Tax returns and complianceTax ratesResidence rulesTermination of residenceEconomic employer approachTypes of taxable compensationTax-exempt incomeExpatriate concessionsSalary earned from working abroadTaxation of investment income and capital gainsAdditional capital gains tax (CGT) issues and exceptionsTax reimbursement methodsCalculation of estimates/prepayments/withholdingRelief for foreign taxesGeneral tax creditsSample tax calculation
All income tax information is summarized by KPMG Advisors AE, the Greek member firm of KPMG International, based on the Greek income tax law 2238/1994.
Tax returns and compliance
When are tax returns due? That is, what is the tax return due date?
Personal income tax returns must be filed between 1 March and 31 May of the year following the end of the relevant tax year. The tax year for individuals is the calendar year (ends on 31 December each year). Pensioners, salaried individuals, non-Greek residents who earn Greek-source income and Greek residents who earn foreign-source income file tax returns in May. Individuals who declare income from agricultural activities file the tax return in April. Individuals who declare income from commercial activities (self-employment), on condition that they keep accounting books or earn income as freelance professionals, file tax returns in April. The filing date depends on the last digit of an individual’s Greek tax number (AFM).
What is the tax year-end?
The tax year for income tax purposes is the calendar year (31 December).
What are the compliance requirements for tax returns in Greece?
Greek residents file tax returns with their local tax office (in the area of the taxpayer’s residence or principal place of business or location of permanent establishment). Tax returns may be delivered by hand or by registered mail in order to ensure prompt submission (proof is obtained). Alternatively, the taxpayer may submit the tax return via the internet by using a unique username and password.
Please note that regarding 2012 Greek income tax returns (for income earned during 2011) electronic filing is obligatory for all taxpayers whose total taxable income exceeds EUR 12,000, apart from those taxpayers who receive income from pensions, under certain conditions.
Penalty for the late filing of tax returns amounts to 1 percent of the tax due for each month of delay, with maximum 60 percent of the tax which was to be avoided by the failure to file a tax return on time. Penalty for failing to file a tax return amounts to 2.5 percent of the tax underpayment for each month of delay (maximum 120 percent). Finally, the penalty for filing of an inaccurate tax return amounts to 2 percent of the underpayment, for each month of delay (maximum120 percent). In case no tax is due, fines ranging from EUR 117 to EUR 1,170 are imposed for the above omissions or delays.
Under Greek tax law, employers are under the obligation to withhold Greek payroll tax from the remuneration paid to the employees in Greece, on a monthly basis (in Greece salary is payable 14 times per year). The tax withheld is determined on the basis of a table setting forth personal tax withholding rates which may be further reduced depending on the number and status of dependents.
The tax due on the basis of the assessment issued is payable in three equal installments payable by the last working day of the first, third, and fifth month following the month in which the assessment is issued. However, if the assessment is issued in August or September in the year of filing, the tax due is payable in two equal installments by the last working day of the first and third month following the month in which the assessment is issued. If the assessment is issued after October in the year of filing, the tax due is payable in one lump sum by the last working day of the second month following the month of assessment. Where the total tax liability (for both spouses) totals EUR 300, the tax due is payable in one lump sum by the last working day of the second month following the month in which the assessment is issued. Advance income tax is payable and is included in the tax assessment issued. The advance tax is equal to 55 percent of the tax assessed less any tax withheld at source in the year of assessment. Individuals who report only employment income or from the own use of real estate do not pay any advance tax.
Non-Greek residents should appoint a tax representative and file tax returns with the Non-Greek Resident Tax Office (provided that their tax representative’s tax office is located in Athens).
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What are the current income tax rates for residents and non-residents in Greece?
Income tax table for 2011
Income tax table for 2011
The tax free bracket is increased to the amount of EUR 9,000 applicable to young taxpayers up to thirty years of age, to pensioners over sixty five years of age and to taxpayers with special needs, as well as to pensioners having dependent children with special need under conditions specified by the law.
