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Greece - Income Tax

Greece - Income Tax

Taxation of international executives

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Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

As of 1 January 2016, personal income tax returns must be filed up to 30 June of the year following the year of income. The tax year for individuals is the calendar year (ends on 31 December each year).

By exception, individuals who submit an application for the transfer of their tax residence to non-Greek tax residents and have timely provided the required documents (please refer to the relevant section below) should submit their personal income tax return no later than the end of the tax year following the year related to their transfer request (i.e. no later than 31 December).

What is the tax year-end?

The tax year for income tax purposes is the calendar year (1 January - 31 December).

What are the compliance requirements for tax returns in Greece?

Residents

Greek residents file tax return with their local tax office (in the area of the taxpayer’s residence or principal place of business or location of permanent establishment). Tax returns are submitted via the internet by using a unique username and password.

Administrative penalties

Where the taxpayer or any other person fails to file timely or does not file a tax return in relation to income and/or withholding tax or does not respond to the Tax Administration’s request for information, does not cooperate during the tax audit, does not proceed with registration with the tax authorities as a taxpayer and/or upon appointment as a tax representative, registers more than one time with the Greek tax authorities , fails to comply with any obligation regarding the maintenance of books and records or to file notifications with the tax authorities, the following administrative penalties are imposed:

  • EUR2,500 where any taxpayer fails to register or registers more than one time with the Greek tax authorities.
  • EUR100 in case of non-filing, or late filing or filing an inaccurate tax return (in case of salaried employees or pensioners who are not registered as free-lancers).

If the same omission occurs within a period of 5 years, the penalty is doubled while in case of any subsequent occurrence of the same type of omission, the penalty is quadrupled.
In case of filing of an inaccurate tax return the following penalties are imposed

  • 10 percent of the additional tax not reported, if such additional tax is equal to or higher than 5 percent but less than 20 percent of the tax due based on the tax return;
  • 25 percent of additional tax not reported, if such additional tax is higher than 20 percent but less than 50 percent of the tax due based on the tax return;
  • 50 percent of the additional tax required for payment, if such additional tax is higher than 50 percent of the tax due based on the tax return

Additional penalties

In case of non-filing of a tax return the penalty imposed is 50 percent of the tax that would apply in case of timely filing. The penalty for non-payment of withholding taxes is 50 percent of the amount of taxes that were not paid.

Moreover, in the case of late settlement of the tax due, interest will be charged for each month of delay calculated at the rate of 8.76 percent annually, i.e. 0.73 percent for each month of delay.

Under the Greek tax law, employers are under the obligation to withhold Greek payroll tax from the remuneration paid to the employees in Greece, on a monthly basis (in Greece salary is payable 14 times per year with 15 payroll runs consisting of monthly payments for January through December, Easter bonus, Summer vacation bonus and Christmas bonus). The tax withheld is determined on the basis of a table setting forth personal tax withholding rates.

The employer is obliged to report via the Independent Authority for Public Revenue the taxable employment income (i.e. gross employment income minus the applicable social security contributions and any group pension fund contributions) on a monthly basis 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. Specifically, benefits in kind are not subject to payroll withholdings whilst they are subject to payroll reporting. As of 1 January 2019, monthly payroll shall be uploaded electronically on taxisnet on a monthly basis (in a platform set by the Ministry of Finance). Payroll items which are not subject to payroll withholdings are equally subject to electronic payroll reporting. . 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. For tax year 2019 the respective reporting deadline is 13 March 2020.

The tax assessment note is usually issued immediately upon electronic submission of the tax return. However, if Foreign Tax Credit (FTC) is claimed via the annual Greek income tax return, the Greek tax authorities may commence an audit enquiry requesting specific documentation supporting the FTC and upon its completion, the tax assessment note is issued. The tax assessment note is not usually issued immediately when an income tax return or an amended/ supplementary income tax return has been submitted in hard copy.

Non-residents

Non-Greek tax residents should appoint a tax representative and file tax returns with the Non- Greek Resident Tax Office (provided that their tax representative’s tax office is in Athens) on condition that they earn actual Greek source income.

Tax rates

What are the current income tax rates for residents and non-residents in Greece?

Residents

Employment income tax table for 2020

Taxable income bracket

Cumulative tax

Tax rate on income for 2020 in bracket

From EUR

To EUR

EUR

Percent

0

10, 000

900

9

10,001

20,000

2,200

22

20,001

30,000

2,800

28

30,001

40,000

3,600

36

40,001

No limit

 

44   

The tax rates changes are applicable as of 1 January 2020

Special scales apply in case of (a) severance payments and (b) annuity payment in the framework of group pension plans.

