Thinking beyond borders
Non-residents are taxed only on Greek-sourced income.
The determination of residency status in Greece is based primarily on the center of vital interests as well as on a “number of days rule”. Specifically if an individual maintains their permanent or main residence or habitual abode or center of vital interests, namely their personal and financial relations in Greece, then the residence of the respective individual for tax purposes is Greece. An individual who is present in Greece for a period exceeding 183 days, cumulatively during any 12-month period is considered to be a Greek tax resident as of their first day of arrival in 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 including their short stay abroad.
The rules governing the individual’s income taxation will be determined by reference to the individual’s tax residency status (i.e. Greek tax resident or non-Greek tax resident).
The taxability of employment income of non-Greek residents is determined by reference to the applicable double tax treaty for the avoidance of double taxation (if any).
On the assumption that the individual is registered as a non-Greek tax resident and in case of future tax audit, the Greek tax authorities might require tax residency certificates for the individual in order to evidence/support that the individual is tax resident (and therefore subject to tax on the individual’s worldwide income) in another jurisdiction/state. An individual who is not in a position to provide the requisite documents will automatically be classified as a Greek tax resident by the tax authorities, who will seek to assess tax on the individual’s worldwide income plus penalties (if applicable) for inaccurate filings (when due).
The definition of tax residence is introduced on the basis of the Organisation for Economic Co-operation and Development (OECD) Guidelines as of 1 January 2014 onwards. The concept of usual (permanent) residence is determined for tax purposes in Greece if someone resides in Greece for more than 183 days, cumulatively during any 12-month period, including their short term stay abroad.
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 including their short stay abroad.
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 500,000 euros (EUR) 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 (based on article 16 of Law 4251/2014).
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.
Taxable income is classified into four categories:
Married persons are subject to tax separately on their own income but are required to file a joint income tax return unless an election for separate filing is submitted by 28 February of the year following the year for which tax return is to be filed. If such an election is not filed by both or one of the spouses joint filing will take place and no further amendment is possible for the tax year filing in question. Civil unions/partnerships (for both opposite sex and same sex couples) may as well file joint declaration by notifying the Registry Department of their competent tax office. No instruction by the Greek State has yet been provided for civil unions/partnerships previously filing joint tax return but deciding to file separately in the future.
Additionally, all individuals over 18 years of age, who earn income, are obliged to file an income tax return irrespective of whether the income earned by them is subject to tax or not (i.e. as a general rule the taxpayers are not exempt from filing their yearly income tax declarations even if the income received by them is tax exempt).
Each income category is separately computed and subject to tax.
For each category the tax rates are indicated below.
As of 1 January 2020 for employment/pension income a progressive tax scale is applicable to both Greek and non-Greek tax residents, with no tax-free bracket, as provided in the table below in euros (EUR):
|Income bracket||Tax rate||Tax per (Percent)||Aggregate income||Aggregate tax|
|Next 10,001-20,000||22%||2 200||20,000||3,100|
|Next 20,001-30,000||28%||2 800||30,000||5 900|
|Next 30,001-40,000||36%||3 600||40,000||9 500|
Annual Family Tax Credits on employment/pension income (applicable as of tax year 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 tax credit of 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|
Collection of expense receipts
For tax year 2019: As of 1 January 2017, the above tax credit is linked to a minimum value of expenses that must be incurred by individuals via electronic payment, depending on the individuals’ level of income.
A progressive scale applies for the determination of the income tax reduction related to electronic transactions acknowledged as expenses for specific groups of goods and services as determined by Greek Law. In particular, expenses that must be effected via electronic payment in order to secure the tax credit are as follows:
With a maximum value (ceiling) of expenses of EUR34,000, regardless of income level.
A tax of 22 percent is imposed on the difference between the amount required and the amount declared, when the minimum amount of expenses is not effected via electronic payment.
For tax year 2019: As of 1 January 2020 a flat rate applies for the determination of the income tax return related to electronic transactions. Employees, pensioners, freelancers and other independent earners should incur expenses by using electronic means of payment within E.U. of 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.