The first bracket is conditional upon collection of a certain amount of receipts The amount of receipts that must be submitted to the tax authorities in order for the taxpayer to benefit from the tax free bracket is increased to 25% of the taxpayer’s personal declared income which is taxable according to the general provisions for income up to EUR 60 000. Receipts for acquisition of assets, bills for utilities (telecommunication companies, water, or energy supply), tickets of transportation, and expenses that are recognized for other deductions or credits are exempted.
Taxation at source is imposed to executives of banks for cash bonus received apart from regular wages and overtime paid up to and including financial year 2013 is amended. We note that cash bonuses up to 10 percent of the annual income (for annual net remuneration up to EUR 60,000) or up to EUR 6,000 (for annual net remuneration exceeding EUR 60,000) are taxed according to the income tax scale of article 9. Amounts above such percentage are taxed at source according to the following scale.
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For the purposes of taxation, how is an individual defined as a resident of Greece?
Greek law states that Greek-source income is taxable in Greece, whereas individuals who are Greek residents are subject to tax in Greece on their worldwide income. According to Greek tax legislation the residence of an individual for tax purposes is Greece, if respective individual has his residence or habitual residence in Greece. Greece is considered to be the habitual residence of an individual if he is physically present in Greece for more than 183 days in total within the same calendar year. It is also provided that residence is assumed to exist, unless the taxpayer proves the opposite.
By exemption to the above rules, in case an individual has his/her habitual residence in Greece, but he/she is subject to taxation on his/her worldwide income in a country with which Greece has not concluded a Double Taxation Treaty and such country is not included in the list of non-cooperating countries which is issued by the Ministry of Finance, such individual is subject to taxation in Greece only on income arising in Greece for the first three years of his/her habitual residence in Greece.
Non-Greek residents are not allowed any deductions from their income, unless they are citizens of the EU earning more than 90 percent of their global income in Greece. If this condition applies, then EU citizens are entitled to the tax-free bracket and most of the tax credits. EU citizens who wish to claim these deductions should provide the Greek tax authorities with a certificate issued by the tax authority of the country where they are declared as residents, stating the amount of their worldwide income and the amount of Greek-source income.
On the basis of a recently enacted Ministerial circular/decision it is provided that all non-Greek tax residents, who report and are taxed in Greece only on their Greek source income, should file with non residents tax authority the following documentation:
- in case respective individual is tax resident (i.e. taxed on his/her worldwide income) in a country with which Greece has concluded a Double Taxation Treaty (DTT), respective individual should file a tax residence certificate in the form which is provided for by the applicable DTT, issued by the competent authorities of respective Treaty country, whereas only individuals who are tax residents in the USA and Turkey, should file tax residence certificates as issued by the competent authorities of respective countries;
- in case respective individual is tax resident (i.e. taxed on his/her worldwide income) in a country with which Greece has not concluded a DTT (non-Treaty country), respective individual should file the following documentation with Greek tax authorities:
- income tax return as filed with the tax authorities of respective non-Treaty country, provided that an obligation for the filing of such return is applicable in respective country, or
- certificate issued by the competent authorities of respective non-Treaty country (i.e. tax authorities or municipal authorities etc.), which should certify the worldwide income of respective individual, as well as the permanent residence of both him and his family members (i.e. spouse and children), in order to prove that respective individual has strong bonds with such non-Treaty country. In order for the above documents to be acceptable by Greek tax authorities, they should bear the Apostille of the Hague Convention of 5 October 1961, in case the country of issuance is a contracting party of respective Convention. In the opposite case (the issuing country is not a contracting party of the Hague Convention), the above documents are only acceptable by Greek tax authorities, if they are certified by the competent Greek Consulate.
Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.
The 183 days rule applies in Greece.
What if the assignee enters the country before their assignment begins?
The mere presence of the individual in Greece prior to the commencement of his/her assignment could have an impact in case the individual is eligible for treaty protection as the days of his/her physical presence might exceed the days in Greece permitted by the respective double tax treaty (if there is one).
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Termination of residence
Are there any tax compliance requirements when leaving Greece?