Specifically, severance payments are taxed at source which extinguishes any further tax liability for the individual, based on the following progressive tax scale:

Taxable income bracket

Cumulative tax

Tax rate on income in bracket

From EUR

To EUR

EUR

Percent

0

60,000

0

0

60,000.01

100,000

4,000

10

100,000.01

150,000.01

10,000

20

150,000.01

No limit

 

30

Furthermore, amounts payable to beneficiaries that correspond to insurance premiums paid by a company for group pension plans for their employees are taxed at source as follows:

  • 10 percent for the first EUR40,000 and 20 percent for the part exceeding EUR40,000.
  • 15 percent for every periodically paid benefit.

The above rates are increased by 50 percent in case of early redemption. The tax is withheld by the life insurance company. As of 1 January 2020, company group pension payouts distributed to employees due to their participation in voluntary employment termination programs is no longer considered as early redemption and thus not subject to the increased tax rate by 50 percent.

Special taxation of athletes

As of 1 January 2020, the special taxation of athletes under certain conditions was introduced. Specifically, it is stipulated that income earned by professional athletes from sports corporations, departments of remunerated athletes or recognized sports clubs, is taxed at a flat tax rate of 22 percent exhausting any further tax liability provided that the amounts received in one lump sum or in installments for a transfer contract or the renewal or termination of their contract, exceed EUR40,000 within the respective tax year. Otherwise, the regular employment income tax scale applies.

Additionally, for income earned as of 1 January 2016, a special solidarity contribution applies based on the following progressive tax scale:

Taxable income bracket

Tax rate on income in bracket for 2020

From EUR

To EUR

Percent

0

12,000.99

0

12,001

20,000.99

2.2

20,001.0

30,000.99

5.00

30,001.00

40,000.99

6.50

40,001.00

65,000.99

7.50

65,001.00

220,000

9.00

220,000.00

Over

10.00

Kindly note that the special solidarity contribution is imposed on the total overall declared or deemed income, taxable and non-taxable. By analogy to income tax exemption provisions, all categories of taxpayers having 80 percent disability or more, are exempt from solidarity contribution.

Non-residents

Above tax rates apply to non–Greek tax residents as well. Double Taxation Treaties should be examined for possible exemption for Greek source income. Moreover, some categories of income may be exempted from special solidarity contribution.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Greece?
 

Greek law states that Greek-source income is taxable in Greece, whereas individuals who are Greek tax residents are subject to tax in Greece on their worldwide income. According to Greek tax legislation the residence of an individual for tax purposes is Greece, if the respective individual has their permanent or main residence or habitual abode or center of vital interest in Greece. Furthermore, an individual is considered as a Greek tax resident as of the first day of their residence in Greece if they reside in Greece for a period exceeding 183 days, cumulatively during any 12-month period including short term stay outside Greece.

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.

Non-Greek tax residents are not allowed any deductions from their income, unless they are tax residents of the EU or the EEA and they earn more than 90 percent of their global income in Greece or they can prove that their taxable income is that low that they should be entitled to deductions.

Non-Greek tax residents, who report and are taxed in Greece only on their Greek source income, are no longer required to provide the Greek tax authorities with documentation supporting their non-Greek tax residence status, however, are obliged to provide such documentation on demand by the competent tax authorities.

Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/jurisdiction for more than 10 days after their assignment is over and they repatriate.
 

The 183 days rule applies in Greece, cumulatively during any 12-month period. Respective provision is subject to wide interpretation and we are currently pending further clarifications and guidance to be issued by the Hellenic Ministry of Finance.

What if the assignee enters the country/jurisdiction before their assignment begins?
 

The mere presence of the individual in Greece prior to the commencement of their assignment could have an impact in case the individual is eligible for treaty protection as the days of their physical presence might exceed the days in Greece permitted by the respective double tax treaty (if there is one).

Termination of residence

Are there any tax compliance requirements when leaving Greece?
 

Yes. Taxpayers, who permanently relocate outside Greece and qualify to apply for the change of their tax residence status to non-Greek tax residents, should submit the relevant application and appoint a Greek individual as their tax representative.

The relevant application should be submitted (indicatively) no later than the last working day of the first 10 days of March of the tax year following the tax year of their departure, to the taxpayer’s competent tax office.

