Taxation in Greece
|An aspect of fiscal policy|
Taxation in Greece is similar to most other developed nations, being based around two systems, direct and indirect taxation.
All Income Tax in Greece is progressive. An individual in Greece is liable for tax on her or his income as an employee and on income as a self-employed person. In the case of an individual who answers the test of a "permanent resident" of Greece, tax will be calculated on her or his income earned in Greece and overseas. An individual whose income is only from a wage is not obligated to file an annual return. The employer deducts tax from the employee and transfers it to the tax authority every month. (Income tax brackets have changed significantly since 2008.) Income tax brackets in Greece for the year 2008 were 0% (up to 12,000 euros), 27% (from 12,001 to 30,000 euros), 37% (from 30,001 to 75,000 euros) and 40% (above 75,000 euros). For tax year 2009 the respective rates were 0%, 25%, 35% and 40%, but since 2010 brackets and rates changed a lot.1
The current tax rates are as follows:2
|€0 - €12,000||0%|
|€16,000 - €22,000||24%|
|€22,000 - €26,000||26%|
|€26,000 - €32,000||32%|
|€32,000 - €40,000||36%|
|€40,000 - €60,000||38%|
|€60,000 - €100,000||40%|
An employer is obligated to deduct tax at source from an employee and to make additional contributions to social security as in many other EU member states. The employer's contribution amounts to 28.06% of the salary. The employee's contribution is 16%.
There are several cases of Tax exemptions under the Greek taxation system, these are as follows:
- Proceeds from the sale of shares that are traded on the Athens Stock Exchange.
- Income from ships and shipping.
- A dividend received from a Greek company.
- Capital gain from sale of a business between family members, as defined by law.
The examples of Tax deductibility in Greece are, as with most other features of Greek taxation, similar to that of other Western European and North American nations, that is, tax deductibility for things such as charity and other things as shown below:
- 15% credit on a mortgage for the first residential apartment.
- 15% of the rent paid on the main residential apartment up to maximum.
- Donations to public, religious and other institutions.
- Compulsory payments to social security.
Corporations in Greece are taxed on their income in Greece and from overseas. Foreign companies in Greece are taxed only on income that is generated in Greece.
Beginning in 2007, the rate of corporate tax is 25%. Starting in 2010 the corporate tax rate will fall 1% annually until it reaches 20% in 2015.
A capital gain in Greece is added to regular income and is taxable at the same rate as regular income for a company, other than in specific instances as defined in law.
As of 1 Jan 2009, Greece imposes a withholding tax of 10% on corporate dividends, unless the dividend qualifies for application of the EC Parent-Subsidiary Directive or if a lower rate applies under an applicable double tax treaty.3 It also imposes a withholding tax on interest and royalties, however the tax rates may be reduced or eliminated by an applicable double tax treaty or if the payment qualifies for application of the EC Interest and Royalties Directive.45
The VAT tax in Greece is 4.5% to 23%. For all goods not belonging to any special category, the VAT is 23%. For Category 1 goods the VAT is 13%, and for Category 2 goods it is 4.5%. On some islands there is a VAT reduction for Category 1 goods to 13%.
- Parent Subsidiary Directive, by Salvador Trinxet Llorca
- European Union Direct Taxes, by Salvador Trinxet Llorca