Greece regulatory round-up: February 2016

A new law under development in Greece affecting individual tax, corporate income tax and social security contributions will likely have a negative impact on business.

The current review of social security contributions and tax rates in Greece was long overdue, and it will likely have a negative impact on businesses. As agreed with creditors, the Greek Government must save an additional €1.8bn this year and it is not willing, at this stage, to cut existing pensions. One scenario would see social security contributions increased, while another scenario would see only tax rates increased.

The new law under development is still at draft stage and naturally there is uncertainty among Greek taxpayers – also fuelled by recent increases to the solidarity contribution and advance tax rates.

For information on the current rates please read on.

Tax rate for individuals

The taxable income from employment and pensions are subject to tax in accordance with the following scale:

Gradual income (EUR)   Tax rate % Incremental tax (EUR)  Total income (EUR)   Total tax amount (EUR)
 0 - 25.000
 22  5.500
 25.000
 5.500
 25.001 - 42.000
 32  5.440
 42.000
 10.940
 42.000-
 42  -  -  -

The resulting tax will be reduced by €2,100. If the tax is less than €2,100, the reduction confines itself to as the corresponding tax. For taxable income that exceeds €21,000, the decline is reduced by €100 per €1,000 of taxable income.

For example, for an income of €30,000 the tax reduction amount is €1,200. (30.000-21.000 = 9.000, 9.000 * 100/1000 = 900, 2.100-900 = 1.200).

Additionally “Solidarity contribution” is withheld according to the following scale:

Income (EUR)   Rate %
 0-12.000
 0,0
 12001-20.000
 0,7
 20.001-30.000
 1,4
 30.001-50.000
 2,0
 50.001-100.000
 4,0
 100.001-500.000
 6,0
 500.001-
 8,0

For example, a taxpayer with income of €32,000 with the current regime, pays an annual solidarity contribution of €640, a monthly ratio of €45,71.

Separately taxed and followed by extinction of tax liability is any lump sum compensation paid by any entity for any reason, that interrupts employment or other contract, which connects the entity to the person entitled to compensation. The tax is calculated according to the following scale:

Gradual income (EUR)  Tax rate % 
 0-60.000
 0
 60.001 - 100.000
 10
 100.001 - 150.000
 25
 15.001 and upper
 30

Corporate Tax

The profits from individual business activity (freelancer, OE, EE) are taxed according to the following scale:

Gradual income (EUR)  Tax rate %  Incremental tax (EUR)   Total income (EUR)  Total tax amount (EUR)
 0 - 50.000
 26  14.500
 50.000
 14.500
 50.001+
 33  -  -  -

  • There is a tax advance of 75% rate (for 2015).
  • There is an annual flat duty tax liability of either €500 or €650 depending on the kind of business activity, furthermore there is NO flat duty tax liability for specific occasions.

The profits from Corporate business activity (SA, LTD, PC etc ), are taxed with a standard rate of 29%

  • There is a tax advance of 100% rate.
  • There is an annual flat duty tax liability of one thousand (1.000) euros.

The dividends obtained from individuals (domestic or foreign) are separately taxed with a 10% rate following extinction of tax liability.

Under specific circumstances and if a Greek entity is a part of a group of companies, there is no withholding tax (10%) on dividends paid to foreign shareholders. The transfer of the profits of the branches of foreign entities are exempted from any withholding tax.

VAT

  • The main VAT rate is 23%
  • The reduced VAT rate is 13% and 6%

Social Security Contributions

The most common Social Security Contributions for employees and employers are as follows:

Rates IKA contribution by business insurance (N.4254 / 14)

Classes of insurance   Employee rate  Employer rate  Total rate
 Gross eteam  15,50%
 24,56%
 40,06%
 Gross heavy - eteam  18,95%
 26,71%
 45,66%

For example: An employee with a monthly Gross salary of €1.516, pays €234,98 contributions to IKA (social security) and in addition the employer pays €372,33.

It’s important to note that all of the above are currently undergoing reform.

Talk to us

Our experts in Athens are closely monitoring all regulatory changes and can assist businesses with interpretation of the current, ever-changing situation and the new law once passed.

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Need more information? Get in touch with Yannis and his team in Greece.

Yannis Goussiakis
Yannis  Goussiakis
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