The following persons and legal entities are subject to corporate income tax:

a) capital companies that were established in Greece or abroad (SA’s,LLCs,PCCs)

b) private companies that were established in Greece or abroad (Partnerships)

c) non-profit legal persons governed by public or private law established in Greece or abroad and including all kinds of associations and institutions, with the exception only any income made in pursuit of the fulfilment of their missions, which are not subject to tax;

d) cooperatives and associations;

e) civil societies, urban profit or non-profit companies, participatory or hidden if they are carrying on a business or profession;

f) joint ventures;

g) legal entities defined in Article 2 of the ITC which are not included in one of the previous cases.

Exemptions

1) The following are exempt from corporate income tax:

a) general government entities, except for income earned from capital and capital gains (Capital companies are not included, except for those, in which the State or a legal person governed by public law holds 100%);

b) the Bank of Greece;

c) collective investment undertakings that are subject to a special system of operation and are established in Greece or in another EU/EEA Member State;

d) international organizations, provided that the tax exemption provided for under an international convention ratified by Greece or subject to reciprocity;

e) Asset Development Fund SA in accordance with the laws governing it.

2) Income as set out below is also free of tax:

a) Interest earned on bonds issued by the European Financial Stability Fund (EFSF) under the implementation of the participation program for restructuring the Greek debt,

b) Capital gains arising from the exchange of Greek government bonds or corporate bonds guaranteed by the Greek government for other securities pursuant to the participation program for restructuring the  Greek debt,

c) Capital gains arising from the transfer of Greek government bonds and treasury bills acquired by foreign legal persons or legal entities and they have not permanent establishment in Greece. In general, according to the Circular No 1032/2015, income from the transfer of securities acquired by legal persons or entities that are not Greek tax residents is exempt from income tax.

d) The intercompany dividends received by a legal person who is a tax resident in Greece are exempt from tax, provided that: a) the recipient taxpayer holds a minimum participation rate of at least ten percent (10%) of the value or number of share capital, basic capital, or voting rights of the entity that distributes; and b) the minimum shareholding is held for at least twenty-four (24) months; and  c) the legal entity that makes a distribution of profits is subject to tax, it is not based in a country that is included in the list of uncooperative States under Article 65 of the ITC.

e) Profits of very small businesses, as defined in the 2003/361/EU Recommendation, derived by the disposal of electricity power towards “D.E.I” or other supplier according to the “Special Program of photovoltaic Systems” up to 10kw.

f) profits from the operation of ships under the Greek flag by Greek companies, cooperatives or unions of cooperatives, where such profits are subject to the specific taxation on ship owners' profits (tonnage tax); when distributed in any form, profits as above accruing to a Greek private or public company or cooperative are not taxed.

g) Goodwill arising from property expropriation.

h) Goodwill arising from the transfer of domestic corporate bonds (Law 3156/2003) and of corporate bonds issued by companies in the EU, EEA/EFTA.

i) Goodwill arising from the sale of UCITS (domestic, EU, EEA/EFTA).

Special tax rate for SMEs

As an initial remark, there is no specific tax rate for SMEs. Nevertheless, article 58 par.5 of the New Greek Income Tax Code (L.4172/2013 applicable as of 1.1.2014, hereinafter ITC) provides that sole proprietorships qualifying as micro enterprises (Recommendation 2003/361/ EC of May 6, 2013) are exempt from income tax as regards profits acquired from exploitation of photovoltaic up to 10 kW under specific requirements provided that such gains are recorded in a special reserve account, which will be subject to income tax upon distribution or capitalization thereof. An unconditional income tax exemption applies as per article 29 of ITC for individuals and sole proprietorships that fall under the same regime for the exploitation of photovoltaic up to 10 kW.

Corporate Income Taxation

Business profits acquired by legal persons and legal entities which keep double entry accounting books  as well as non-profit legal persons governed by public or private law established in Greece or abroad and including all kinds of associations and institutions,  which keep single entry accounting books, are taxed at a 26% tax rate.  percent (26%). In case of entities covered by cases b, d, e, f and g of Article 45 of ITC and  keeping  single entry accounting  books, profits gained from a business activity are taxed according to the following tax scale:

Business profits acquired by agricultural cooperatives and producer groups are taxed at thirteen percent rate (13%). 

The taxpayer who derives income which is subject to withholding tax in accordance with Article 62 includes this income on taxable profits before the deduction of  the withholding tax. The tax payable by the taxpayer in relation to such income is reduced by the amount of tax withheld.