No, there are no tax compliance requirements when leaving Greece. However, assignees who received income for services rendered in Greece (which is taxable in Greece) have the obligation to submit an income tax return for this income and pay corresponding tax thereon. In case the individual has no intention returning to Greece for another assignment after submission of the required income tax returns, the individual may notify with the Greek tax authorities on his/her permanent departure from Greece and appoint a tax representative.
Specific implications in case of amendment of Greek tax residence status to that of non-Greek tax resident have recently been introduced into Greek law.
If an individual who has been a Greek tax resident for five consecutive years, amends his/her tax residency status, he/she will be considered a Greek tax resident and be taxed in Greece on his/her worldwide income for five years following the amendment of his/her Greek tax residency status if the following conditions are cumulatively satisfied:
- the individual becomes tax resident in any country having a preferential tax regime
- the individual has substantial financial interests in Greece.
Preferential tax regimes are determined as those in which the tax rate is equal to of less than 60 percent of the Greek tax rate.
Furthermore, an individual is considered to have substantial financial interests in Greece if at the time of the amendment of his/her tax residency status he/she has a 25 percent participation in a partnership which is taxed in Greece or has a 5 percent participation in a corporation which is also taxed in Greece, or his/her Greek source income is more than 30 percent of his/her total income or the value of his/her Greek source income is over EUR 45,000, or he/she owns proprietary goods in Greece which give rise to income and their value exceeds the amount of EUR 150,000.
Greek law also provides that a Greek tax resident who transfers his/her tax residence to a country included in the list of non cooperating countries issued by the Ministry of Finance, will continue to be considered a Greek tax resident and be taxed in Greece on his/her worldwide income.
What if the assignee comes back for a trip after residency has terminated?
Please refer to our comments earlier.
Do the immigration authorities in Greece provide information to the local taxation authorities regarding when a person enters or leaves Greece?
There is no specific protocol for the exchange of information between the tax authorities and the immigration authorities in Greece. However both authorities in the course of their procedures and/or audits will seek confirmation of proper registration and may seek to cross reference any information received.
Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
It depends on whether the assignee continues to receive income for services rendered in Greece or he/she has other reasons to have a filing obligation, that is, the purchase of a house in Greece, assets, and so on.
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Economic employer approach1
Do the taxation authorities in Greece adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Greece considering the adoption of this interpretation of economic employer in the future?
Greek tax law does not specifically provide for the economic employer approach. However, the Greek tax authorities may adopt such approach on a case-by-case basis depending on the actual circumstances surrounding each case.
Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
There is no de minimus number of days before the Greek tax authorities will apply the economic employer approach. Physical presence in Greece is the basis for applying the 183-days rule.
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Types of taxable compensation
What categories are subject to income tax in general situations?
The overriding assumption is that remuneration for services provided in Greece (employment income) is taxed in Greece. For most of the benefits considered, there is no express provision in Greek tax legislation addressing their tax treatment. In general, all benefits are subject to income tax in Greece in the hands of the recipient employees.
Benefits, which are deemed to be employment income, include the following (the list is not exhaustive and is valid for benefits provided after 1 January 2005):
- the value of gift vouchers;
- the value of marketing vouchers for the purchase of goods with the exception of food vouchers up to EUR 6.00;
- the amount of paid or deemed housing allowance;
- payments for personnel in-house assistance;
- cash allowances paid to employees by reason of their position and responsibility undertaken.
However, in accordance with jurisprudence, the reimbursement of expenses incurred by the employee for the purposes of carrying out assigned employment duties should not be deemed to be employment income.
Income arising from the use of company cars to be used by the chairmen, members of the board of Directors, or managers is considered as employment income. The taxable income considered as employment income will be calculated as a percentage of the manufacturer's purchase price (MPP) of the first year of circulation for company cars (leased or owned) as follows:
The taxability (or not) of these items is always a contentious issue and may be disputed by the tax authorities in the course of a tax audit of the company’s (employer’s) books. In any case, the exemption from income tax is conditional to the expense being evidenced by the appropriate tax documents (that is receipt, invoice, and so on). Although the Greek tax authorities, in principle, could seek to tax the benefit in the hands of the employee, their practice so far has been only to disallow the expense as deductible expense from the taxable income of the employer. This of course is not a guarantee on the position that they may adopt in the future.
