Recently enacted Greek laws have reformed the country’s social security system and personal taxation rules.1
Greece’s financial crisis and the rigors of austerity imposed by the country’s international creditors have induced further changes to Greece’s tax system. As such, assignees working in Greece subject to Greek tax law and those working outside of Greece still subject to Greek tax law are likely to see an increase in their tax burden as they pay higher income tax and solidarity contribution and there is a squeeze on their tax credits.
International assignment cost projections and budgeting for assignments to Greece and for assignees outside Greece still subject to Greek taxation should take into account the changes described in this newsletter. Employers will need to make the necessary payroll adjustments and update hypothetical tax calculations for tax equalized assignees.
The income tax scale has been made more progressive with the addition of a fourth bracket and rate. The new tax scale on salaries and/or pension income (hereinafter income) is shown on the following page.2 The top rate which had been set at 42 percent is now set at 45 percent.
|Income bracket in EUR||Rate %|
|0 – 20,000||22%|
|20,001 – 30,000||29%|
|30,001 – 40,000||37%|
|40,001 and higher||45%|
The tax credit has been modulated and a lower income ceiling applies. The tax credit on income up to EUR 20,000 (previously, EUR 21,000) is set as follows:
Where the income exceeds EUR 20,000, the amount of the tax credit is reduced by EUR 10 (instead of EUR 100 as it was previously) per EUR 1,000 income. (The amount of EUR 10 seems odd, but that is what is published in the Government Gazette.)
1 The above tax scale is also applicable to the net taxable profits of individual entrepreneurs and freelancers. However such individuals are not eligible for the tax credits applicable to pensioners and employees.
2 The above tax scale and tax credits are also applicable to individual farmers. The previous 13-percent special tax regime is abolished.
3 In case of a taxpayer earning income from pension, employment, and farming activity, the applicable tax credit is calculated on the aggregate income reported. However, where a taxpayer earns income from other sources, the tax credit will be calculated only on the income from pensions, employment, and/or farming.
The tax rate on dividends is increased from 10 percent to 15 percent. New rules provide that the new rate applies for income earned from 1 January 2017 onwards.
Rental income is taxed at the following tax rates/brackets:
The special solidarity contribution has been made more progressive with the addition of a new bracket, and going forward higher rates apply. The special solidarity contribution is incorporated into the Income Tax Code and is applied on all taxable income (i.e., earned taxable income, investment income, dividends, interest, etc.). The new progressive scale3 is as follows:
|Aggregated Income in EUR||Rate %|
|0 – 12,000||0%|
|12,001 – 20,000||2.2%|
|20,001 – 30,000||5.00%|
|30,001 – 40,000||6.50%|
|40,001 – 65,000||7.50%|
|65,001 – 220,000||9.00%|
|220,001 and higher||10.00%|
The taxable benefit-in-kind from the use of company cars is increased for 2016 onwards to 80 percent (from 30 percent)4 on the vehicles cost recorded as an expense in the employer’s accounting books.
1 Law 4387/2016 (Government Gazette Ά 85/12.05.2016) on “Unified Social Security System – insurance and pension system reform – Income tax and gambling games regulations” and, Law 4386/2016 (Government Gazette Ά 83/11.05.2016) amending the treatment of research and development (R&D) expenses.
We will report on the social security changes in more detail in a subsequent GMS Flash Alert.
2 For the previous tax rates applied to individuals, see the KPMG publication Taxation of International Executives: Greece.
3 For the previous Social Solidarity Contribution rates applied to individuals, see the KPMG publication Taxation of International Executives: Greece.
4 For taxable benefits-in-kind, see the KPMG publication Taxation of International Executives: Greece (under “Types of compensation”) .
This article is excerpted with permission, from “Tax – Breaking News” (May 2016), a publication of the KPMG International member firm in Greece.
For additional information or assistance, please contact your local GMS or People Services professional or the following professional with the KPMG International member firm in Greece:
Tel. +30 210 60 62 227
The information contained in this newsletter was submitted by the KPMG International member firm in Greece.
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