Amongst other categories non-residents as well as Greek tax residents who reside or work abroad are exempt from such measure.
Board of Directors Fees
As for 1 January 2014 the Board of Directors Fees are classified as employment income and are taxed based on the applicable tax scale for salaried employees.
Business activity income, including private agricultural business, is subject to the same progressive scale as employment income which is provided below (in EUR):
|Income bracket||Tax rate||Tax per (Percent)||Aggregate income||Aggregate tax|
However, for new private businesses and entrepreneurs with commencement date as of 1 January 2013 onwards and for the first 3 years of their operation the tax rate of the first scale is reduced by 50 percent.
Income earned from private agricultural business is subject to the same tax credit as employment/pension income (i.e. respective tax credit is not available for business income).
These rates are superseded by the provisions of the double taxation treaties concluded by Greece with other countries/jurisdictions.
Some tax exemptions apply to various types of investment income (e.g. dividends earned via European Union (EU)/European Economic Area (EEA) Undertakings for the Collective Investment in Transferable Securities (UCITS) mutual funds, etc.).
Capital gains arising from the transfer of listed securities and derivatives are taxed at the rate of 15 percent **on condition that the following are cumulatively met:
A new stock options tax framework is introduced, 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. It is worth mentioning that share plans in general (e.g. grant of free shares, etc.) do not appear to be covered by this provision. The above provisions are applicable to income earned in tax years after 1 January 2020. Further guidance and circulars are expected to be issued with regards to such type of income.
Capital gains arising from the transfer of real estate is not subject to tax until 31 December 2022.
Some tax exemptions apply to various types of investment income (e.g. capital gains earned via EU/EEA UCIT mutual funds and the Greek State bonds etc.).
** Subject to the specifically signed Double Tax Treaty Agreement between Greece and the other country/jurisdiction concerned.
Special solidarity contributions
The contribution is imposed on the total income reported on the individual’s annual income tax return not taking into consideration any tax credits or deductions stipulated under Greek tax law (apart from some of the income categories that are exempted from special solidarity contribution – i.e. employment termination payments, child allowance etc.). The solidarity contribution scale is progressive.
Annual Income Amount (EUR)
|2020 Rate||Tax per (Percent)||Aggregate income||Aggregate tax|
By analogy to income tax exemption provisions, all categories of taxpayers having 80 percent disability or more, are exempt from solidarity contribution.
According to Greek law, all employees are subject to social security contribution. The employee’s social security contribution is withheld on a monthly basis from the salary by the employer whereas employer’s social security contributions are also due. The standard rates currently in force are 15.75 percent (employees) and 24.81 percent (employers) whereas a maximum monthly gross salary on which contributions are due is provided (currently EUR6,500.00). It should be noted that not all the categories of the working force are covered by the same social security rates as the salaried employees. Further investigation is required in case the individual performs other kinds of entrepreneurial/business activities.
As of 1 January 2016 personal income tax returns must be filed electronically up to 30 June of the year following the end of the relevant tax year. The tax year for individuals is the calendar year. The filing deadline is extended to 31 December in case the individual filed an application for change of residency to that of a non-Greek tax resident.
Under Greek tax law, employment income is taxable in the hands of the employee in the year in which the employee is entitled to claim such income, whereas income tax withholding should be effected by the employer. Employers are under an obligation to withhold Greek income tax on the remuneration paid to employees in Greece on a monthly basis (in Greece, salary is payable 14 times per year – there are at least 15 payroll periods in a year, 12 months plus bonuses for vacation, Easter and Christmas).
Amounts of payroll tax withheld on a monthly basis should be remitted by the employer to the tax authorities by the end of the second month following the month that income was paid, at the latest. By 28 February following the end of the year, the employer is obliged to report, via the personalized online account TAXISnet with the Independent Authority for Public Revenue, the annual taxable employment income (i.e. gross employment income minus the applicable social security contributions and other applicable deductions (if any)) 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 during the tax year. 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 an annual salary letter (either in hard copy or electronically) to the employee including the regular salary and any benefit paid to the employee during the tax year as well as the applicable payroll withholding.
