controls introduced in July 2015, the transfer of funds from Greece abroad has been in any way prohibited, including transfers to accounts held in credit institutions established and operating abroad as well as transfer of funds by the use of credit, debit and prepaid cards for cross-border payments. More recent legislative amendments (introduced in October 2015) have relaxed the above restriction so that now up to EUR 500 per depositor/payer per month can be transferred abroad from credit and payment institutions operating in Greece. Nevertheless, any other transfer of funds, which are in principal prohibited, may be approved by a Special Committee of the Ministry of Finance.
Non-Greek residents are not allowed any tax credits, unless they are tax residents of the European Union or the European Economic Area and
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