Tax circumstances in Greece are a source of a huge confusion among people interested in moving or developing there. On one hand there are many incentives and special tax regimes that are certainly enticing and on the other – there are taxes that on the high end look very unappealing to people toying with the idea of settling their activities in Greece.
Residence and taxes
There are different rules depending on whether you are a resident or not and similar circumstances can be found in many other countries. Nevertheless, income taxation has always been a relatively problematic subject, especially when it involves international matters. To be precise worldwide income tax involves double taxation agreements and hence is a more complicated matter, however as a rule Greek income is subject to Greek income taxes. Double taxation agreements are a solution to a problem involving taxing same income in two different countries. For these interested in investing in other countries it is quite important to familiarize themselves with details of the agreement between the two sides.
You are obliged to pay taxes in Greece, if certain conditions apply:
- You have been in Greece for over 183 days in any calendar year
- You are conducting professional activities or are employed in Greece
- Annual income exceeds 3,000 EUR
- You are operating a business or investment in Greece
- You are in possession of permanent home or property in Greece
- Earning income through renting properties or developing buildings in Greece
- Owning a vehicle (car, motorcycle, aircraft or boat) in Greece
Non-residents are obliged to pay taxes in Greece only on Greek source income, although variations may apply in case of marriage, in which case taxes will be settled individually. Employment income in Greece regardless of whether it comes from being self-employed or not is taxed. Additionally, for the residents of EU member states there are certain credits and deductions, eligibility for which is gained when income from Greece exceeds or is 90% of your total. Non-Greek residents require a tax representative to file tax returns and it must be done in Non-Greek Resident Tax Office. Another limitation is that tax representative must have an office in Athens.
Tax residence
Greece is certainly trying to attract wealthy individuals to become tax residents. For a high-net-worth individual awaits non-domicile tax regime, which involves paying annual flat tax regardless of their foreign income. Similar offer awaits investors, who can pay 100,000.00 EUR every tax year regardless of their foreign income. Paying this tax means being free from any further tax obligations for foreign properties – that includes gift and inheritance tax. This package may be used for up to 15 years and the conditions to be eligible for it are pretty simple – prior to becoming one of Greek tax residents not being recognized as tax resident in Greece during at least seven out of eight past years and confirmation of having invested at least 500,000.00 EUR in real estate, transferable securities, business or shares in companies in Greece. If investment was made by legal entity, it will count as yours if you are an owner of majority of the shares.
Greek taxes
In Greece you may encounter the following types of taxes:
- Income tax
- Social security tax
- Capital tax
- Value Added Tax (VAT)
Income tax can have many sources, covering investment, employment and professional areas. Besides personal income many other things will contribute to tax liability including but not limited to real estate properties, business activities, mobile valuables and financial instruments. Self-employed individuals will be required to pay employment income tax as well as social security in both employer and employee parts.
Capital tax includes for example inheritance tax, gift tax and taxes concerning property transfers and lotteries as well as capital gains tax.
Tax rates
In Greece all income taxes are progressive – tax scales with income value. Greek Income Tax Code (ITC) puts personal income tax rates and corporate income tax rates at:
- 9% for income up to 10,000.00 EUR
- 22% within 10,000.00 – 20,000.00 EUR
- 28% within 20,000.00 – 30,000.00 EUR
- 36% within 30,000.00 – 40,000.00 EUR
- 44% above 40,000.00 EUR
Withholding taxes are applied at following rates: royalties – 20%, interests – 15% and dividends – 5%. Meanwhile, real estate property taxes are set at 15% for taxable income below 12,000.00 EUR, 35% for within 12,000.00 – 35,000.00 EUR and 45% for exceeding 35,000.00 EUR. Property tax on owned properties is based on tax value influenced by size, location, age and other specifications, additionally municipalities may apply another tax of 0.025% – 0.035% real estate’s value commonly referred to as municipality tax.
In Greece VAT is applied at 4 different rates, with 24% being the standard, reduced rates of 13% and 6% – certain pharmaceutical and food products, medical equipment for disabled, hotel accommodation, etc, and final 0% rate for Intra-community and international sea and air transport. Exempt are services related to education, insurance, culture and international transport.
Short summary
Greece has a lot to offer for wealthy entrepreneurs and investors, especially if they are willing to take a risk and become Greek tax residents. Whether the deal is worthwhile is highly dependent on your situation and location, however there are many companies willing to lend you a hand by analysing and explaining in detail the benefits and drawbacks in your case.