Taxes in Europe Database v2
Law 4172/2013 (Income Tax Code), as amended by Law 4174/2013, Law 4223/2013, Law 4302/2014, Law 4303/2014, Law 4305/2014, Law 4254/2014, Law 4283/2014, Law 4307/2014 and Law 4316/2014
Spouses file a joint return but each spouse is liable for the tax payable on his or her share of the joint income. The husband is liable for the filing of the joint return. Deductible personal expenses concerning both spouses and tax credits are apportioned to each spouse according to the income earned by each one of them. Losses incurred by one spouse may not be set off against the income of the other spouse. Spouses file a return separately if a) they have been divorced at the time of the tax filing or b) one of the spouses is bankrupt or has been subject to guardianship.
Obligation to file a tax return:
A. The individuals mentioned above who have completed 18 years of age, regardless of having taxable income or not.
Note: Regarding income derived by minor children, the parent who has the custody is liable for filing a tax return.
B. Individuals residing abroad for their income arising in Greece as well as when they are subject to the provisions of imputed income, irrespective of whether they are tax exempt (from imputed income).
C. Any individual shall file a tax return as long as he/she has been called upon by a document issued by the head of the competent Local Tax Office.
Total income of all categories (e.g. income from immovable property, salaries, enterprises etc.).
There are four categories of income:
a) Income from employment and pensions
b) Income from business activities, which also includes income from self-employed activities and agricultural activities as well
c) Income from capital and
d) Income from Capital gain, which includes income deriving upon transfer of real estate or securities
Benefits in kind:
Benefits in kind received by the employee or his relatives of a value exceeding EUR300 per year are included in taxable income at their market value.
Benefits in kind that are considered as employment income are: the market value of company cars provided to employees or partners or shareholders, benefits in kind in the form of loans provided to employees or partners or shareholders, the market value of stock option rights provided to employees or partners or shareholders, the market value of residence granted to employees or partners or shareholders, calculated under the current provisions.
In order to determine the tax payable on the total net income of each taxable person, the taxes corresponding to different categories of income are summed up and positive and negative figures are netted out.
Where provided for by Law, allowances and expenses are then deducted and the remainder constitutes the taxable income. Income tax itself, fines and other taxes are not deductible.
Deductions (expenses of enterprises)
In order to determine the net taxable income of business activities, all expenses are deductible, with the exception of the provisions of art 23 of the ITC, provided that:
a) They are carried out in the interest of the business or as a part of the ordinary trade transactions,
b) The corresponding transaction is real and its value does not abstain from the fair value as set by the indirect methods of audit, and
c) They are recorded in the books of the relevant tax year and are proven by appropriate documentation.
In addition, the expenses for scientific and technological research are deducted from the gross income of enterprises, increased by 30%. The expenses for equipment are allocated equally in the next three years in order to be increased by 30%.
The tax arising by the tax scale for employees and pensioners is reduced as following:
The above tax deduction is granted under the condition of the on time submission of receipts/invoices for the purchase of goods and services equal to 10% of the taxable income and up to the amount of €10,500. Should the value of invoices is less than the one required, a 22% penalty is imposed on the remaining amount.
The following tax credits are deducted from the payable amount of tax, as calculated on the basis of the scale after applying the above tax allowance:
1. The amount of tax is reduced by EUR 200 in case the taxpayer himself or his dependents are: handicapped (over 67%), handicapped soldiers or military personnel injured in the course of their duties, war victims or victims of terrorist attacks or in case they receive pension by the State as war victims or as handicapped.
2. 10% of the expenses of medical and hospital care of the taxpayer and his dependents, provided they are not covered by Social Security Funds and they exceed 5% of the taxable income. The total credit cannot exceed EUR 3,000. Hospital expenses in respect of unmarried or widowed children who suffer from an incurable disease, who are mentally retarded or are blind and whose total annual income does not exceed €6,000 are also included.
3. 10% of the total amount of donations to entities in Greece or other EU or EEA member-states that are defined by the Minister of Finance, provided that the donation exceeds the amount of EUR 100 during the fiscal year. The total amount of donations cannot exceed 5% of the total taxable income.
Note: Taxpayers who are not Greek tax residents are not eligible for the tax credits mentioned above, unless they are tax residents of an EU or EEA Member State and a) at least 90% of their total income is derived from sources in Greece or b) they prove that their income is so low that are eligible for a tax credit according to the national law of the country of their tax residence.