Typical elements of an expatriate’s compensation package that are taxable include the following.
- Income from employment includes all amounts paid or benefits-in-kind received in a year. In general, all amounts paid by the employer are taxable but court decisions identify a number of exceptions in relation to the reimbursement of expenses incurred in carrying out assigned employment duties. Tax acceptable documentation is a condition for ensuring a benefit is not taxable to the employee.
- Reimbursements of foreign and/or home-country taxes form part of an individual’s compensation package and are taxable if they relate to services provided in Greece.
- A cost-of-living allowance normally forms part of an individual’s taxable income.
- Whether or not expatriation premiums would form part of an individual’s taxable income in Greece depends primarily on the date these premiums are paid as well as the tax residence status of the employee at the date of payment and whether respective premiums relate to services provided in Greece. Payment of such premiums before the commencement of the Greek employment by an employer or division of the employer’s business located outside Greece and not ultimately borne by the Greek employer would not constitute taxable income in Greece. However, an allowance paid upon or after commencement of the individual’s assignment (employment) in Greece would in principle be attributed to Greek employment and would thus constitute taxable income in Greece.
- Cars owned by the employer and provided to the employee for both business and personal use give rise to income as analyzed earlier. Deferred compensation schemes, whereby an expatriate employee receives part of the compensation in the form of a lump-sum paid abroad on departure from Greece is taxable to the extent it relates to services provided in Greece (Greek-source income).
- Stock option plans, whereby benefits arising from the exercise of stock options of a value lower than the stock exchange value at the time they are exercised considered as employment income and are subject to Greek income tax.
After adding up the various taxable elements of compensation, the employee is taxable on the net amount, which is defined as the total amount less the employee’s share of social security contributions. Please note that for Greek and expatriate employees registered on the Greek payroll, the Greek tax authorities should be provided with a salary statement, issued by the Greek employer, reporting the total taxes paid and withheld by the Greek employer as a result of the Greek employment. However, for Greek and expatriate employees who are not registered to the Greek payroll, the Greek tax authorities should be provided with a salary statement issued by their foreign employer reporting compensation received as well as taxes paid abroad.
Typical elements of an expatriate’s compensation package that are non-taxable (tax-exempt) include the following.
- School tuition reimbursements to an expatriate employee have, in certain cases, been regarded by the courts as not forming part of the employee’s income on the grounds that free education in foreign languages is not provided in Greece, as may be the case in the country of origin (that is unavailability of free tuition in Greece in the children’s mother tongue). Therefore, this is an extra cost imposed on the foreign individual who has transferred to Greece. It constitutes non-taxable income, provided the appropriate tax records exist and the reimbursement is correctly structured.
- The cost of providing air tickets to expatriates and their families for annual trips to their country of origin should be normally accepted as not forming part of an individual’s taxable income.
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Are there any areas of income that are exempt from taxation in Greece? If so, please provide a general definition of these areas.
Interest derived from Greek government bonds by non-residents will be exempted from tax. Dividends and profits distributed by mutual funds (issued in EU countries) and venture capital companies are exempt from tax irrespective of whether the recipient is a Greek or non-Greek resident.
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Are there any concessions made for expatriates in Greece?
Expatriates who are non-Greek residents are only subject to tax on income from Greek sources. Non-residents could have dual contracts and not be subject to tax on income earned for services provided outside Greece. In practice, most foreign nationals who are on expatriate assignments in Greece are considered non-Greek residents and may exclude employment income from working outside Greece on condition that such employment income does not relate to services provided in Greece.
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Salary earned from working abroad
Is salary earned from working abroad taxed in Greece? If so, how?
Greek tax legislation does not provide any relief to Greek residents who earn a salary outside Greece, except for certain classes of Greek civil servants who are required to fill a vacancy abroad.
Any other income of the taxpayer is normally added to employment income in order to arrive at taxable income.