The supporting documents providing proof that the center of the taxpayer’s vital interests is in the other country/jurisdiction (e.g. a tax residence certificate, or a copy of the foreign income tax assessment note issued in the other country/jurisdiction or, in the absence of such assessment note, a copy of the relevant foreign income tax return etc.) should be submitted (indicatively) no later than the last working day of the first 10 days of September of the tax year following the tax year of departure, however, in any case not later than 31 December of the tax year following the tax year of departure. There is however also the possibility of retroactive applications.

Furthermore, assignees who received income for services rendered in Greece have the obligation to submit an income tax return for this income and pay corresponding tax and solidarity contribution thereon (if applicable), however, the Double Tax Treaty examination for specific income and circumstances should be taken into account.

What if the assignee comes back for a trip after residency has terminated?
 

Please refer to our comments above.

Communication between immigration and taxation authorities

Do the immigration authorities in Greece provide information to the local taxation authorities regarding when a person enters or leaves Greece?
 

There is no specific protocol for the exchange of information between the tax authorities and the immigration authorities in Greece. However, both authorities in the course of their procedures and/ or audits will seek confirmation of proper registration and may seek to cross reference any information received.

Filing requirements

Will an assignee have a filing requirement in the host country/jurisdiction after they leave the country/jurisdiction and repatriate?
 

It depends on whether the assignee continues to receive income for services rendered in Greece (i.e. including the trailing income) or they have other reasons to have filing obligation, that is, the purchase/ownership of a house in Greece, assets, etc.

Specifically, foreign tax residents are obliged to submit a Greek income tax return only if they earn actual Greek source income, regardless of whether it is taxed (i.e. subject to tax scale, at source etc.) or is tax exempt.

Economic employer approach

Do the taxation authorities in Greece adopt the economic employer approach1 to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Greece considering the adoption of this interpretation of economic employer in the future?
 

Greek tax law does not specifically provide interpretation for the economic employer approach. However, the Greek tax authorities may adopt such approach on a case-by-case basis depending on the actual circumstances surrounding each case.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
 

There is no de minimus number of days before the Greek tax authorities will apply the economic employer approach. Physical presence in Greece is the basis for applying the 183- days rule.

Types of taxable compensation

What categories are subject to income tax in general situations?
 

The overriding assumption is that remuneration for services provided in Greece (Greek source employment income) is taxed in Greece. Furthermore, the market value of any benefit in kind received by an individual or their relatives is added to their taxable income, provided that the total amount of these benefits exceeds EUR300 per tax year. The excess amount of EUR300 (which now serves as a tax-free limit) is considered as benefit in kind.

Benefits, which are deemed to be employment income and are specifically stipulated by Greek legislation, include amongst others the following (the list is not exhaustive):

  • Company cars: The calculation of the taxable benefit in kind relating to the use of company cars is amended as of tax year 2020 onwards. In particular, the value of the use of company car is calculated as a percentage of the car’s Pre-Tax Retail Price (PTRP) based on the below progressive scale and on the bases of its age as follows:

PTRP in EUR

Rate %

0 – 14,000

4%

14,001 – 17,000

20%

17,001 – 20,000

33%

20,001 – 25,000

35%

25,001 – 30,000

37%

30,001 and higher

20%

Age of Car

Discount Rate %

0-2

0%

3-5

10%

6-9

25%

10 years and higher

50%

Furthermore, the tax-exempt ceiling, applicable only to tool cars, is being increased from EUR12,000 to EUR17,000.

  • Loan: the law provides a method to determine the value derived from loans to an employee or a partner or a shareholder by an individual, company or legal entity where a written loan agreement exists as well as in the absence of a written loan agreement. Moreover, as of 1 January 2020, benefit in kind in the form of loan is redefined. It sets the difference between the interest paid by the employee and the average market interest rate, as the amount of benefit regardless of whether as written agreement exists or not.
  • Stock option rights: the time at which the option is exercised or transferred is defined as the time at which the benefit is taxed. The tax base is determined using the closing price of the stock reduced by the cost of the option. A new stock options tax framework is introduced as of 1 January 2020, where if the shares that are acquired upon exercise, are retained for a period exceeding 24 months, or 36 months under certain conditions, are taxed as capital gains at a flat tax rate of 15 percent, or 5 percent for shares of newly established companies and if certain conditions are cumulatively met. We are pending clarification and further guidance to be issued by the Hellenic Ministry of Finance in this respect. Furthermore, based on the explicit law provision the new regime appears to apply only in case of stock options plans (e.g. and not to share/equity plans in general).
  • Housing allowance: rent paid by the employer, or in case of an owned house, the amount of 3 percent of the objective tax value of the property is added to taxable income of the Individual

For the above-mentioned benefits in kind (company cars, loan, stock option rights and housing allowance), no tax-free threshold of EUR300 is available.