When the wife derives income taxable on the basis of the scale, then the following are deducted from her own payable amount of tax:
a) deductions related to medical and hospital expenses, donations and the lump sum of €200 of the spouse
b) deductions related to medical and hospital expenses of the spouse’s children from a former marriage, her children born out of wedlock, her parents and orphaned relatives of first and second degree of kin
If from the joint tax return submitted by the spouses no tax obligation arises for one of them, or the payable amount of tax is less than the sum of the deductions (medical and hospital expenses, lump sum of €200) then the whole amount of the deductions or the ensuing difference is attributed to the payable tax of the other spouse.
The losses of income from commercial and agricultural undertakings manifest in 3d and 2d Category Books (Accounting Information Code - e.g public limited companies) may offset taxable income from other sources or be carried over for the next five years, provided that the books are properly and accurately kept over that period. Losses incurred abroad can only be offset against income derived abroad.
Some forms of income, specified by Law are exempt from the tax.
Examples of exemptions:
1. Income from employment and pensions
2. Profits from business activities
Profits of individuals and very small businesses, as defined in the 2003/361/EU Recommendation, derived by the disposal of electricity power to the Public Electricity Corporation “D.E.I. S.A.” or other supplier according to the “Special Program for developemnt of photovoltaic Systems up to 10 kw” are tax exempt.
3. Income from capital
There is tax exemption on:
a) Interest of bond loans and treasury bills of the Greek State that are received by individuals,
b) Interest arising from bonds issued by the European Financial Stability Facility (E.F.S.F.) in application of the program for the restructuring of the Greek debt.
4. Capital gains due to the transfer of capital
a) Capital gains derived from the transfer of real estate property up to the amount of€25,000 after the adjustment provided that the taxpayer held the property for at least 5 years.
b) Capital gains derived from the exchange of bond loans of the Greek State or corporate bonds under the guarantee of the Greek State in application of the program for the restructuring of the Greek debt.
c) Capital gains derived from the transfer of securities provided that the individual is tax resident in a country with which Greece has concluded a Convention/Agreement for the avoidance of double taxation and that is proved with relative documentation.
1) The taxable income derived by employment and pensions is subject to tax according to the following tax scale:
TAX SCALE FOR EMPLOYEES AND PENSIONERS
Total amount of
The tax derived by the above tax scale is reduced by the amount of €100 per each €1,000 of income and up to €2,100 for annual income exceeding the amount of €21,000.The tax deduction is granted under the condition of the on time submission of receipts/invoices for the purchase of goods and services equal to 25% of the taxable income and up to the amount of €10,500. Should the value of invoices is less than the one required, a 22% penalty is imposed on the remaining amount.
The tax deduction is granted under the condition of the on time submission of receipts/invoices for the purchase of goods and services equal to 25% of the taxable income and up to the amount of €10,500. Should the value of invoices is less than the one required, a 22% penalty is imposed on the remaining amount.
a) Officers working in ships of the merchant marine, whose income is taxed at a 15% flat rate and
b) the low income crew working in ships of the merchant marine, whose income is taxed at a 10% flat rate.
2) The taxable income from business activities is taxed according to the following tax scale:
TAX SCALE FOR SELF-EMPLOYED & PERSONAL BUSINESSES
3) The Capital income is taxed according to the following tax rates:
a) Dividends are taxed at a 10% flat rate, which exhausts the tax liability of individuals
b) Interests are taxed at a 15% flat rate, which exhausts the tax liability of individuals
c) Royalties are taxed at a 20% flat rate, which exhausts the tax liability of individuals
d) Income derived by real estate is taxed according to the following tax scale:
TAX SCALE FOR IMMOVABLE PROPERTY & SECURITIES
4) Capital gains derived from transfer of real estate is taxed at a 15% tax rate.
Income from Dividends
Distributed profits by Greek Corporations in the form of dividends, Board and Directors fees, additional compensation of directors and employees other than wages, as well as interim dividend payments received by individuals tax residents in Greece are subject to a 10% withholding tax. This tax exhausts the tax liability of the recipient.