The income tax of legal persons and legal entities is calculated according to the annual tax return of the taxpayer and the amount of the tax liability is specified  in accordance with Article 31 & 32  of the Tax Code Procedure, after the deduction of: a ) the tax withheld, b ) the tax paid in advance, c ) the tax paid abroad, in accordance with Article 9.

In case of  intercompany dividends received by a legal person who is a tax resident in Greece and paid by a domestic or foreign subsidiary established in a EU Member State, when the conditions of art. 48 of ITC are not met, the tax paid as corporate income tax as well as the tax paid on dividends is reduced by the amount of tax.  

If the amount of tax paid in advance or withheld exceeds the tax due , the excess is refundable.

Distributed dividends by legal persons and legal entities are subject to a 10% withholding tax, which exhausts the relevant income tax liability when the recipient is individual. Tax is not withheld on profits distributed by legal persons and legal entities that keep single-entry books, as these profits are taxed only in the name of the legal person or legal entity.

Capital Income

 a)  Domestic Savings:

 A withholding tax of 15% is levied on interest income arising from claims of any kind, either secured by a mortgage or not, and whether carrying a right to participate in the debtor or not, and in particular income from deposits, government bonds, securities and bonds, with or without safety, and any loan relationship, including additional benefits (premiums), repurchase agreements (repos/reverse repos) and rewards arising from securities, bonds or debentures. The withholding tax exhausts the tax liability only for individuals and for the type of income of the taxpayer under the ITC.

Exemptions

No tax is withheld on interest  paid to a legal person referred to in the Annex to Directive 2003/49/EC the Common System of Taxation Applicable to Interest and Royalty Payments Made Between Associated Companies of Different Member States, as applicable, if:

a) the legal person or legal entity who receives directly or indirectly held shares or a participation of at least ten percent (2%) in value or by number in the share capital or voting rights of the paying taxpayer or the taxpayer that pays holds directly shares or participation of at least twenty-five per cent (25%) in the capital stock of the legal person or of the legal entity that receives, or a third legal person or a legal entity that holds directly shares or participation of at least twenty-five per cent (25%) in the capital stock of both the legal person or the legal entity that receives and the taxpayer that makes the payment;

b) the minimum shareholding or participation is held for at least twenty-four (24) months; and

c) the legal person who receives:

aa) is of the type including in the listed in Annex I, Part A of Directive 2003/49/EC, as amended; and

bb) is a tax resident of an EU Member State in accordance with the laws of that State and is not considered a tax resident of a third country outside the EU pursuant to the terms of a double taxation agreement concluded with this third state; and

cc) is subject, without choice or exemption, to one of the taxes listed in Annex I part B of Directive 2003/49/EC or any other person may in the future replace one of those taxes.

 Interest payments for loans granted by credit institutions, including the interest for overdue payment and the interest for inter-bank deposits are exempt from withholding tax.

b) Savings Abroad:

As regards interest deriving from savings or bonds abroad, a 15% tax is levied on gross amount provided that this income is entered in Greece through the domestic credit Institution which is the paying agent.

In case that this income remains abroad, no tax is withheld. In case that this income is acquired by domestic legal persons or legal entities or the permanent establishment in Greece of foreign legal persons, it will be taxed according to the general provisions of the ITC, as income derived by business activity. As regards individuals having tax residency in Greece, the tax is levied upon the submission of the annual tax return, in which all kinds of income are declared.  

 As regards interests from bonds and treasury bills issued by the Greek government and acquired by legal persons and legal entities having their tax residence in Greece they are taxed at a 15% withholding tax rate, which does not exhaust their tax liability. In case that the recipient of the income is individual or foreign legal person with no permanent establishment in Greece, this income is tax exempt.     

c) Greek corporate bonds:

Interest deriving from greek corporate bond a 15% withholding tax is levied.

d) Foreign government bonds:

• As regards interest deriving from foreign government bonds held by natural entities, a 15% tax is levied on deriving interest and exhausts the tax liability regarding this income.
• As regards interest deriving from foreign government bonds held by (established in Greece) legal persons and legal entities deriving from foreign government bonds is taxed according to general taxation and withheld tax of 15% is deducted.

 e) Forms of income taxed individually

As regards fees for technical services, administration fees, fees for consulting and other fees for similar services paid to foreign legal persons which are not permanently established in Greece, they are not subject to the 20% withholding tax.

Income derived by dividends, interests and royalties paid to foreign legal persons which are not permanently established in Greece is taxed at  a 10%, 15% and 20% tax rate respectively. Once the tax has been thus withheld, the tax obligation in respect of the income concerned is exhausted.