Cash bonuses

However, the reimbursement of accommodation, food and travel expenses incurred by the employee for the purposes of carrying out assigned employment duties should not be deemed to be employment income, on condition that proper receipts and expense report has been duly submitted.

Typical elements of an expatriate’s compensation package that are taxable include the following:

  • Income from employment includes all amounts paid or benefits-in-kind received in a year, on the understanding that the market value of the benefit exceeds EUR300 per tax year. (certain exceptions apply).
  • Reimbursements of foreign and/or home-country/jurisdiction taxes form part of an individual’s compensation package are taxable if they relate to services provided in Greece.
  • A cost-of-living allowance normally forms part of an individual’s taxable income.
  • Whether or not expatriation premiums would form part of an individual’s taxable income in Greece depends primarily on the date these premiums are paid as well as the tax residence status of the employee at the date of payment and whether respective premiums relate to services provided in Greece. Payment of such premiums before the commencement of the Greek employment by an employer or division of the employer’s business located outside Greece and not ultimately borne by the Greek employer would not constitute taxable income in Greece. However, an allowance paid upon or after commencement of the individual’s assignment (employment) in Greece would principle be attributed to Greek employment and would thus constitute taxable income in Greece. Subject of Double Taxation Treaty review.
  • Cars owned by the employer and provided to the employee for both business and personal use give rise to income as analyzed earlier. An exemption applies in case of tool cars used by specific salesmen, technicians etc., test drive cars, minibuses used for the employee’s transportation, cars used for the transportation of guests or clients etc. and service cars
  • Deferred compensation schemes, whereby an expatriate receives part of the compensation in the form of a lump-sum paid abroad on departure from Greece is taxable to the extent it relates to services provided in Greece (Greek-source income).
  • Stock option plans, whereby benefits arising from the exercise of stock options of a value lower than the stock exchange value at the time they are exercised considered as employment income and are subject to Greek income tax. However, please see above information about the new stock options tax framework as of 1 January 2020.

After adding up the various taxable elements of compensation, the employee is taxable on the net amount, which is defined as the total amount less the employee’s share of social security contributions and any employee’s group pension plan contributions. Please note that for Greek and expatriate employees registered on the Greek payroll, the Greek tax authorities should be provided with electronic information regarding the compensation data as well as the total taxes paid and withheld by the Greek employer as a result of the Greek employment. However, for Greek and expatriate employees who are not registered with the Greek payroll, the Greek tax authorities should be provided with a salary statement issued by their foreign employer reporting compensation received as well as taxes paid abroad.

Typical elements of an expatriate’s compensation package that are non-taxable (tax-exempt) include the following:

  • insurance premiums paid by the employee or the employer on behalf of an employee within the framework of group pension plans, however amounts payable to beneficiaries that correspond to insurance premiums paid by a company for group pension plans for their employees are taxed upon distribution separately at a special scale.
  • insurance premiums paid by the employer in order to cover medical and hospital care or death or incapacity of its staff within the framework of insurance plans, up to the annual amount of EUR1,500 per employee.

Electronic receipts collection measure

As of 1 January 2020, employees, pensioners, freelancers and other independent earners should incur expenses by using electronic means of payment within E.U. or E.E.A. equal to 30 percent of their actual income, with a maximum expenses ceiling of EUR20,000. A penalty of 22 percent on the difference between the required versus the amount spent, will incur. While calculating the actual income, solidarity contribution and alimony payments are not considered. Special provisions for certain categories of taxpayers apply. The expense receipt measure does not apply to Greek tax residents who are residing or working abroad as well as to non-Greek tax residents who are subject to annual income tax return filing obligation in Greece.

It is worth mentioning that the above provisions regarding expense receipts equally apply to rental income as of 1 January 2020.

Intra-group statutory directors

Will a non-resident of Greece who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Greece trigger a personal tax liability in Greece, even though no separate director's fee/remuneration is paid for their duties as a board member?

