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Taxation in Greece
 
 
 

Business Taxation

Companies doing business in Greece are subject to corporate income tax, value-added tax (VAT), real estate taxes and social security contributions.

Taxable Income and Rates

The tax rate for both corporations and limited liability companies is 25%. The 25% rate also applies to foreign companies and entities with non-profit status. The tax rate for general and limited partnerships is 22%. Law firms and notaries are taxed at a flat rate of 25%.

Taxable Income Defined
Corporations and limited companies are taxed on total annual profits before distribution of dividends, profits, fees to directors and profits to employees. There is no further tax on dividends or profits when distributed. Dividends or profits from participations in other companies are deducted from a corporation’s taxable income.
Resident corporations (Greek and foreign corporations operating and managed in Greece) and limited companies are taxed on net income earned in Greece and abroad. Greece unilaterally grants credit to residents for foreign income tax paid up to the amount of Greek tax payable on the foreign income. This may be modified under a double-taxation treaty between Greece and the foreign company’s home country. Tax credits are available for foreign income and withholding tax paid by both second-tier and lower-tier foreign subsidiaries of Greek-based companies.

Net income is calculated by deducting expenses from gross income (net income per books). This is adjusted for non-deductible expenses, tax-free income and other income subject to special regulations with termination of tax liability (such as interest income subject to withholding tax).

Non-resident companies are taxed only on income arising from Greek sources.

A resident or permanent establishment is defined as one that maintains shops, offices, warehouses or manufacturing facilities in Greece; transacts business or offers services through a representative in the country; renders technical or research services there, even without a representative; or conducts other common business activities. Mere participation in the capital of a Greek limited liability company or corporation confers permanent establishment status (ie residence), but mere ownership of publicly traded shares does not give rise to residence.

Deductions
Allowable deductions usually include ordinary business expenses such as directors’ fees, bonuses to managers and directors, interest payments, repair and maintenance of leasehold property and management fees (eg franchise and royalty payments), provided the latter do not exceed 5% of expenses.

Royalties and service fees supported by written contracts are deductible in the year they are actually paid. However, a deduction for such expenses is disallowed if the services are provided via an offshore company registered in a country offering “especially favourable” tax treatment.

Advertising expenditures are deductible, although liable for a 2% tax payable to the municipality where the firm is established. There is also a levy on behalf of press workers’ supplementary social insurance funds on all print (20%) and media (21.5%) advertising. The cost of computer hardware and software provided by companies to employees may also be deducted.

Start-up expenses and the cost of acquiring real property may be written off in one year or in equal instalments over five years. Leasehold additions and improvements may be amortised over the term of the lease. Leased real property may be deducted up to the value of the buildings but not the value of the underlying and surrounding land. Leasing companies may depreciate expenses incurred in acquiring real property over the period of the leasing contract.

A deduction from gross income is permitted for premiums paid for private employee group-life-insurance schemes (with cover against death or accidental injury) that include return of premiums at retirement, as a lump sum or in instalments.


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