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Tax
i Greek tax residence
Individuals who are tax residents of Greece are topic to Greek earnings tax on their worldwide earnings (Greek and international earnings) whereas a international tax credit score is supplied on international earnings declared in accordance with the Organisation for Economic Co-operation and Development (OECD) tips for the avoidance of double taxation. Non-Greek tax residents are topic to Greek earnings tax solely for their earnings sourced in Greece. The ITC supplies an indicative listing of earnings thought-about as arising in Greece (Greek-sourced earnings).
For earnings tax functions, a person is taken into account as a Greek tax resident supplied that she or he maintains in Greece his or her everlasting or main residence or ordinary abode or the centre of his or her important pursuits (i.e., private, financial and social bonds) or she or he is a consular or diplomatic worker or public officer of comparable standing or a civil servant of Greek nationality and serving overseas.
Also, a person residing in Greece constantly for a interval of greater than 183 days is taken into account as a Greek tax resident. This is just not relevant the place a person is residing in Greece completely for tourism, medical, therapeutic or comparable private functions, if his or her residence doesn’t exceed a interval of twelve months, together with short-term stays overseas. The above provision might not be relevant if a double taxation treaty (DTT) (ratified by regulation) exists, in which case DTT supplies a special means of taxation from the tax residence of the different nation – occasion of the DTT. It is talked about that DTT, by its integration into Greek (home) regulation, has mechanically acquired an elevated legislative energy over the home laws, in line with Article 28 of the Greek Constitution.
Greece has entered into DTTs with the following international locations, offering helpful earnings tax provisions in comparison with inside earnings tax laws: Albania, Armenia, Austria, Azerbaijan, Belgium, Bosnia-Herzegovina, Bulgaria, Canada, China, Croatia, Cyprus, the Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Hungary, Iceland, India, Ireland, Israel, Italy, Korea, Kuwait, Latvia, Lithuania, Luxembourg, Malta, Mexico, Moldova, Morocco, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Switzerland, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States and Uzbekistan.
ii Income tax
The following 4 classes of earnings are topic to earnings tax underneath the present ITC:
- earnings derived from employment and pension;
- earnings derived from enterprise actions;
- capital earnings; and
- capital features earnings.
Different tax charges apply to the above classes for people. The relevant tax charges are both progressive or tax exhaustive (one-off tax). The above-mentioned kinds of earnings are taxed as follows.
Income derived from employment or pensions
Income derived from employment or pensions is taken into account to be the gross earnings from salaried work and pensions, and contains all kinds of earnings, in money or variety acquired, in the context of any present, previous or future employment relationship. In addition, the ITC explicitly supplies that the board of administrators’ charges are categorised as employment earnings for tax functions.
Apart from the common provision for the taxation of salaries, the ITC incorporates provisions for the taxation of particular advantages in variety yearly exceeding €300 that are thought-about as taxable earnings derived from employment for the worker and are added to the gross earnings from salaried work and pensions. Benefits in variety indicatively embrace the following:
- the worth of products represented by present cheques;
- the worth of vouchers given freed from cost to buy items or providers at related shops. In the case of meals vouchers, the profit in variety is assumed to be any quantity exceeding €6 per working day;
- use of firm bank cards to cowl bills not incurred on behalf of the firm, however to cowl private, household or different bills unrelated to the enterprise pursuits of the employer or not used in regular industrial transactions, the place the value is assumed by the employer;
- the profit accruing to staff, managers, directors, board members and pensions or corporations offering vitality, telephony, water provides, gasoline or subscriber providers (similar to tv) from offering them with a sure amount of electrical energy, cellphone calls, water, pure gasoline and subscriber channels, at both a diminished fee or freed from cost;
- numerous funds made immediately by employers to 3rd events, similar to funds to further tuition centres, colleges, nurseries and campsites and funds protecting tuition prices and nursery charges, direct funds to cowl the value of such individuals taking part in workshops, programmes, coaching or schooling coaching programs, or to cowl subscriptions to journals or chambers, unrelated to their enterprise actions or the publish they maintain; and
- the provision of firm cell phone connections to staff, managers and board members to the extent that it goes past the value of their tariff plan, supplied that the extra above the tariff plan is used for private causes and never for causes related to the employer’s enterprise actions.
