Taxation in Greece

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Taxation in Greece, as in most developed nations, is based on the direct and indirect systems. The total tax revenue in 2017 was €47.56 billion from which €20.62 billion came from direct taxes and €26.94 billion from indirect taxes. The total tax revenue represented 39.4 % of GDP in 2017.[1] Taxes in Greece are collected by the Independent Authority for Public Revenue (Ανεξάρτητη Αρχή Δημοσίων Εσόδων (ΑΑΔΕ)).

Income tax[edit]

Income taxation in Greece is progressive. Income tax is payable by all individuals earning income in Greece, regardless of citizenship or place of permanent residence. Permanent residents are taxed on their worldwide income in Greece[2]. An individual in Greece is liable for tax on their income as an employee and on income as a self-employed person. In the case of an individual who is a permanent resident of Greece, their tax owed is calculated on their income earned in Greece and overseas. An individual whose income is only from a wage is not obligated to file an annual return. The employer deducts tax from the employee and transfers it to the tax authority every month.[3][4]

The 2014 tax rates are as follows:[5]

Income Taxation
€0 – €25,000 22%
€25,001 – €42,000 32%
> €42,001 42%

In May 9, 2016 a new set of emergency measures were voted in the Parliament by the SYRIZA/ANEL government.[6] These changes include new income tax rates as well as new solidarity tax rates. The tax rates applicable to income earned in 2016 are as follows:[7]

Income Taxation
€0 – €20,000 22%
€20,001 – €30,000 29%
€30,001 – €40,000 37%
> €40,001 45%

The solidarity tax rates are progressive ranging from 2.2% to 10%. They are assigned as follows:[8]

Income Solidarity tax rate
€0 – €12,000 0%
€12,001 – €20,000 2.2%
€20,001 – €30,000 5%
€30,001 – €40,000 6.5%
€40,001 – €65,000 7.5%
€65,001 – €220,000 9%
> €220,001 10%

But by 01.01.2020 the tax rate for the solidarity contribution will have been amended as in the table below:[9]

Income Solidarity tax rate
€0 – €30,000 0%
€30,001 – €40,000 2%
€40,001 – €65,000 5%
€65,001 – €220,000 9%
> €220,001 10%

Social security tax[edit]

Employees[edit]

An employer is obligated to deduct tax at source from an employee and to make additional contributions to social security as in many other EU member states. The employer's contribution amounts to 24.56% of the salary. The employee's contribution is 15.5%.

Payroll tax Greece An employer is obligated to deduct tax at source from an employee and to make additional contributions to social security as in many other EU member states. The employer's contribution amounts to 28.06% of the salary. The employee's contribution is 16%.

Source: Payroll taxes Wikipedia section GREECE.

Self-employed or contractors[edit]

The basic social security contributions amount to the 27.1% of total income (after VAT paid, qualified expenses deducted and before income tax paid).
This number can broken down to 20.0% for public pension funding and 7.1% for the public health system.

An extra 7.0% is charged for people enlisted to added benefits public pension schemes.
An extra 4.0% is charged for people enlisted to retirement bonuses public schemes.
Thus the total contributions can go as high as 38.1% of income.

Income range for calculation of Social security tax is 4,923 - 70,330 EUR per year.
If annual income is out of the range above, the lower/higher limits respectively will be considered for calculation.

Especially for agriculture professionals, the basic contribution of 27.1% will be lower until 2021, as follows:
21.1% in 2017
23.1% in 2018
25.1% in 2019
26.1% in 2020
26.6% in 2021
27.1% in 2022+

Especially for doctors, pharmacists, engineers, lawyers and economists, the total contribution of 27.1-38.1% will be 5-50% lower until 31/12/2020, as follows:
For total income 0-7,000 EUR 0% lower
For total income 7,000-13,000 EUR 50% lower
For total income 13,000-14,000 EUR 49% lower
For total income 14,000-15,000 EUR 48% lower
...
For total income 56,000-57,000 EUR 6% lower
For total income 57,000-58,000 EUR 5% lower
For total income 58,000+ 0% lower

Corporation tax[edit]

Corporations in Greece are taxed on their income in Greece and from overseas. Foreign companies in Greece are taxed only on income that is generated in Greece. Also, there is 100% advance payment of the taxable amount of the current fiscal year, and is being balanced by each next fiscal year financial data.