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Taxation of investment income and capital gains
Are investment income and capital gains taxed in Greece? If so, how?
Income from dividends is classified as investment income. According to the recent amendments on the Greek tax law, dividends paid by corporations (AE) and earnings distributed by limited liability companies (EPE) to individuals are subject to a withholding of 25 percent, if the payment of dividends and distribution of profits are made from 1 January 2012 onwards.
The same withholding tax rates apply in case the dividends or profits are distributed to Greek tax resident by foreign entities. In such a case the withholding tax extinguishes the tax liability of the individual without having the right of a refund.
Interest arising from bank deposits maintained in Euros is subject to withholding tax of 10 percent, even if the beneficiaries of the bank deposits are non-Greek residents. For Greek residents, where interest is not remitted to Greece, the beneficiary is obliged to remit respective tax by filing a special tax return. Respective procedure applies for interest earned as of 1 January 2005 onwards. However, interest arising from bank deposits maintained by non-Greek residents in other currencies (for example U.S. Dollars, British Pound Sterling, and other non-Euro currencies) is exempt from withholding, as they are considered to be in foreign currency. Interest on Greek government securities issued after 3 January 1998, is subject to tax at the rate of 10 percent; repo revenues are also taxed at 10 percent. Where a tax treaty for the avoidance of double taxation applies, the withholding tax may be reduced or eliminated. Where a non-Greek resident receives interest from Greek government bonds or Greek corporate bonds, such interest is exempt from tax withholding according to Greek legislation.
Income from the rental of real estate is included in the taxable income of an individual. In addition to income tax levied according to the progressive scale, the gross income from land and buildings is subject to a surtax of 1.5 percent (3 percent for residential real estate exceeding 300 square meters). This tax cannot exceed the tax payable on the total income. Deductions for specific expenses such as maintenance, depreciation, insurance, and so on are permitted up to a defined percentage of gross rental income. Stamp duty on housing rental income has been abolished since 1 January 2008 onwards.
Capital gains are generally subject to an advance tax of 20 percent. The gain from the sale of a business, a branch, units in a partnership, an EPE, participation in a joint venture (other than a construction joint venture), joint ownership of rights governed under civil law or the waiver of a right to participate in a capital increase of an EPE or a partnership are subject to an advance tax of 20 percent. Gains from the disposal of other business rights such as patents, industrial property, and so on are also subject to an advance tax of 20 percent. These gains are generally not regarded as ordinary business income (or loss) for the individual and are not included in the individual’s income. Only the extra amount paid by the lessee to the lessor in addition to the rent in case of a property renting is regarded as ordinary business income and is treated accordingly for tax purposes. The latter amount is included in the income of the individual for the determination of taxable profits with credit being granted for the 20 percent advance tax paid.
The gain on the sale of shares of companies not listed on the Athens Stock Exchange is not subject to capital gains tax. However, there is a special tax imposed at the rate of 5 percent on the higher amount between the contractual sale price and the deemed sale price of the shares. The deemed price is determined on the basis of a specific formula. This tax does not apply if the seller of the shares is a corporation resident in a tax treaty country and does not have a permanent establishment in Greece (in case it has a permanent establishment, the 5 percent tax will be imposed if the shares are an asset of the permanent establishment). The corporate investor is entitled to credit the 5 percent tax on the capital gain from the sale of non listed shares against its final corporate tax liability, but such credit cannot exceed the amount of corporate income tax corresponding to the capital gain.
As of April 2011, a 0.2 percent tax is imposed on the sale of shares listed in the Athens stock exchange or in foreign exchanges. The profit arising from the sale of shares listed in the Athens stock exchange or in foreign exchanges acquired as of 1 January 2013 will be subject to tax according to the general provisions of Greek tax law and corresponding losses will be tax deductible.
Benefits arising from the exercise of stock options of a value lower than the stock exchange value at the time they are exercised are considered as employment income and are subject to Greek income tax.
The benefit resulting from the exercise of stock options is calculated as the difference between the price paid by the beneficiary and the fair market value at date of exercise.
|Other (if applicable)
* On condition that the stock options provided refer to services rendered in Greece.
