EU membership has opened Greece access to new loans at low rates from European financial institutions. To obtain them, the country's government distorted statistical indicators for a long time, so data on the disastrous state of affairs in the economy became public only after 2009. As an emergency response, taxes in Greece had to be revised: the list, rates and administration procedure.
The nuances of the tax system
The 2008 crisis affected the entire world, but countries such as Greece were particularly hard hit by their own governments. The state, which was actively developing after the Second World War, began to drown in debt: in 2021, the amount of external borrowings exceeded 180%.
High social payments to vulnerable groups of the population also do not help to reduce the tax burden. Attempts to reform to make Greece's tax system more loyal to business and reduce benefits only led to unrest in the streets.
And yet, against the background of high rates and an increase in the number of contributions (for example, the introduction of a tourist tax, new payments from owners of real estate and vehicles), the state has found a way to reduce the financial burden on businesses:
- from 2021 will reduce the corporate tax rate;
- from 2021, VAT will be lowered by 2% for home buyers in new buildings;
- Greece will also cut property tax by 30-50% in 2019-2020.
List of taxes in Greece
The basis of the tax grid in Greece is:
- corporate income tax for organizations (Φόρος Κερδών);
- income for individuals (φόρο εισοδήματος);
- VAT (Φόρος Προστιθέμενης Αξίας, ΦΠΑ);
- property owner fees (one-time and annual);
- capital gains tax (Φόρο Υπεραξίας Ακινήτων);
- registration and stamp duty;
- road tax (τέλη κυκλοφορίας);
- taxes in Greece for tourists, introduced from January 1, 2021;
- withholding from income from a source (domestic or foreign).
Commercial property or home owners will face a range of fees:
- Upon purchase. Tax on the transfer of ownership (Φορολογία Μεταβίβασης Ακινήτων) - 3.09% of the cost of housing purchased on the secondary market or in a new building, if the issuance of a permit for its construction occurred no later than December 31, 2005. For new premises built according to documents after this date, a rate of 24% is provided.
- During the entire period of ownership. Since 2021, the government began to levy a new type of payment - a single tax on property owned (ΕΝ.Φ.Ι.Α). The amount of the contribution depends on the location of the property, its class, purpose, number of storeys, but to a greater extent on the assessed value. Housing over 200,000 euros is considered a luxury and is additionally taxed from 0.1% depending on the value.
- When renting out. Individuals will pay personal income tax - up to a maximum of 45%. For legal entities from 2021 and for the next four years, the income tax rate will be 25 instead of 29%. In addition, if accommodation is rented to tourists, the administration must withhold taxes from guests in hotels in Greece (a flat rate for each day of residence in the country).
- When selling. Capital gains tax (in case of receiving benefits from the sale of property, securities and business) - 20% of the amount of excess of the sale value over the purchase price.
Taxation of individuals
Citizens and foreign individuals are required to pay taxes on income received in Greece. Moreover, the higher the level of profit, the higher the rate is applied to it.
| Name | Bid | The essence |
|---|---|---|
| Income tax in Greece for employees | 22–43% | The exact amount of taxation of income of individuals (residents and non-residents) depends on the amount of annual income: up to 25,000 euros - only 22% (maximum tax 5,500 euros per year); up to 42,000 euros - already 32% (the maximum payment to the budget is 5,500 + 5,440 euros per year); over 42,000 euros per year - 43%. |
| Personal income tax from self-employed and entrepreneurs | 26–33 % | The scale is also progressive: up to 50,000 euros - 26%; more than 50,000 euros - 33%. |
| Tax on income from the rental of movable and immovable property | 15–45 % | The same principle works here. The higher the annual income, the higher the percentage: up to 12,000 euros - 15%; difference up to 35,000 euros - 35%; all that is above - 45%. |
| Tourist tax in Greece | from 0.25 to 4 euros per person | Introduced in 2018. Charged from foreigners visiting the country for tourist or business purposes. |
| Road tax (τέλη κυκλοφορίας) | Fixed payment from 22 to 1,380 euros | The amount depends on the engine size and the age of the vehicle. All vehicles that have received license plates on the territory of Greece are subject to taxation. It is paid in advance, that is, in 2018 for 2019. |
| Collection for inheritance and donation | from 1 to 40% | Depends on the degree of relationship between the donor and the recipient of the gift (1-10% for close relatives, 40% for the rest). Calculated based on the appraised value of the property |
Due to the financial turmoil of the state, taxes in Greece for individuals remain high. In 2021, this led ordinary Greeks to ignore their obligation to file tax returns and demonstrate a determined willingness to refuse to pay taxes.
Against the backdrop of low incomes, high unemployment in the country and the threat of civil unrest, the government was forced to think about measures to revive the economy. The action plan includes provisions for a phased reduction in the fiscal burden from 2021.