Citizens of EU member states, of the states of the EEA (i.e. Iceland, Liechtenstein, and Norway), and Swiss citizens must apply for the appropriate type of certificate of registration of EU citizens (i.e. for the provision of dependent employment services, for the provision of non-salaried services etc.) if they wish to work in Greece or decide to take up residence in Greece. A stay of up to 3 months does not require a permit. However, in practice, it may be necessary to obtain such a certificate even if the stay is shorter than 3 months.
The definition of permanent establishment introduced in the Greek Income Tax Code is aligned with the Organization for Economic Co-operation and Development (OECD) Guidelines. Permanent establishment is defined as the fixed place of business through which the business of an enterprise is wholly or partially carried on.
The term permanent establishment includes mainly:
Following the general rule, the provisions of the double taxation treaties concluded by Greece with other countries/jurisdictions, which may include a narrower definition of a permanent establishment shall prevail over the provisions of the Greek Income Tax Code.
Third countries’/jurisdictions’ citizens wishing to work in Greece must apply for the corresponding visa before arriving in Greece and apply for a residence permit immediately upon arrival.
Given that the application procedure for visa is lengthy, the procedure should be commenced well in advance of the planned date of arrival.
Certain third countries’/jurisdictions’ citizens may require a visa to enter the country/jurisdiction even for vacation or short business trips.
Greece has entered into double taxation treaties with 57 countries/jurisdictions (an additional double taxation treaty has been signed with Singapore however not yet ratified, thus not in force) to prevent double taxation and allow cooperation between Greece and other tax authorities in enforcing their respective tax laws.
Indirect taxation provides above 40 percent of the state’s tax revenue.
A value-added-tax (VAT) was introduced in Greece in 1987 and is one of the most important indirect taxes. The basic VAT rate applicable to most goods and services is 24 percent; other rates apply as well depending on the nature of goods/services and/or geographic location.
In accordance with the provisions of Law 4172/2013 and Law 4174/2013 the intercompany transactions with one or more associated enterprises are exempted from the documentation obligation, if they do not exceed the amount of:
The Transfer Pricing Documentation File, where appropriate, must be prepared by the end of the deadline for the submission of the company’s annual Corporate Income Tax Return (i.e. last working day of the sixth month from the year-end of the company). The aforementioned Documentation File is accompanied by a Summary Information Sheet which must be electronically submitted to the Independent Authority for Public Revenue of the Ministry of Finance, within the same deadline that is provided for the preparation of the Transfer Pricing Documentation File.
Greece has not yet implemented the BEPS Action 13, in relation to Master File and Local File but has implemented the Country-by-Country (CbyC) Reporting. This obligation relates to Multi National (MNE) Groups with total consolidated group revenue exceeding EUR750 million during the immediately preceding fiscal year. Entities of such MNE Groups that are resident for tax purposes in Greece are obliged to notify the Greek tax authorities with respect to the filing of the CbyC Report, no later than the last day of the Reporting Fiscal Year to which it relates.
If the Greek tax authorities challenge a company’s intra-group transactions, then the following may occur:
Other Transfer Pricing penalties applying:
Services performed within Greece shall comply with the provisions of the Greek and EU legislation regarding the protection of personal data i.e. the General Data Protection Regulation (EU) 2016/679 (which is applicable in Greece) and all the related Greek laws.
There are no foreign exchange control restrictions. However, all monetary transfers abroad must be effected through commercial banks in Greece. When approving such transfers (as well as when approving transfers between residents when effected through commercial banks), commercial banks may ask for certain supporting documentation (related to the authenticity of the transaction). For payments made abroad, they may even seek to ensure that the payment has been subject to or exempt from withholding tax.
Non-Greek residents are not allowed any tax credits, unless they are tax residents of the EU or the EEA and:
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.