Since 1 January 2020, earnings from employment or pensions is taxed in line with the following progressive tax scale.
Taxable earnings | Tax fee |
---|---|
Up to €10,000 | 9% |
€10,001 to €20,000 | 22% |
€20,001 to €30,000 | 28% |
€30,001 to €40,000 | 36% |
€40,001 and above | 44% |
Income derived from enterprise actions
Individuals are topic to earnings tax on enterprise earnings, which is outlined as the complete income from enterprise transactions in addition to from unbiased professions after the deduction of any enterprise bills, depreciations and dangerous money owed. The enterprise earnings is taxed in line with the following tax scale.
Taxable earnings | Tax fee |
---|---|
Up to €10,000 | 9% |
€10,001 to €20,000 | 22% |
€20,001 to €30,000 | 28% |
€30,001 to €40,000 | 36% |
€40,001 and above | 44% |
Moreover, in line with the ITC, any improve of wealth for a person deriving from an unlawful, unjustified or unknown supply or trigger is taken into account as earnings derived from enterprise actions and is additional topic to tax at 33 per cent.
Capital earnings
Capital earnings is a definite class of earnings and contains the earnings, in money or in variety, from dividends, pursuits, royalties and immovable property.
Income from dividends is outlined as the earnings from shares, founders’ shares, or different rights of participation in earnings that are not money owed, in addition to earnings from different company rights, together with interim dividends and actuarial reserves, earnings from partnerships and another distributed quantity.
Income from curiosity is outlined as the earnings on any form of claims, both secured by mortgage or not, whether or not offering a proper to take part in earnings of the debtor or not. Specifically, this contains earnings from deposits, authorities securities, bonds (with or with out safety) and from each form of mortgage settlement, together with premiums, repurchase agreements or reverse repurchase agreements and rewards derived from shares, partnerships, bonds or securities. There is a tax exemption relating to the earnings by the curiosity of bond loans and treasury payments of the Greek state, obtained by people, in addition to to the curiosity arising from bonds issued by the European Financial Stability Facility in software of the programme for the restructuring of the Greek debt.
Income from royalties is outlined as the earnings gained in trade for the use or the proper to make use of any form of mental property rights.
Income from actual property property is outlined as the earnings (in money or in variety) derived from leasing (rental), self-use or the free concession of the use of land or actual property property. The earnings obtained in variety is calculated at the market worth. In addition, the earnings for self-use or the free concession of use is the same as 3 per cent of the goal worth of the property. A tax exemption is utilized to the aforementioned presumptive earnings in the case of the free concession of the use of the actual property property – which shall not exceed 200 sq. metres – to a relative in the ascending or the descending line, who will use it as his or her essential residence.
The capital earnings earned by a person is topic to withholding tax as follows:
- dividends distribution is topic to a withholding tax at the fee of 10 per cent, with impact for funds carried out as much as the tax yr 2016, 15 per cent for the tax yr 2017, 10 per cent for the tax yr 2019 and 5 per cent for the tax yr 2020 onwards exhausting any additional tax legal responsibility for people (ultimate tax);
- curiosity funds are topic to a withholding tax fee of 15 per cent, exhausting any additional tax legal responsibility for people (ultimate tax); and
- royalties funds are topic to a withholding tax at the fee of 20 per cent, exhausting any additional tax legal responsibility for people (ultimate tax).
Income from immovable property sourced by the leasing (rental) or by the self-using (presumptive earnings) of the actual property property is topic to earnings tax in accordance with the following tax scale, which is relevant to earnings gained from 1 January 2017.
Income | Tax fee |
---|---|
Up to €12,000 | 15% |
€12,001 to €35,000 | 35% |
€35,001 and above | 45% |
Short-term lease: Airbnb
As of 1 January 2017, earnings from the short-term lease of actual property in the context of the sharing financial system is taxed in accordance with the provisions of Article 39A of the ITC.