No, on condition that no separate director’s fee/remuneration is paid for their duties as a board member for the Greek entity.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Greece?

See our comment above.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Greece (i.e. as a general management fee where the duties rendered as a board member is included)?

Yes, such appointment as a statutory director (i.e. member of the Board of Directors in a group company situated in Greece) will trigger a personal tax liability in Greece and reporting obligations for the company situated in Greece.

c) In the case that a tax liability is triggered, how will the taxable income be determined?

It will be determined as employment income with applicable income taxation and special solidarity contribution progressive rates. Such income is subject to Double Taxation Treaties review.

Tax-exempt income

Are there any areas of income that are exempt from taxation in Greece? If so, please provide a general definition of these areas.

The categories of income, which are exempt from tax, are the following:

  • Interest income derived from senior dept. or treasury bills of the Greek Government in case the beneficiary is an individual.
  • Interest income derived from bonds of the EFSF.
  • Capital gain arising from the transfer of listed securities acquired prior to 1 January 2009.
  • In case of listed securities acquired after 1 January 2009, an exemption from capital gains tax applies only if the participation in the company’s share capital is less than 0.5 percent.
  • Capital gain arising from the transfer of Greek and EU/ EEA corporate bonds Profits from the transfer of titles for the individuals who are tax residents of a country/jurisdiction with which Greece has signed a Double Tax Treaty for the avoidance of double taxation, on condition that they provide a tax residence certificate.
  • Certain allowances paid and expenses reimbursement by the employer to the employee are tax-free on the understanding that respective expenses were incurred exclusively in the frame of the business activity of the employer.
    • As of 1 January 2020, the reimbursement of the Public Means of Transport monthly or yearly card purchase.
    • As of 1 January 2020, the purchase price of granted company cars with zero or low emissions (up to 50 CO2/km) and with Retail Price Before Taxes up to EUR40,000, during any time of the tax year.
    • As of 1 January 2020, the benefit in kind in the form of shares, provided to an employee or partner or shareholder by a legal entity, regardless of whether the employment relationship continues, if such shares are acquired upon exercise and are only transferred after 24 or 36 months (under certain conditions) following their acquisition date.
  • Moreover, specific categories of employment income and pensions are "exempted" for income tax purposes by the new Income Tax Code (indicatively, income from performance of duties by a foreign diplomatic or consular representative etc., alimony received by the beneficiary, pensions received due to disability by war victims or their families etc., allowance, salaries or pensions to disabled persons with disability of at least 80 percent, allowance due to unemployment paid by OAED under conditions, EKAS allowance, payments to recognized political refuges etc.).
  • Capital gains arising from the sale of EU/ EEA based UCITS is tax exempt.
  • Profit from disposal of produced electricity to DEH Company or another supplier after joining the "Special development program of photovoltaic systems up to ten (10) KW".

Expatriate concessions

Are there any concessions made for expatriates in Greece?
 

Expatriates who are non-Greek residents are only subject to tax on income from Greek sources. Non-residents could have dual contracts and not be subject to tax on income earned for services provided outside Greece. In practice, most foreign nationals who are on expatriate assignments in Greece are considered non-Greek residents (assuming they have kept their tax residency in the home location) and may exclude employment income from working outside Greece on condition that such employment income does not relate to services provided in Greece.

High Net Worth Individual Regime
 

In an effort to attract high net worth individuals, an alternative taxation on foreign source income earned by individuals (and/or their relatives) who transfer their tax residence to Greece is introduced, if the following conditions are cumulatively met (a) the individual was not a Greek tax resident for the 7 out of 8 years preceding the transfer of their tax residence to Greece and (b) can prove that they or their relatives or a legal entity in which they hold the majority of the shares, invests in real estate or moveable assets or shares of legal entities based in Greece. The amount of the investment should not be lower than EUR500,000 and must be completed within a period of 3 years. Condition (b) is not required in case of an individual who has obtained a residence permit due to investment activity in Greece.

In particular, individuals who will utilize the alternative taxation method, should pay a lump sum tax of EUR100,000 on an annual basis, regardless of the level of their foreign source income. In case where a relative utilizes respective provisions, they should pay a lump sum tax of EUR20,000 on an annual basis. Utilization of these provisions cannot exceed a period of 15 tax years.

The Greek source income of the individuals subject to the alternative taxation method should be reported in the annual income tax return and taxed according to its classification, whilst their foreign source income is not subject to reporting and is taxed based on the lump sum tax.