The importation and exportation of foreign currency into and out of Greece is unrestricted. Both residents and non-residents may maintain foreign currency accounts with banks in Greece. Such accounts may be credited with any foreign currency which arises from Greece or abroad, including foreign bank notes and foreign exchange which is purchased with Euros. The funds and interest thereon may be freely transferred abroad by residents and non-residents. No tax relief is available for foreign exchange losses and foreign exchange gains are not taxable per se.
There is no income tax on the disposal of a principal residence in Greece.
Please see Overview and Introduction regarding treatment of imputed income on the basis of living expenses or acquisition of certain assets.
Donations no longer qualify as deductions from the total income of the donor, according to the newly enacted provisions.
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Additional capital gains tax (CGT) issues and exceptions
Are there additional capital gains tax (CGT) issues in Greece? If so, please discuss?
Real estate tax is imposed on individuals and legal entities irrespective of their citizenship as follows:
Real estate tax 2011
Especially for years 2010, 2011, and 2012 a tax rate of 2 percent applies for the real estate value exceeding EUR 5,000,000.
Increased VAT rates are introduced by Law 3833/2010. In particular, VAT is increased on the transfer of new buildings (that is the construction licenses of which were issued or revised after 1 January 2006) at the rate of 23 percent, on condition that they are used for the first time by the purchaser as his secondary residence or commercial property. Following this first transfer, every subsequent transfer will be subject to real estate transfer tax.
Are there capital gains tax exceptions in Greece? If so, please discuss?
Please refer to our comments above.
What are the general deductions from income allowed in Greece?
Certain personal deductions and allowances are available to Greek residents in computing their taxable income. In addition respective deductions and allowances are also available to citizens of the EU earning more than 90 percent of their global income in Greece. Such deductions and allowances are deductions for dependent children and, the mandatory employee-portion of social security contributions on employment income. The latter deductions and allowances are not available to non-Greek residents with the above mentioned exemption of citizens of EU earning more than 90 percent of their global income in Greece .
The tax-free amount of the first income bracket (as determined) is increased as follows depending on the number of children:
The above tax-free amounts apply for all individuals.
For taxpayers with more than three dependent children, the tax-free bracket increases by an additional EUR 3,000 for each additional child.
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Tax reimbursement methods
What are the tax reimbursement methods generally used by employers in Greece?
The most common tax reimbursement method used by employers in Greece is the tax equalization method. However, the concept of hypothetical tax is not recognized for Greek tax purposes.
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Calculation of estimates/prepayments/withholding
How are estimates/prepayments/withholding of tax handled in Greece? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
Tax withholding is handled as Pay-As-You-Earn.
Employers are required to withhold income tax from salaries, wages, and other remuneration paid to their employees. The amounts withheld are determined in accordance with the scale of ordinary income tax rates applicable to individuals, except when payments are of a non recurring nature (such as bonuses). In this case, tax is generally withheld at the rate of 20 percent. Income taxes must be withheld and remitted to the tax authorities every month for employers employing more than 50 individuals during the previous financial year. The tax withheld is remitted to the tax authorities by the 20th day of the month following the month the income relates to.
At the end of the year, the employer is obliged to prepare an annual payroll tax return of amounts paid and taxes withheld. Any amount of tax due should be paid upon the filing of respective return.
By 15 February of each year, the employer is required to issue to each employee a statement of the amounts paid and tax withheld, a copy of which must be filed with the tax authorities within March together with the return listing all employees and detailing for each employee amounts paid and tax withheld during the year.
Special reporting requirements apply in case of stock options. Specifically the employer should mention on the statement indicating the amounts of employment income, the amount of tax paid and withheld also should state the taxable amounts relating to stock options. Specifically, the salary statement for each employee should indicate on a separate line the taxable amount relating to the stock options. Furthermore, the employer should indicate respective amounts on the second page of the annual payroll tax return.