Specifically, rental earnings from the short-term lease of immovable property in the sharing financial system is taken into account as taxable earnings deriving from immovable property, supplied the immovable property is furnished when rented, with out the provision of any extra service apart from the provision of mattress linen, and is taxed pursuant to the corresponding relevant tax scale (15 per cent to 45 per cent). If any extra providers are supplied, the earnings is taken into account as enterprise earnings and taxed in line with the corresponding relevant tax scale (9 per cent to 45 per cent).
Short-term lease of immovable property in the context of the sharing financial system5 is exempt from worth added tax (VAT), supplied that, throughout the lease, the lessor doesn’t present extra providers to visitors much like these supplied in accommodations, similar to cleansing providers, waste assortment, altering linen and different buyer care providers. The provide of mattress linen is just not thought-about an extra service and subsequently has no impact on the VAT exemption. Also, different utilities similar to electrical energy, water and web connection, which are charged to the host and subsequently handed on to the visitor, are included in the worth of the rental value and subsequently are not thought-about extra providers and don’t have an effect on the VAT exemption.
Capital features earnings
Any surplus that arises from the switch of capital (i.e., actual property property, securities, listed shares, sovereign bonds, interest-bearing payments, firm payments or by-product monetary merchandise as described in the ITC) is taken into account earnings from capital features and is topic to tax at a fee of 15 per cent. The taxable surplus is the distinction between the buy (acquisition) value and the switch (promoting) value. An exemption from the stated tax is utilized in particular instances. For instance, any capital features derived from the switch of securities by people may very well be exempted from capital features tax if stated people are tax residents of one other state with which a DTT has been signed, and supplied that each one the essential documentation is submitted to the related tax administration authority, evidencing the residence of the aforementioned people to those states.
Taxation on capital features from the switch of actual property property has been postponed till 31 December 2022.
Stock choice and share award plans preferential tax regime
Stock choice and share award plans represent distinctive devices for the provision of incentives to staff in addition to an alternate type of compensation of govt members and administrators, to strengthen their effectivity and productiveness. The inventory choice and share award plans’ preferential tax regime was not too long ago interpreted by the Independent Authority Public Revenue Circular Pol. E 2208/2020.
As of 1 January 2020, no taxation arises upon granting, vesting or exercising of inventory choices. The taxation is deferred to the subsequent shares’ switch, which have been acquired upon train by the beneficiary of the scheme.
The tax remedy relies on the holding interval of the shares, ranging from the grant date of the inventory choices as much as the shares’ switch.
- If the shares are transferred previous to the completion of 24 or 36 months (for start-ups), from the grant date of the inventory choices, the earnings is taxable as employment earnings at a progressive tax scale as much as the marginal fee 44 per cent relevant on wage earnings (particular solidarity contribution on salaries earnings is suspended as much as the finish of 2022).
- If the shares are transferred after the completion of 24 or 36 months from the grant date of the inventory choices, the earnings generated is taxable as capital acquire at a 15 per cent fastened fee (or 5 per cent for start-ups) and particular solidarity contribution at progressive tax charges as much as the marginal fee 10 per cent (particular solidarity contribution on salaries earnings was suspended as much as the finish of 2021).
In the case of listed shares, the taxable worth is the shares’ market value on the train date minus the inventory choice train value (preferential acquisition worth of shares), whereas, as for non-listed shares, the taxable base is the unfold (i.e., the share’s inside worth on the train date when the shares have been acquired), outlined primarily based on the firm’s inside internet asset worth (as mirrored in its accounting books) minus the inventory choice train value (preferential acquisition worth of shares). In addition, any subsequent acquire on the sale of shares shall be topic to capital features tax at a 15 per cent fastened fee and particular solidarity contribution at progressive tax charges as much as 10 per cent.
With regard to share award plans, any acquire on the sale of shares shall be topic to capital features tax at a 15 per cent fastened fee and particular solidarity contribution at progressive tax charges as much as 10 per cent, no matter the time of shares’ switch following their free granting. In case of listed shares, the taxable worth is the share market value at the time of the shares’ free granting, supplied the shares’ sale value equals to or it’s decrease than the market value, whereas any optimistic distinction between the shares’ sale value minus share market value on the day of their free granting, supplied the beneficiary participates in share capital with a proportion greater than 0.5 per cent, is subsequently topic to capital features tax at a 15 per cent fastened fee. As for non-listed shares, the taxable base is the highest between shares sale value and inside worth at the time of their free granting.
iii Special earnings tax provisions supplied by the ITCAlternative technique for figuring out minimal taxation (deemed earnings)
The ITC supplies an alternate technique for calculating the minimal tax obligation of people in line with sure goal standards. If, after software of these goal standards, the deemed earnings of the taxpayer is greater than the declared earnings, she or he shall be taxed in line with his or her deemed earnings.