Income from Securities
Tax on savings
Interest paid by Greek Individuals to beneficiaries abroad:
As regards, interest paid by Greek individuals to beneficiaries abroad a 20% tax is withheld by the individual paying the interest when the beneficiary is individual and 33% when the interest is paid to legal entities. The intermediary bank may deny remitting the remaining interest amount abroad unless a payment certificate for the corresponding tax withheld is submitted to it. This tax exhausts any further tax liability regarding this income.
Tax is due on interest derived from loans which is at least equal to the one resulting by applying the minimum interest rate of interest-bearing treasure bills of three month duration.
Greek government bonds (art. 12 Income Tax Code):
Greek corporate bonds:
Interest deriving from private companies’ bond loans falls under the same taxation as interest deriving from government bonds (paragraph 8, article 26, Law 2789/2000), without any obligation of retaining the titles.
Foreign government bonds:
Income taxed individually:
Some forms of income are taxed individually, and the payment of such tax exhausts the tax liability regarding this income. Examples:
Sales of shares affected by Special Negotiators (Law No 1806/98, art 22 A) are exempt from the tax.
Dividends are subject to a 10% withholding tax, which exhausts the income tax liability of the recipients. This rate shall apply to distributed profits approved by the General Meetings as of 1st January 2014 onwards. For distributed profits which are approved in 2013, the applicable withholding tax rate is 25%.
As regards withholding tax on interests, savings and government bonds, see above.
The tax can be paid in three equal bimonthly installments. The first payment shall be made until the last day of the month following the deadline for tax filing and the remaining two payments shall be made until the last day of the third and fifth month following the deadline for tax filing respectively.
Ministry of Finance.
Municipalities-local authorities are beneficiary of the revenue for: 20 %.
Spouses must submit a joint tax return, except in certain cases specified by Law. Taxes, duties and levies on the income declared in the joint return are calculated separately for each one. Losses by one spouse cannot be offset against the income of the other. The income of one spouse is added to that of the other and taxed as if it were the latter’s if it accrues from a business that is financially dependent on that other spouse.
Children’s own income
a) Single children who are under 18 years old or they are adults up to 25 years old and study at the university or are registered as unemployed or are serving their military service are not considered as dependent members, if their annual taxable income exceeds the amount of €3,000 and provided that they cohabit with their parents.
b) The income of minor children is added to the income of the parent who has the custody and is taxed in the name of the parent who is in principle liable for tax filing. This provision does not apply to the following types of income, in respect of which the minor child has a personal tax obligation: a) employment income and b) pensions due to the death of his father or mother.
Non tax residents
Taxpayers who are not tax residents of Greece are subject to tax for the income arising in Greece.
Taxpayers who are not Greek tax residents are not eligible for the tax credits mentioned above, unless they are tax residents of an EU or EEA Member State and a) at least 90% of their total income is derived from sources in Greece or b) they prove that their income is so low that are eligible for a tax credit according to the national law of the country of their tax residence.
Presumptions of income
The ownership of certain “luxury” goods, such as houses (first house and second houses), cars, leisure boats, private planes and helicopters, swimming pools, suggests that the taxable person disposes of a minimum amount of yearly income to provide for the goods’ expenses (preservation, circulation etc.). This amount is determined by the tax authorities according to certain objective criteria relating to the goods’ size, age etc. The taxable person can challenge this “presumption” in certain cases laid down by Law (unemployed persons, persons co-habitating with their parents, serving in the army, underage orphans, incarcerated or hospitalised persons and anyone that can prove force majeure), by producing conclusive proof that the actual expenses were lower.
Special features (Partnerships and other entities)
Other types of entities (apart from corporations) subject to income tax are partnerships (limited (EE) and unlimited general (OE) partnerships), civil law societies, civil law or non-profit companies, silent partnerships, participation companies, joint-ventures, legal services and notary companies). The total income of those entities, after the deduction of the profits which are tax exempt or taxed separately, is taxed according to the following tax scale:
Partnerships, joint ventures - other legal entities maintaining single entry accounting books
For those entities which maintain double-entry books, their tax treatment is now aligned with that of corporations (SAs, LLCs and PCCs), which means that the entire amount of their net profits is taxable at the level of the entity (taxation at the level of the entrepreneur is abolished) at a flat rate of 26% , whereas a 10% withholding tax is imposed on distributed profits.