It is worth mentioning that settlement of the annual lump sum tax exhausts any further tax liability for the individual on their foreign source income, whilst any tax paid abroad is not offset against any Greek tax liabilities. Furthermore, this individual is exempt from inheritance and donations tax on any foreign assets.

The required categories of investments, their retention period in Greece, the application process as well as any other details required for the implementation of respective provisions shall be determined amongst other by ministerial decisions. 

Salary earned from working abroad

Is salary earned from working abroad taxed in Greece? If so, how?

Greek tax legislation does not provide any relief to Greek residents who earn a salary outside Greece, except for certain classes of Greek civil servants who are required to fill a vacancy abroad.

Any other income of the taxpayer is normally added to employment income in order to arrive at taxable income.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Greece? If so, how?

Income from dividends is classified as capital income. According to Greek legislation, dividends are subject to tax at the rate of 5 percent as of 1 January 2020. The aforementioned taxation exhausts the tax liability in case the beneficiary is an individual.

Income from interest is subject to tax at the rate of 15 percent that exhausts the tax liability in case the beneficiary is an individual.

As of 1 January 2020, Individuals who are non-Greek tax residents are tax exempt on interest income earned:

a) by corporate bonds issued by companies which are listed in the E.U. or in an organized financial market outside E.U. that is regulated by the International Organization of Securities Commission (IOSCO), as well as

b) by bonds issued by cooperative banks that operate as credit institutions.

Furthermore, the above-mentioned individuals are exempt from solidarity contribution on interest income earned on Greek Government Treasury Bills as well as listed corporate bonds as described above.

Furthermore, it is stipulated that the said individuals are not subject to annual tax return obligations if their income is solely derived from interest earned from Greek Government T-Bills and corporate bonds as aforementioned.

Royalties are subject to tax at the rate of 20 percent that exhausts the tax liability in case the beneficiary is an individual.

Rental income is taxed at the rate of 15 percent for income up to EUR12,000, 35 percent for income from EUR12,001 up to 35,000 and 45 percent for income exceeding EUR35,000.

A new tax credit is being introduced as a percentage of the expenses made for aesthetic, functional and energy upgrade of buildings (which are not or will not be subject to the buildings’ upgrade program), on condition that such expenses are made via electronic means of payment or via a payments service provider. Respective expenses are considered as tax credit in 4 equal installments at 40 percent of their value, with a total maximum value of expenses of EUR16,000. The above provisions are applicable to expenses incurred in tax years after 1 January 2020 and until 31 December 2022.

Capital gains arising from the transfer of listed securities and derivatives is taxable at the rate of 15 percent as of January 2014 and on condition that it is not considered business profit and on condition that the following are cumulatively met:

  • the individual-shareholder seller holds at least 0.5 percent of the share capital of the listed entity, and
  • in case of listed securities, they have been acquired after 1 January 2009.

Furthermore, a 0.2 percent tax is imposed on the sale of shares listed in the Athens stock exchanges or in foreign exchanges.

Benefits arising from the exercise of stock options of a value lower than the stock exchange value at the time they are exercised are considered as employment income and are subject to Greek income tax (be mindful of the special stock options tax regime analyzed above).

The benefit resulting from the exercise of stock options is calculated as the difference between the price paid by the beneficiary and the fair market value at the date of the exercise

Residency status Taxable at:
  Grant Vest Exercise
Resident N N Y
Non-resident N N Y*
Other (if applicable) N/A N/A N/A

*On condition that the stock options relate to services rendered in Greece and DTT exemption (if available) does not apply.

A new stock options tax framework is introduced as of 1 January 2020, where if the shares that are acquired upon exercise, are retained for a period exceeding 24 months, or 36 months under certain conditions, are taxed as capital gains at a flat tax rate of 15 percent, or 5 percent for shares of newly established companies and if certain conditions are cumulatively met. Further clarifications are expected from the Hellenic Ministry of Finance of how such provisions will apply in practice. 

Foreign exchange gains and losses

Both residents and non-residents may maintain foreign currency accounts with banks in Greece. Such accounts may be credited with any foreign currency which arises from Greece or abroad, including foreign bank notes and foreign exchange which is purchased with Euros. No tax relief is available for foreign exchange losses and foreign exchange gains are not taxable per se (assuming they do not qualify as business income).

Real estate property gains and losses

Capital gains tax arising from the sale of immovable property is being postponed until 31 December 2022. 