Deemed earnings could derive both from ‘dwelling bills’ from belongings owned or from ‘precise bills’ from the quantity spent to buy belongings and is calculated after taking into consideration the following goal standards:
- the floor space of the essential residence of the taxpayer in mixture with its tax worth;
- the floor space of any secondary residences of the taxpayer;
- the measurement of the engines (e.g., 1,200cc, 1,400cc) of any automobiles of the taxpayer, in mixture with the yr of the automotive’s manufacturing;
- salaries of housemaids and different workers;
- charges for private colleges for the taxpayer’s youngsters;
- leisure boats;
- aeroplanes; and
- swimming swimming pools.
Purchases of automobiles, bikes, boats, aeroplanes and different items that value above €10,000, the institution or the participation in the capital improve of an organization underneath the type of an infinite or restricted legal responsibility partnership or company or restricted legal responsibility firm or private company or society of civil regulation or three way partnership or buy of firm components or securities, in addition to funds to insurance coverage funding contracts, to the extent that they represent funding product, are taken into consideration in the calculation of the taxpayer’s annual deemed earnings. The taxpayer can, underneath sure circumstances, cowl the distinction between really declared earnings and earnings that’s deemed after the software of the above guidelines, by exhibiting that the quantity in extra of the declared earnings is justified by financial savings made out of earnings taxed in earlier years.
Deemed earnings provisions are not relevant in the case of a international tax resident who doesn’t earn earnings from Greek sources.
Controlled international corporations
CFC guidelines have been launched in the ITC, with the goal of coping with the tax avoidance of Greek corporations or people, by means of shifting revenues to subsidiaries in low-tax jurisdictions.
It is specified that the taxable earnings of a person Greek tax resident contains the non-distributed earnings of authorized or different entities or everlasting institution, tax-resident in one other state, supplied that the following circumstances are cumulatively met:
- the taxpayer, on his or her personal or collectively with associated individuals, holds, immediately or not directly, shares, components, participations, voting rights or participations in the capital at a proportion exceeding 50 per cent, or is entitled to obtain a proportion exceeding 50 per cent of the earnings of the stated authorized or different entity;
- the company tax really paid relating to the earnings of the above international authorized particular person or authorized entity or everlasting institution is lower than the distinction between the company tax that will be owed by the authorized particular person or authorized entity or the everlasting institution, in line with the provisions of Greek regulation if this authorized particular person, entity or everlasting institution was a Greek tax resident in accordance with Article 6 of the ITC and the company tax really paid by the authorized particular person or authorized entity or everlasting institution relating to their earnings; and
- a proportion exceeding 30 per cent of the internet earnings earlier than taxes realised by the authorized entity or different entity falls underneath a number of of the following classes:
- curiosity or another earnings generated from monetary belongings;
- royalties or another earnings generated from mental property;
- earnings derived from dividends and the switch of shares;
- earnings derived from movable belongings;
- earnings derived from finance lease;
- earnings derived from invoicing corporations that generate income from (1) gross sales of products and providers and (2) providers bought and offered to affiliated corporations that don’t add an financial worth or add a minimal financial worth; and
- earnings derived from insurance coverage, financial institution and different monetary actions.
The above shall not apply to instances the place the CFC is engaged in a considerable financial exercise supported by personnel, tools, belongings and services, as evidenced by related details and circumstances. However, the above provisions of the ITC shall apply if the CFC is a tax resident or maintains a everlasting institution in a 3rd nation that isn’t a celebration to the Agreement on the European Economic Area.
iv Solidarity tax contribution on people’ earnings
As a results of the financial disaster, a particular solidarity tax contribution was imposed on people’ complete earnings (each declared and deemed earnings from any supply) that exceeded €12,000 on an annual foundation. However, since 1 January 2020, this particular solidarity tax contribution has utilized to a person’s complete earnings (from any supply) from €0.
