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Tax Guide Greece

Greece is country situated along the Mediterranean Sea in Europe. It has Bulgaria on one side, and Republic of North Macedonia, as well as Albania on the North. The capital of Greece is Athens City. The official language of Greece is Greek. Euro is used as the official currency Euro. Greece has a rich history, and it has been subject to several political changes over the course of years. Starting from 1829, when they first achieved independence from Ottoman Empire, there were several changes that took place over the course of years. Subsequently, in the second half of 19th century as well as the first half of 20th century, it added neighboring islands and territories to its federation. Today, Greece comprises of 13 different peripheries that are subsequently divided into 322 municipalities.

Therefore, over the course of years there has been considerable restructuring on grounds of administration, and other related activities. In the same manner, there are several reformative measures that have been implemented since, and continue to be implemented over the course of time.

On grounds of taxation, Greece generally has a progressive taxation regime, where the most emphasis is on direct personal income tax. With lesser indirect taxes (or taxes on consumption), it is one of the few tax regimes in the area that has a relatively lower tax propensity on goods and services.

Corporate Taxes in Greece

As far as resident corporations are concerned, it can be seen that they are taxed on their worldwide income in Greece. On the other hand, non-resident corporations are mainly taxed on any Greek-source income they derive.

Subsequent to tax year 2019, the Corporate Income Tax rate of legal entities, in exception of credit institutions, saw a decline from 28% to 24%. Credit institutions are taxed differently at a rate of 29%.

Greece has a considerably larger economic base that comprises of shipping and warehousing. Therefore, the Greek tonnage tax regime model mainly intends to tax shipping activity and mainly applies to Greek or foreign ship-owning companies that have vessels with a Greek flag. In this regard, the Greek Tonnage Tax regime is broadly categorized into two categories, Category A and Category B. The descriptions of both these categories are given below:

  • Category A: Category A vessels include cargo vessels, tankers, steel hull vessels, passenger containers, drilling containers etc.
  • Category B: This category includes small boats as well as any other motor vessels that are not included in Category A.

The tonnage tax that is levied on these vehicles is subject to the vehicle carrying a Greek flag on the top of vessel. However, there are also a handful of tax exemptions that can be availed when it comes to tonnage tax. For example, vessels that are built within Greece, and carry a Greek flag, are exempt from tax for the first years of their operation. In the same manner, there is also a 50% reduction for vessels that are operating on regular routes between Greek and foreign ports.

However, for corporates, there are no municipal or local taxes on income that are levied.

In addition to Corporate Income Tax, there are a couple of other taxes that are also levied. They include the following:

  • Value Added Tax: The Standard Value Added Tax (VAT) Rate that is applicable is 24%. However, there is a reduction in VAT for certain elements, including fresh food, child care, elderly care, disabled care, as well as accommodation related services. The reduced rate for this particular field is around 13%. In the same manner, there is a super reduction that is offered for medicines and health care. For these areas, there is a reduced rate of 6%. Following May 2019, a wide majority of foodstuff like oil, sugar and other staples, has been subject to super reduced rate of tax of 6%.
  • Custom Duties: A wide majority of goods that are imported into Greece from outside the European Union are subject to custom duties. These duties are uniform across the rates provided by EU’s Common Custom Tariff.
  • Excise Duties: Excise Taxes are levied energy and electricity products, as well as tobacco, alcoholic products, as well as coffee. The tax rate, however, is variable across different product categories.

Personal Income Tax in Greece

As far as Personal Income Tax is concerned, it can be seen that Income Tax in Greece is paid by all the individuals that are earning in Greece. This is regardless of citizenship or their location of residence. However, permanent residents of Greece are taxed on based on their worldwide income in Greece.

Greece introduced a tax reform in 2013, based on which Income Tax was contingent on the source of income. It was therefore calculated accordingly. The tax scale for employment income, pensions, as well as business (sole trader profits), the following tax rates are applicable:

  • First 10,000 Euros: A tax rate of 9% is applicable.
  • For the next 10,000 Euros: A tax rate of 22% is applicable.
  • For the next 10,000 Euros: A tax rate of 28% is applicable.
  • For the next 10,000 Euros: A tax rate of 36% is applicable.
  • Above 40,000 Euros: A tax rate of 44% is applicable.

On the other hand, there are different tax rates that are levied, in the case where there is a rental income applicable. These tax rates are given below:

  • For the first 12,000 Euros: A tax rate of 15% is applicable.
  • For the next 23,000 Euros: A tax rate of 35% is applicable.
  • Above an income of 35,000 Euros: A tax rate of 45% is applicable.

It must also be noted that the tax rates mentioned above include an incremental calculation of taxes. For example, these slabs will continue to apply on income increments, at the rate mentioned above. Therefore, it is not linearly progressive in nature. Increased marginal tax rate only applies to the incremental income. For example, if an individual has an income of 13,000 Euros, a tax rate of 9% would apply to the income up to 10,000 Euros. For the additional 3000 Euros, tax rate of 22% would be applicable.

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