Personal use items

Please see Overview and Introduction regarding treatment of imputed income on the basis of living expenses or acquisition of certain assets.

Gifts

The donation tax credit is increased to 20 percent as of 1 January 2020 donated to organizations recognized by the Minister of Finance is permitted with the restriction that donations may not exceed 5 percent of the taxable income, while the amount donated within the tax year must exceed the amount of EUR100.

Luxury Tax

Luxury tax of 13 percent is imposed on private yachts/boats exceeding 5 meters, excluding wooden sailing vessels and pleasure ships which are constructed or under construction in Greece in conformance with Greek nautical tradition:

  • Luxury tax rate for the private cars from 1 929 cc up to 2 500 cc is 5 percent. As of tax year 2019 onwards, private cars of taxpayers having at least 4 dependent children are exempt from luxury tax.
  • As concerns private cars exceeding 2 500 cc, swimming pools, aircraft, helicopters and gliders, the luxury tax rate is 13 percent.
  • The above rates are applied on the deemed income arising from each of the above assets.
  • The above luxury tax rates apply for income declared in fiscal year 2015 (i.e. for income arising in calendar year 2014) onwards.

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Greece? If so, please discuss?

Not Applicable.

Please refer to our comments below regarding the Real Estate Ownership Taxes and Transfer Taxes.

Are there capital gains tax exceptions in Greece? If so, please discuss?

Please refer to our comments above.

General deductions from income

What are the general deductions from income allowed in Greece?
 

Certain personal deduction is available to Greek residents in computing their taxable income. Such deduction is the mandatory employee-portion of social security contributions on employment income. Furthermore, contributions to company group private pension funds are also deductible items, since the annuity paid at the end of the program is taxed separately via a special scale.

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Greece?

The most common tax reimbursement method used by the employers in Greece is the tax equalization method. However, the concept of hypothetical tax is not recognized for Greek tax purposes.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in Greece? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

Pay-as-you-earn (PAYE)

Tax withholding is handled as Pay-As-You-Earn.

Employers are required to withhold income tax from salaries, wages and other remuneration paid to their employees. The amounts withheld are determined in accordance with the scale of ordinary income tax rates applicable to individuals.

Benefits in kind are not subject to payroll income tax withholdings.

Income tax must be withheld and remitted to the tax authorities on a monthly basis by the employer.

The employer is obliged to report via the Independent Authority for Public Revenue the taxable employment income (i.e. gross employment income minus the applicable social security contributions and any group pension fund contributions) on a monthly basis 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. Specifically, benefits in kind are not subject to payroll withholdings whilst they are subject to payroll reporting. As of 1 January 2019, monthly payroll shall be uploaded electronically on taxisnet on a monthly basis (in a platform set by the Ministry of Finance). Payroll items which are not subject to payroll withholdings are equally subject to electronic payroll reporting. 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. For tax year 2019 the respective reporting deadline is 13 March 2020.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in Greece? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Income tax paid outside Greece by Greek tax residents on foreign-source income is offset against the tax payable in Greece up to the amount of Greek tax corresponding to such foreign-source income. The Greek tax attributable to the foreign-source income is determined on the basis of the Greek income tax rates applicable for each type of income.

General tax credits

What are the general tax credits that may be claimed in your country/jurisdiction? Please list below.

Annual Family Tax Credits on employment/pension income:

The tax credit on employment/pension income up to EUR12,000 is set as follows:

          Conditions

2020

Taxpayers without children

EUR777

Taxpayers with one child

EUR810

Taxpayers with two children

EUR900

Taxpayers with three children

EUR1,120

Taxpayers with four children

EUR1,340

Taxpayers with five or more children

EUR1,340 plus additional EUR220 per each additional dependent child

Income limit for full credit

EUR12,000

Reduction in credit if income above limit

EUR20 per EUR1,000 of income. The provision does not apply to taxpayers with 5 or more dependent children.

Electronic receipts collection measure
 

As of 1 January 2020, employees, pensioners, freelancers and other independent earners should incur expenses by using electronic means of payment within E.U. or E.E.A. equal to 30 percent of their actual income, with a maximum expenses ceiling of EUR20,000. A penalty of 22 percent on the difference between the required versus the amount spent, will incur. While calculating the actual income, solidarity contribution and alimony payments are not considered. Special provisions for certain categories of taxpayers apply. The expense receipt measure does not apply to Greek tax residents who are residing or working abroad as well as to non-Greek tax residents who are subject to annual income tax return filing obligation in Greece.