Corporate income tax rates by year:

2007, 2008, 2009 - 25%
2010 - 24%
2011, 2012 - 20%
2013, 2014 - 26%
2015 - 29%
2019 - 28%
The corporate income tax rate is to be gradually reduced as follows:[10]
Late 2019 - 24%
2020 - 20%
The planned reduction does not include corporate income tax rate of Greek credit institutions and Greek branches of nonresident credit institutions, which is to remain at 29%.

Capital gains tax[edit]

A capital gain in Greece is added to regular income and is taxable at the same rate as regular income for a company, other than in specific instances as defined in law.

A capital gain by an individual in Greece is taxable at the rate of 15%. There is no tax in the case of capital gain from trading in the stock market as long as the individual owns less than 0.5% of the publicly listed company. [11]

Withholding tax[edit]

As of 1 Jan 2009, Greece imposes a withholding tax of 10% on corporate dividends, unless the dividend qualifies for application of the EC Parent-Subsidiary Directive or if a lower rate applies under an applicable double tax treaty.[12] It also imposes a withholding tax on interest and royalties, however the tax rates may be reduced or eliminated by an applicable double tax treaty or if the payment qualifies for application of the EC Interest and Royalties Directive.[13][14]
By 13.12.2018 the withholding tax rates are as given in the table below[15]:

Type of income Withholding tax rate
Dividents 10%
Interest 15%
Royalties and other payments 20%
Fees for technical projects, management fees, and consultancy and other related services 20%
By exception, fees received by contractors of every kind of technical projects and lessors of public, municipal, association, or port proceeds 3% on the value of the project under construction or lease payment

Value added tax[edit]

Value added tax (VAT) was implemented in to the Greek taxation system in 1987 in order to replace turnover tax and other indirect taxes. The Greek VAT system complies with the European Union value added tax system.
The Value added tax (Φόρος Προστιθέμενης Αξίας (Fóros Prostithémenis Axías (FPA))) in Greece consists of 3 rates:
standard rate of 24%
reduced rate of 13%
super reduced rate of 6%
The VAT rates applied in the Aegan islands of Leros, Lesbos, Kos, Samos and Chios, are 30% lower than the corresponding rates applied in the mainland. The lower VAT rates applied in these Greek Islands are 4% (super-reduced rate), 9% (reduced rate) and 17% (standard rate). The lower VAT rates are in effect until 30.06.2019.[16]

The standard rate applies to the following categories:
foodstuffs, water supplies, pharmaceutical products, medical equipment for disabled persons, children’s car seats, books, newspapers, periodicals, admission to amusement parks, admission to cultural services (except theatre and concert tickets), admission to sporting events, cable TV, writers, composers etc., social housing, renovation and repairing of private dwellings, window cleaning and cleaning in private households, agricultural inputs, restaurant and catering services, use of sporting facilities, supplies by undertakers and cremation services, medical and dental care, bicycles, shoes and leather goods, clothing and household linen.

and to the following goods and services:
alcohol beverages, lemonades and fruit juices, clothing, footwear, tobacco, hifi-video, computers, smartphones, E-books, household electrical appliances, furniture, jewels, telecommunication services, energy products (firewood and timber for industrial use), petroleum products ( unleaded petrol, diesel fuel, LPG, heating oil, lubricants), motor vehicles, domestic passenger transport (air, sea, inland waterway, rail and road), international passenger transport (inland waterway, rail, road), bars and cafes, immovable property, treatment of waste and waste water, services supplied by lawyers, art, collector’s items and antiques.[17]

The reduced rate applies to the following categories:
foodstuffs, water supplies, pharmaceutical products, medical equipment for disabled persons, agricultural inputs, hotel accommodation, social services, domestic care services.
and to the following goods and services:
mineral water, energy products (natural gas, electricity, district heating), hotels[18]

The super reduced rate applies to the following categories:
pharmaceutical products, newspapers, admissions to cultural services (theatre and concert tickets).[19]

VAT returns are submitted on quarterly or monthly basis, depending on the type of books (single or double-entry books) kept byt the VAT payer. The current deadline for submission of VAT returns is 06. 05. 2019 and the payment deadline for VAT returns is 31.05.2019.
Exempted from VAT are those taxable persons whose annual turnover (excluding VAT) is no higher than € 10,000 from supply of goods or/and services. Such persons may opt to be exempt from VAT. The exemption does not apply with regard to taxable persons not established in the Greek territory.[20]

Other taxes[edit]

Real property tax[edit]

