doing business in greece

Doing Business in Greece

Prepared by Prooptiki Ltd

September 2010

Country - General Information

Strategic Link to the: Balkans Eastern Mediterranean

Region

Eastern Europe Black Sea

Population: 11.3 million Working force: 4.6 million Euro-zone since 2001 Capital: Athens

5.5 million inhabitants

Basic Economic Figures

GDP growth rate -1.5% (Q2 2010)

Unemployment Rate: 11.8% (Q2 2010)

-2

-1,5

-1

-0,5

0

0,5

1

1,5

2

Series1 -0,7 -1 -0,3 -0,5 -0,8 -0,8 -1,8

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010

Major Industries

Tourism 15% of GDP

Construction Telecommunications Energy Production Textiles Food Processing

Shipping Over 4.5% of GDP

Chemicals Tobacco Processing Metal Products Mining Petroleum

Investment OpportunitiesSectors to Invest

Tourism Energy ICT Food & Beverage Life Sciences Environmental Management

Investment Opportunities Why Invest in Greece? Foreign Direct Investment

Gross FDI inflows: €6.48 million (2008 data) Net FDI inflows: €3.46 million (2008 data)

Investment Incentives Investments Incentive Law

Greek Economy Member of the Euro-zone

Trade Exports grow steadily

Infrastructure Due to the Olympic Games 2004

Human Capital Access to Financing & Venture Capital in Greece

wide selection of alternatives for their financing needs Emerging National Markets

Southeast Europe and the Eastern Mediterranean

Labor Regulations

Minimum Age limit: 15 years old

Most common working hours 5-day week 8 hour day

Minimum Wage Levels

Representative Minimum Wage Levels

in Greece (amounts in €)Until June 30, 2011 July 1, 2011 July 1, 2012

Labourers (daily rate) 33.04 – 45.74 Raised by the level of EU inflation rate for 2010

Raised by the level of EU inflation rate for 2011

Clerks (monthly rate) 739.56 – 1,020.80

Labor Regulations

Customary and Legal Holidays in Greece

January 1 - New Year's Day Whit Monday

January 6 - Epiphany May 1 - Labour Day

March 25 - Independence Day October 28 - National Holiday

Good Friday December 25 - Christmas Day

Easter Monday December 26 - Boxing Day

“Overwork”: 1 extra hour per day 20% premium of the hourly wage

“Overtime”: any extra hour after “overwork” Up to 120 hrs a year: 40% premium More than 120 hrs a year: 60% premium

Labor Regulations

Employee Compensation

Employment Period

(in the same employer)

Dismissal Notice Time

2 months – 2 years 1 month

2 years – 5 years 2 months




More than 20 years 6 months

Dismissal Notice

Working Period Compensation

2 months – 1 year 1 month + 1/6

1 year – 4 years 2 months + 1/6

4 years – 6 years 3 months + 1/6



10 full years 6 months + 1/6

Taxation in Greece

Individual Taxation Corporate Taxation Capital Gains Taxation Real Estate Taxation Inheritance & Gift Taxation Other Taxation

Individual TaxationIncome Tax Scale

Income Brackets (in €) Tax Rate

0 - 12,000 0%

12,001 – 16,000 18%

16,001 – 22,000 24%

22,001 – 26,000 26%

26,001 – 32,000 32%

32,001 – 40,000 36%

40,001 – 60,000 38%

60,001 – 100,000 40%

More than 100,000 45%

Directly connected to the collection of receipts of expenses

Income up to €12,000 shall collect receipts to the amount of 10% of the income

Income more than €12,000 need to collect 30% of their income on receipts

Individual Taxation

The non-taxable amount of income is increased by: €1,500 for individuals with one dependent child €3,000 for individuals with two dependent child €11,500 for individuals with three dependent children, increased

by €2,000 for each additional child.

Non-residents: are allowed to avail of deductions and credits, if:

they are residents of EU member states and 90% of their worldwide income is from Greek sources.

are liable to pay taxes on their income from Greek sources. are liable to pay a surtax of 5% on income up to €12,000; unless

they are residents of EU member states and 90% of their worldwide income is from Greek sources.