For earnings earned from 1 January 2020, a solidarity tax contribution is imposed in accordance with the progressive charges beneath.
Income | Tax fee |
---|---|
Up to €12,000 | 0% |
€12,001 to €20,000 | 2.2% |
€20,001 to €30,000 | 5% |
€30,001 to €40,000 | 6.5% |
€40,001 to €65,000 | 7.5% |
€65,001 to €220,000 | 9% |
€220,000 and above | 10% |
In addition, as of 27 May 2016, salaries and wages are topic to withholding tax in opposition to solidarity tax contributions in accordance with the above charges.
According to Circular E2009/2019, issued by the Independent Authority of Public Revenue, the particular solidarity tax contribution of Article 43A of the ITC, as an earnings tax, is just not imposed on earnings generated overseas by a Greek tax resident that isn’t topic to Greek earnings tax underneath the provisions of the relevant DTT. Also, the particular solidarity tax contribution of Article 43A of the ITC is just not imposed on earnings generated in Greece by a international tax resident that isn’t topic to Greek earnings tax underneath the provisions of the relevant DTT.
For the tax yr 2021, the earnings of a pure particular person is exempt from the imposition of the particular solidarity levy, with the exception of earnings from wage labour in the public sector and pensions, as not too long ago amended underneath Article 121 of Law No. 4799/2021.6 This exemption extends to tax yr 2022 for employment earnings in the private sector.
v Luxury dwelling tax
As a results of the financial disaster, from the tax yr 2014, a luxurious dwelling tax applies on people’ earnings, calculated on the quantities of the annual deemed expenditures arising from the possession or holding of private passenger automobiles, aeroplanes, helicopters, yachts and swimming swimming pools, as follows:
- for passenger automobiles from 1,929cc to 2,500cc, a tax fee of 5 per cent is utilized;
- for passenger automobiles greater than 2,500cc, a tax fee of 13 per cent is utilized (private passenger automobiles with greater than 10 years’ use since their first yr on the street are exempted from stated tax); and
- for plane, helicopters, swimming swimming pools and yachts longer than 5 metres, a tax fee of 13 per cent is utilized.
vi Real property taxReal property switch tax
The fee of the actual property switch tax (RETT) is 3 per cent calculated on the worth of the actual property property. For tax functions, a system has been established for the goal calculation of the worth (i.e., primarily based on a system of minimal values). According to this technique, if contracting events declare a value decrease than the goal value, the taxes are primarily based on the goal value (greater value). Lately, the precise sale costs of actual property in Greece have been considerably diminished and have been a lot decrease than the goal values. As a consequence, the tax paid on the goal values supplied by Greek regulation is greater than the tax that will be calculated on the precise sale value in line with the contract. Further, a municipality surcharge equal to three per cent of the RETT additionally applies, thus resulting in an efficient switch tax fee of three.09 per cent. The purchaser suffers the RETT, which needs to be paid as a lump-sum quantity earlier than signing the switch deed. No tax profit (deduction) is supplied for this quantity. Also, notary and land registry charges aggregately quantity to roughly 1.1 per cent of the value agreed in the notarial deed (i.e., the consideration) or the goal (tax) worth of the property for RETT functions, whichever is larger. Notary and land registry charges are often payable by the purchaser. No tax profit (deduction) is supplied for this quantity.
Annual actual property tax
Annual actual property tax (ENFIA) is imposed on actual property property rights and applies to actual property situated in Greece that’s owned by people and entities. ENFIA is payable on an annual foundation. The tax payable relies on a number of elements.
Special tax actual property
A particular tax applies on the worth of actual property located in Greece and owned by an organization that has its registered seat at a non-cooperative state, as supplied underneath Article 65 of the ITC, at a tax fee of 15 per cent. However, if the firm discloses all its shareholders or final beneficiaries (people) who maintain a tax identification quantity in Greece, it’s exempt from the particular tax. Many different exemptions are additionally supplied.