It is worth mentioning that the above provisions regarding expense receipts equally apply to rental income as of 1 January 2020.

As of 1 January 2020, tax reduction of 20 percent of amounts donated to organizations recognized by decision of the Minister of Finance is permitted with the restriction that donations may not exceed 5 percent of taxable income, while the amount donated within the tax year must exceed EUR100.

Certain conditions apply in case of non-Greek tax residents in order to qualify for the tax credits.

Sample tax calculation

This calculation assumes a married taxpayer coming to Greece with two children whose 3- year assignment begins 1 January 2020 and ends 31 December 2022. The taxpayer’s base salary is 100,000 US dollars (USD) and the calculation covers 3 years.

 

2020

USD

2021

USD

2022

USD

Salary

100,000

100,000

100,000

Bonus

20,000

20,000

20,000

Cost-of-living allowance

10,000

10,000

10,000

Housing allowance

12,000

12,000

12,000

Company car

6,000

6,000

6,000

Moving expense reimbursement

20,000

0

20,000

Home leave

0

5,000

0

Education allowance

3,000

3,000

3,000

Interest income from non-local sources

6,000

6,000

6000

Exchange rate used for calculation: USD1.00 = EUR0.0.92071 (14 February 2020).

Other assumptions

  • All earned income is attributable to local sources.
  • Bonuses are paid at the end of each tax year and accrue evenly throughout the year.
  • Interest income is not remitted to Greece.
  • The company car is used for business and private purposes and the annual taxable amount for the employee is USD6,000.
  • The employee is deemed resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation.
  • Interest income is taxed at the rate of 15 percent as well as at the rate of 9 percent for solidarity contribution purposes (i.e. marginal solidarity contribution rate based on the taxpayer’s level of income.
  • Social security contributions have not been considered.
  • We consider all amounts to have been agreed gross.

Calculation of taxable income

Year ended

2020

EUR

2021

EUR

2022

EUR

Days in Greece during year

365

365

365

Earned income subject to income tax

 

 

 

Salary

92,071

92,071

92,071

Bonus

18,414

18,414

18,414

Cost-of-living allowance

9,207

9,207

9,207

Net housing allowance

11,049

11,049

11,049

Company car

5,524

5,524

5,524

Moving expense reimbursement

18,414

0

18,414

Home leave

0

4,604

0

Education allowance

2,762

2,762

2,762

Total earned income

157,441

143,631

157,441

Other income

5,524

5,524

5,524

Total income

162,966

149,155

162,966

Non-taxable items

0

0

0

Total taxable income

162,966

149,155

162,966

Calculation of tax liability

 

2020

EUR

2021

EUR

2022

EUR

Taxable income as above

162,966

149,55

162,966

Greek tax thereon

 

 

 

Income tax

62,002

55,926

62,002

Solidarity contribution

12,018

10,775

12,018

Domestic tax credits (dependent spouse/ children credit)

0

0

0

Foreign tax credits

0

0

0

Total Greek tax

74,020

66,701

74,020

Footnote

1. Certain tax authorities adopt an “economic employer” approach to interpreting Article of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee assigned to work for an entity in the host country/jurisdiction for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country/jurisdiction employer but the employee’s salary and costs are recharged to the host entity, then the host country/jurisdiction tax authority will treat the host entity as being the “economic employer” and therefore the employer for the purposes of interpreting Article 15. In this case, article 15 relief would be denied, and the employee would be subject to tax in the host country/jurisdiction.

Disclaimer

All information contained in this publication is summarized by KPMG Advisors Single Member S.A., the Greek member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity, based on the Greek income tax laws 2961/2001, 3091/2002, the Greek Income Tax Code 4172/2013 and subsequent amendments, the Greek Tax Procedure Code 4174/2013 and subsequent amendments, 4223/2013, 4251/2014, 4254/2014, 4307/2014, 4308/2014, 4312/2014, 4313/2014 and 4316/2014, 4330/2015, 4334/2015, 4337/2015, 4354/2015, 4387/2016, 4389/2016, 4438/2016, 4446/2016, 4447/2016, 4484/2017, 4490/2017, 4579/2018, 4583/2018, 4571/2018, 4549/2018, 4512/2018, 4646/2019, the website of the Independent Authority for Public Revenues (IAPR) in Greece. 

© 2021 KPMG KPMG Advisors Single Member S.A., a Greece Corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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