Individual TaxationBonuses

Bonuses exceeding 10% are taxed as follows:

Bonus Tax Rate

Up to € 20,000 50%

€20,001-40,000 60%

€40,001-60,000 70%

€60,001-80,000 80%

Exceeding €80,000 90%

Individual Taxation

10% withholding tax on accrued interest of a foreign bond or coupon

earned by Greek residents. EXCEPTION: Non-Greek residents having deposits in

Greek banks in foreign currency.

Individual TaxationDeduction Expenses

The total amount of medical expenses Mandatory contributions to social security funds. if the taxpayers are disabled, blind etc. 20% of the purchase price of Mutual Funds,

if the fund is not sold for three years the maximum deduction can be € 3,000.

Interest of loans for the acquisition of a first residence Max size of residence 120 m2

Max loan amount €200,000. The contract of the loan shall have been signed until December

31, 2002.

Individual TaxationTax Credits Hospital expenses

tax credit of 20% up to 6,000€ of the expenses???

Personal Insurance expenses for life health and personal accident Tax credit of 20% up to amount of € 1,200 for unmarried and €1,200 for each

spouse when the taxpayer is married. Interest of loans for the acquisition of a first residence

Tax credit of 20% Max residence size 120 m2 Max loan amount €200,000. Contract after January 1, 2003.

Annual rental of the main residence and private lessons Tax credit of 20% Up to €1,200

Individual TaxationTax Credits Donation and grants to the state and non-profit institutions in

monetary sums Maximum of 10% on taxable income Each receipt shall be more than €100

Alimony Tax credit of 20% Maximum tax credit €600.

Legal advice expenses Tax credit of 20% Maximum credit of 10% of taxable income when theoretical

income is taken into account. Installation of central A/C, natural gas, solar panels

Tax credit of 10% Maximum amount of expenses € 6,000.

Individual TaxationRental Income

Surtax Property < 300 m2

1.5% Property > 300 m2

3%

This surtax cannot be higher than tax income. Stamp Duty

Applicable to all Buildings except Houses 3.6% of the actual rental value of the property

Corporate TaxationAccording to Legal Form

Societe Anonyme

Limited Liabilities Company

General Partnership

Limited Partnership

Corporate TaxationSA & Ltd

Non-distributed profits are taxed as follows:

Dividends taxation: 40%

Fiscal Year Tax Rate

2010 24%

2011 23%

2012 22%

2013 21%

2014 20%

Tax advance: 80%

Corporate TaxationSA & Ltd

Capital accumulation tax 1% on the share capital any increases thereof

payable once upon the registration of the company and upon the approval of any capital increase.

Corporate TaxationGeneral & Limited Partnerships

25% tax rate on profit unless the partners are individuals 20% tax rate

The 3 unlimited partners with the highest participation (not legal entities) get a «business fee» according to their share. This fee is calculated on 50% of the company’s profits and is

deductible from the taxable income of the company. The business fee is taxed at the progressive rate of the new

tax scale with other personal income.

Corporate TaxationGeneral Rules Income from immovable property

3% additional tax rate This additional tax cannot exceed the tax calculated of the

company’s income. The tax is paid in 8 equal monthly instalments

The main exceptions from the above taxation are the following: Profits from the operation of ships under the Greek flag by Greek

companies. Such profits are subject to specific taxation on ship owner’s profits. When profits are distributed they are not taxed.

Subject to reciprocity, profits made in Greece by foreign enterprises from the operations of ships under foreign flag and aircrafts.

Corporate TaxationTaxable Income

Net income calculated by deducting expenses and

depreciation. Allowable deductions usually include business

expenses. Depreciation is based on the acquisition value.

Companies may choose the straight method or declining method.

Corporate TaxationTaxable Income

Deductible expenses shall fulfill the following criteria: shall relate to the business

activity. shall be recorded in the book

entries of the year which deduction is claimed.

shall be supported by all necessary documentation in line with the law.

Tax losses may be carried forward for five (5) consecutive years in order to be set off against income of that time period.

Corporate tax losses generated in another country maybe set off only against foreign source income. All these losses comes from corporation’s books

and records and are in full compliance with the “code of books and records”.

