Greece Tax & Business Guide & Deloitte

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Basic facts
Population 11m Inflation 3.8% (2005)*
Main languages Greek (official), English, French GDP per head US$19,810*
Currency Euro (ƒ) GDP growth 3.4% (2005)*
Economic communities European Economic Area, EU, OECD, WTO
GDP sources 6.5% agriculture, 22.1% industry, 71.4% services
*Economist Intelligence Unit.
Political environment

Greece is a parliamentary republic in which the prime minister and the government hold executive powers.

The centre-right New Democracy (ND) party came to power in elections in March 2004, following a long period in which the Panhellenic Socialist Movement (Pasok) led the country. The prime minister is Constantine Karamanlis, the ND leader. New parliamentary elections are due by March 2008.
Foreign trade and investment
Exports US$19.8bn (2005)* Imports US$45.6bn (2005)*
*Economist Intelligence Unit.

Major exports: Food, raw cotton and tobacco, textiles, mineral fuels and chemicals.

Main trading partners: Other EU countries, which account for about one-half of imports and more than 40% of exports.

Recent investment has focused on the services sector, particularly banking, insurance, tourism, retailing, information technology and telecommunications.
Business and financing
Business forms Corporation; limited liability company; partnership

Foreign firms almost invariably conduct business via a corporation, or anonymos eteria (AE), although other forms of entity are available.

Joint ventures are not considered legal entities but are fiscal entities for tax purposes.

For the offshore regime, see below under ÏCorporate taxÓ.
Labour environment
Unemployment rate 10.8% (2005)* Minimum wage ƒ616 (monthly)
*Economist Intelligence Unit.

The process of registering with the aliens bureau and acquiring a work permit is difficult for workers from outside of the European Economic Area (EEA).

About 35% of the workforce is unionised, with slightly higher rates in manufacturing and banking. Employers and trade unions together set the minimum wage.

Most private-sector employees are covered by the Social Security Fund (IKA).
Taxation
Corporate tax
Main rate 29%

Resident companies are taxed on their worldwide income, with a credit for foreign tax paid. Non-resident companies are taxed only on Greek-source income. An entity is resident for tax purposes if it is incorporated in Greece. The corporate tax rate is 29%. Dividends received are not taxed.

Except in the shipping sector, foreign firms can no longer take advantage of an offshore tax regime that previously provided an exemption from tax on all income earned on trading activities outside of Greece. Under a new regime, however, qualifying companies are taxed at the standard corporate income tax rate (ie 29%) but on a pre-determined cost-plus basis. The gross revenue of such companies is calculated by adding a deemed cost-plus mark-up to the expenses of the enterprise. All expenses (except corporate income tax), including depreciation, incurred by a company providing specific services are taken into account, with a cost-plus mark-up applied to the aggregate of direct and indirect costs. The cost-plus mark-up will be prescribed by the minister of finance on a case-by-case basis and will not be less than 5%. The new regime is available to foreign companies that enjoyed benefits under the former regime and new foreign companies that wish to establish their offices in Greece, provided that their sole purpose is to provide services to their head offices or to associated enterprises outside of Greece.
Individual tax
Progressive rates up to 40%

Resident individuals are taxed on their worldwide income; non-residents are taxed only on Greek-source income. Residence is determined on the basis of personal circumstances, such as possession of a residence permit or length of stay in Greece. Foreign tax is creditable up to the amount of tax that would be payable on the income in Greece. The individual tax rates rise progressively to 40%. Dividends received are exempt from tax.
Capital gains
Gains on business assets and fixed property taxed as income

The sale by companies of tangible assets is taxed as regular business income. Capital gains derived by legal entities from the sale of securities listed on the Athens Stock Exchange are exempt, provided the gains are credited to a special reserve. Individuals are only taxed on certain specified gains, or on gains on transactions that amount to a business. Gains on the sale of a business or participation in a limited company or partnership are taxed by withholding at 20%, and the same rate applies to the sale of certain intangible assets such as goodwill and trademarks.
Indirect tax
Standard rate 19% Other rates 9%, 4.5%, 0%

Value-added tax (VAT) applies to most transactions at the standard rate of 19%. A lower 9% rate applies to food, agricultural products and medical materials; a 4.5% rate applies to books and newspapers. Exports are zero-rated. Exemptions include fees of lawyers and land registrars. Registration is compulsory for businesses.
Tax administration and compliance
Tax year Corporations: accounting year; Individuals: calendar year

For companies, the fiscal year is the calendar year, which refers to an accounting year that normally runs to June 30th or December 31st. Companies pay advance tax and final tax in eight monthly instalments. The tax return is due by the tenth day of the fifth month following the end of the financial year. The tax year is the calendar year for individuals. Employment income of individuals is subject to withholding (PAYE) tax.
Additional tax information
Withholding taxes Dividends 0%, Interest 29%, Royalties 20%. Rates may be reduced by tax treaty or EU directives.
Tax treaties Greece has more than 35 tax treaties.
Dividends Exempt for corporate and individual shareholders.
Revenue protection There is transfer-pricing legislation.
Groups There is no provision for group taxation.
Incentives Regional; investment allowances.
Other taxes Special tax on business income, Real estate transfer tax, Real estate transfer duty, Automatic revaluation tax, Import duties, Consumption tax, Annual real property tax on corporations, Tax on sale of listed shares, Surtax on rent from non-industrial property.