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Relief for foreign taxes
Is there any Relief for Foreign Taxes in Greece? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
Income tax paid outside of Greece in countries with which Greece has concluded Double Tax Treaties by Greek residents on foreign-source income is offset against the tax payable in Greece up to the amount of Greek tax corresponding to such foreign-source income. The Greek tax attributable to the foreign-source income is determined by allocating the total Greek tax proportionately between Greek and foreign-source income.
Most of the double tax treaties concluded with Greece generally follows the current version of the OECD Model Treaty, with the exception of tax treaties with the United Kingdom and the United States which usually specify that a Greek resident will be taxable on remuneration in respect of services performed in either country. Therefore, if a Greek resident is paid by an employer in the other country for services provided in that other country and the Greek resident is taxable there, then any tax paid in that country will be offset against the Greek income tax liability up to a certain amount with the reservation of the provisions of local law.
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General tax credits
What are the general tax credits that may be claimed in Greece? Please list below.
- Life, health, and personal insurance premiums do not qualify as deductions from the total income, but constitute tax credits up to the 10 percent of the annual expense for the amount of EUR 1,200 for the individual and up to EUR 2,400 for a family.
- 10 percent credit for cash donated to the state, municipalities, and certain other local institutions (religious, philanthropic, educational, and medical). The credit also applies to donations of medical equipment and ambulances to certain hospitals, sponsoring fees to private cultural not-for-profit institutions;
- 10 percent of the cost for energy upgrading of a building, so that such building will use renewable energy sources not only for central heating, but also for air conditioning. The maximum amount on which this credit is calculated is EUR 3000.
- 10 percent tax credit for rental payment (for principal residence or for the residence of dependent children that attend recognized educational institutions). The maximum amount on which the tax credit is calculated cannot exceed the amount of EUR 1,000.
- 10 percent tax credit for medical and hospital care expenses for the tax payer and his/her dependents. The tax credit cannot exceed the amount of EUR 3,000.
- 10 percent tax credit for education expenses such as tuition fees for private courses either at home or at private institutions, attended by the children of the taxpayer. The maximum amount of which the tax credit is calculated cannot exceed the amount of EUR 1,000.
- 10 percent tax credit on interest for loans for the acquisition of the taxpayer’s primary residence. Tax credit is limited to the amount of interest corresponding to the first 120 square meters of the total surface area and is limited to a loan principal of up to EUR 200,000.
- 10 percent of alimony paid (not exceeding EUR 1,500) under a court order or under terms of a notarized agreement is given as a tax credit (that is deducted from tax payable). However, the alimony received, forms part of the taxable income of the recipient.
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Sample tax calculation
This calculation assumes a married taxpayer resident in Greece with two children whose three-year assignment begins 1 January 2011 and ends 31 December 2013. The taxpayer’s base salary is USD100,000 and the calculation covers three years.
|Moving expense reimbursement
|Interest income from non-local sources
Exchange rate used for calculation: USD1.00 = EUR 0.69.
- All earned income is attributable to local sources.
- Bonuses are paid at the end of each tax year, and accrue evenly throughout the year.
- Interest income is not remitted to Greece.
- The company car is used for business and private purposes and originally cost USD50,000.
- The employee is deemed resident throughout the assignment.
- Tax treaties and totalization agreements are ignored for the purpose of this calculation.
- The manufacturing price of the company car is below EUR 15,000.
- The amount of receipts necessary is collected and the tax free bracket applies in full.
- The tax payer is not a bank executive.
Calculation of taxable income
|Days in Greece during year
|Earned income subject to income tax
|Net housing allowance
|Moving expense reimbursement
|Total earned income
|Total taxable income
Calculation of tax liability
|Taxable income as above
|Greek tax thereon
|Domestic tax credits (dependent spouse /children credit)
|Foreign tax credits
|Total Greek tax
- Non-taxable items are considered the company car and moving expenses reimbursement.
- Other income relates to the interest which taxed at source 10 percent according to the procedure described under taxation of investment income and capital gains.
1Certain tax authorities adopt an ‘economic employer’ approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country employer but the employee's salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country.
2For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.