Corporate TaxationTax Losses

Capital Gains TaxationShares of Listed Companies

For shares of companies listed into the stock market acquired from January 1, 2011 onwards: 20% withholding tax on capital gain for the short-

term (until 3 months) trade of shares 10% withholding tax on capital gain for the

medium-term (within 12 months) trade of shares There is no capital gain tax in case of more

than 12 months trade of shares

Capital Gains generally regarded as ordinary income taxed at 20% for corporations and partnerships

Capital Gains = Selling Price - Book Value.

Gains from the sale of parts of a limited liability company are taxed at a flat rate of 20%

Capital Gains TaxationShares of Non-Listed Companies

Value-Added Tax

Standard Rate

23%

Lower Rates

Newspapers, magazines, books and theater tickets

5.5%

Goods considered to be essential items (food, pharmaceuticals, transportation, electricity, etc)

11%

The rate is further reduced to 16%, 8% and 4% for taxpayers established in the Dodecanese and in other islands of the Aegean except Crete

Real Estate TaxationFor Individuals

For years 2010, 2011 and 2012, for property value exceeding € 5,000,000 a 2% tax rate is imposed.

Value of Property (€)

Tax Rate

0 – 400,000 0%

400,001 – 500,000 0.1%

500,001 – 600,000 0.3%

600,001 – 700,000 0.6%

700,001 – 800,000 0.9%

Exceeding 800,000 1%

Real Estate TaxationFor Legal Entities

Tax Rate of 0.6% value no less than 1€/m2.

Tax Rate of 0.3% or 0.1% depending on non-profit making character of the

entity and the use of property. For years 2010, 2011 and 2012

a 0.033% tax is imposed on taxable real estate for self-used real estate of hotel enterprises

without applying the minimum limit of 1€/m2.

Real Estate TaxationTransfer Tax

This transfer tax is applicable both to individuals and to legal entities.

Old buildings All real estate transfers are subject to tax at a rate

of 8% until € 20,000 - part of sales price and 10% for the excess amount.

New buildings Only VAT applicable

Inheritance and Gift Taxation

Type of Category

(based in the degree of kinship)

Taxable Scale (€) Tax Rate

CATEGORY “A” (spouse, child, grand-child, parents)

0 – 150,000 0%

150,001 – 300,000 1%

300,001 – 600,000 5%

Above 600,000 10%

CATEGORY “B” 3rd or higher degree of kinship with the deceased (brother, sister, step-mother, step-father, father/mother-in-law, etc)

0 – 30,000 0%

30,001 – 100,000 5%

100,001 – 300,000 10%

Above 300,000 20%

CATEGORY “C” All others heirs or legatees not included to previous categories

0 – 6,000 0%

6,001 – 72,000 20%

72,001 – 267,000 30%

Above 267,000 40%

Other TaxationTax on Transfer of Shares

Listed Shares Listed shares on the Athens stock exchange are

subject to 0.15% tax out the transfer value until the end of 2010.

Non-listed Shares Transfers of non-listed shares are subject to 5%

income tax to the relevant transfer value. This transfer value cannot be lower the result of a calculation according a decision issued by Ministry of Finance.

Other TaxationDividends, Royalties & Interest Dividends

40% tax rate Royalties & Interest

Greece enjoys a transitional regime Withholding tax on interest and royalty payments effected

between associated EU companies Tax rate of 5% until June 30, 2013

In case the EC Directive and DTA do not apply, withholding tax on Royalties is 20% Interest is 40%

25% on remunerations or royalties paid to foreign companies with no permanent establishment in Greece as well as to foreign companies that undertake studies and designs etc. in Greece

Other Taxation

Service Fees 20% withholding tax

Tax on TV Advertisements 20% tax rate

Compensation for the interruption of the employment relationship are subject to income taxation as follows:

€0 – 60,000 0%

€ 60,001 – 100,000 10%

€ 100,001 – 150,000 20%

More than € 150,000 30%

Audit Requirements

The companies subject to audit are the companies that for two years in a row fulfil two (2) of the following criteria Total assets > €2,500,000 Annual revenue > €5,000,000 Employees > 50 (average number)

during the accounting year

Thank you

If you need any further information,

please contact:

[email protected]

doing business in greece

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