The Real property tax is levied on property, that is located in Greece. The tax composes of two parts, the main tax and the additional tax. The value of the main tax depends on the size, location, zone price, surface, age, use and other characteristics of the taxed property. The additional tax is derived from the total tax value of all the taxpayer´s property and it ranges from 0.15% to 1.15% depending on the total value of the property. The additional tax is in effect, if the total value of the taxed property exceeds €250,000.[21]

Inheritance tax[edit]

The Inheritance tax is different for close relatives of the deceased and for other heirs. The former ranges from 1% to 10% of the "tax value" after the deduction of a tax-freee amount, depending on the relationship of the taxpayer with the testator. For other heirs, the inheritance tax rate ranges from 0% to 40% of the tax value.[22]

Tax exemptions[edit]

There are several cases of Tax exemptions under the Greek taxation system, these are as follows:

  • Proceeds from the sale of shares that are traded on the Athens Stock Exchange.
  • Income from ships and shipping.
  • A dividend received from a Greek company.
  • Capital gain from sale of a business between family members, as defined by law.

Tax deductions[edit]

The examples of Tax deductibility in Greece are, as with most other features of Greek taxation, similar to that of other Western European and North American nations, that is, tax deductibility for things such as charity and other things as shown below:

  • 15% credit on a mortgage for the first residential apartment.
  • 15% rent paid on the main residential apartment up to maximum.
  • Donations to public, religious and other institutions.
  • Compulsory payments to social security.

Payments[edit]

Social security tax is paid 12 times a year
VAT tax is paid 3 times a year
Income tax is once a year

See also[edit]

References[edit]

  1. ^ "Tax collection in Greece: State of play -June 2018" (PDF). European Parliament. Retrieved 30 April 2019.
  2. ^ "Greece Individual - Taxes on personal income". Pwc. 13 December 2018. Retrieved 30 April 2019.
  3. ^ "Income tax". Your Europe - Citizens. Retrieved 12 April 2018.
  4. ^ "Greek tax system - Santandertrade.com". en.santandertrade.com. Retrieved 12 April 2018.
  5. ^ "Insights - KPMG - GLOBAL". KPMG. 28 March 2018. Retrieved 12 April 2018.
  6. ^ "Subscribe to read". Financial Times. Retrieved 12 April 2018.
  7. ^ Naftemporiki (19 April 2016). "Οι νέες κλίμακες φορολογίας εισοδήματος –Τι περιλαμβάνει το νομοσχέδιο". naftemporiki.gr. Retrieved 12 April 2018.
  8. ^ "Greece Individual - Taxes on personal income". Pwc. 13 December 2018. Retrieved 30 April 2019.
  9. ^ "Greece Individual - Taxes on personal income". Pwc. 13 December 2018. Retrieved 30 April 2019.
  10. ^ [1], corporate tax set to drop by almost a third
  11. ^ "Υπεραξία μεταβίβασης τίτλων". EEA (in Greek). 2018-05-17. Retrieved 2019-04-23.
  12. ^ Llorca, Salvador Trinxet. "Parent Subsidiary. Text and Cases". Retrieved 12 April 2018 – via Google Books.
  13. ^ http://www.pwc.com/en_CY/cy/publications/assets/pwc-cy_taxup_jan09.pdf
  14. ^ Llorca, Salvador Trinxet (12 April 2018). "European Union Direct Taxes". Asset Protection Publishing. Retrieved 12 April 2018 – via Google Books.
  15. ^ "Greece Corporate - Withholding taxes". PwC. 13 December 2018. Retrieved 30 April 2019.
  16. ^ European comission (1 January 2019). "VAT rates applied in the Member States of the European Union" (PDF). Pwc. Retrieved 30 April 2019.
  17. ^ European comission (1 January 2019). "VAT rates applied in the Member States of the European Union" (PDF). ec.europa.eu. Retrieved 30 April 2019.
  18. ^ .European comission (1 January 2019). "VAT rates applied in the Member States of the European Union" (PDF). ec.europa.eu. Retrieved 30 April 2019.
  19. ^ European comission (1 January 2019). "VAT rates applied in the Member States of the European Union" (PDF). ec.europa.eu. Retrieved 30 April 2019.
  20. ^ Stavropoulos & Partners Law Office (5 March 2019). "Indirect Taxes In Greece". greeklawdigest.gr. Retrieved 30 April 2019.
  21. ^ "Greece Highlights 2019" (PDF). Delloite. March 2019. Retrieved 30 April 2019.
  22. ^ "Greece Highlights 2019" (PDF). Delloite. March 2019. Retrieved 30 April 2019.