Taxation of legal entities
Unfortunately, the unified tax code of Greece has not been optimally implemented, therefore, a separate law is devoted to each tax and collection (subject to amendments and additions).
| Name | Bid | The essence |
|---|---|---|
| Income tax | 28%, with the prospect of reduction to 25% | A new law, passed at the end of 2018, reduced the rate of taxation of profits from 29 to 28% in 2019. It also contains a schedule for reducing the future obligation to 25% by 2022 (1% will be removed annually) |
| VAT | 6,5–23 % | Integration into the world and European economic system requires Greece to maintain the VAT level. The standard tax rate is 23%, preferential 13% are provided for essential products and services of self-employed professionals (doctors, writers, artists, etc.). The lowest rate is provided for the production of periodicals, pharmaceuticals and hotel services - only 6.5%. |
| Withholding tax | 0–33 % | At the maximum rate, income is taxed in the form of interest in favor of a non-resident. 10% is withheld from the amount of dividends in favor of a resident of Greece. Construction contractors pay the least (3%) and internal royalty recipients (0%). |
| Stamp duty | 2,4–3,6 % | It is useful for payers to know what taxes in Greece are charged additionally for transactions: insurance, loans and rent |
| Registration fee | 420 euros per year | Joint-stock companies registered with the Athens Chamber of Commerce and Industry pay |
If the company is registered outside the country, then in Greece its work will have the following features:
- only those profits that are received in the Greek customs territory need to be taxed;
- tax rates practically do not depend on the status of the payer;
- at home, contributions must be paid taking into account international agreements on double taxation.
Tax liabilities of non-residents
Greece does not have a separate tax collection scale for those who have not received tax resident status, only additional fees are provided.
In order for additional taxation in Greece not to affect a foreigner, you need to meet at least one of the signs:
- stay in the country for 183 or more days a year (not necessarily in a row);
- to make Greece the center of their life or commercial interests;
- live abroad, while in the diplomatic service, having Greek origin in the asset.
A legal entity becomes a fiscal resident if it is registered in the country or if it can prove that its management comes from Greek territory.
If none of the conditions are met, the payer will have to come to terms with the fact that taxes in Greece are higher for non-residents. In particular, the state will take 5% more from all incomes of individuals received in the country (an exception was provided only for EU citizens).
An interesting point: if 90% of all income of a non-resident is received in Greece, he has the right to apply all the benefits and deductions due to citizens and permanent residents.
Often, Russian citizens acquire property with the intention of renting it out to tourists. If you need to understand how much the property tax in Greece will be for Russians. Since the Greek authorities do not make a distinction for domestic or foreign buyers of commercial housing, the difference will only be seen when income tax is paid on rental income. So, if for the Greeks the maximum rate is 45%, then the owner from the Russian Federation will be forced to give exactly half of the earned (45% + 5% for non-residents).
Other types of obligations
In the classical sense, land tax in Greece is not implemented. However, the owners of vacant land plots are obliged to pay an annual fee for undeveloped plots in the amount of 0.03-0.09 euros for each square meter of unused area.
In 2021, the list of additional contributions was replenished with a new type of payments from temporarily arriving foreigners. Moreover, a fee is taken from everyone who lives in hotels, rented apartments, furnished rooms or apartments, regardless of the purpose of arrival.
The amount of tourist tax in Greece depends on the category of accommodation: the highest rate is set in 5-star hotels (4 euros), the lowest - in furnished rooms and hostels (0.25 euros per day).
Double taxation prevention
The Greek government has taken care of measures to avoid double taxation of income of its own and foreign citizens. Agreements have been signed with all EU members to save investors' funds. In order for the recipient of income not to pay taxes twice, it is enough for him to provide a certificate of the place of permanent residence and confirmation of the fact of payment of tax in Greece or in another EU country if the profit is received abroad.
In addition to the EU, the Greeks signed treaties with Russia, most of the post-Soviet countries, African South Africa and Egypt, the United States, India, Israel, China, Korea, Kuwait and Mexico.
Benefits and deductions for taxpayers
Commercial organizations and entrepreneurs located in the Eastern Aegean Islands, Dodecanese and Cyclades can pay VAT at 30% reduced rates (16, 9 and 5%, respectively).
When calculating personal income tax obligations, individuals can exercise the right to deduction:
- 1000 euros for each child in the family;
- 15% of the cost of renting a single home or own education;
- in the amount spent on social insurance, purchasing a computer or making an investment in the Greek economy;
- 15% of the amount of medical expenses in the current year;
- 15% of the mortgage interest.
Contrary to expectations, the residence tax in Greece does not change depending on the season, as the climate encourages a year-round flow of tourists.
The procedure for filing reports and payment of obligations
Organizations operating in Greece are required to file tax and financial statements. Depending on the size of the business, financial statements must be submitted:
- through the General Electronic Commercial Register (Γενικό Εμπορικό Μητρώο, Γ.Ε.ΜΗ., GEMI) - in electronic or paper format;
- through the tax authorities (through the myTAXISnet system) /
Fiscal fees and payments are administered by the Greek tax authority, the Independent State Revenue Authority (Ανεξάρτητης Αρχής Δημοσίων Εσόδων, ΑΑΔΕ), directly subordinate to parliament.
Business entities are inspected by the State Revenue Control and Audit Agency (Υπηρεσίες Ερευνών και Διασφάλισης Δημοσίων Εσόδων, ΥΕΔΔΕ), located in the structure of ΑΑΔΕ.
Individuals and entrepreneurs annually submit three main types of income tax returns:
- form E1 - about profit received at the source (not submitted by individuals who receive income exclusively from the employer);
- Form E2 - on income from the transfer of own real estate for paid use;
- Form E3 - on entrepreneurial profits.
The deadline for submission is June 30 of each year following the reporting year.
Organizations submit a Form N income tax return within the same timeframe. Enterprises report on the amount of VAT on a monthly basis using Form F2
Conclusion
Greece has long been maneuvering between two extremes: the need to reduce the tax burden and find a way to increase budget profitability. Obviously, raising taxes will not solve the problem here. Proceeding from this, the authorities took the path of a stepwise reduction of rates. And although, according to the assurances of the authorities, the peak of the financial turmoil has been left behind, the state has not yet found an effective method for solving problems.
