Business Taxation in Greece

Aug 10, 2023

In a global economy, understanding the nuances of business taxation is essential for any enterprise. In Greece, the taxation laws for legal entities are comprehensive, covering various aspects ranging from the determination of profits to withholding tax. Here's a detailed insight into the business taxation landscape in Greece.

Taxing Legal Entities

In Greece, legal entities like Société Anonyme (SA), Private Company (PC), EPE (Ltd.), non-profit organizations, and partnerships are taxed on profits arising within the country as well as their worldwide income. In case taxes have been paid abroad, they are offset against the tax payable in Greece.

The Domicile Dilemma

There is a possibility that the domicile of a legal entity might be outside Greece, but the Greek Tax Authority deems it as an attempt to evade taxes (for example, when management activities are carried out in Greece). Consequently, the total income acquired abroad may be taxed in Greece as well.

Determining Profits

To ascertain profits, the following are deducted from the revenue:

1.    Expenses: Those incurred for the benefit of the business.
2.    Research and Technology Costs: Enhancing expenses by 30%, subject to conditions.
3.    Depreciation.
4.    Cost of Goods Sold: Precedes evaluation of goods or products.
5.    Doubtful Debts: Specific conditions must be met to consider them as expenses.
6.    Losses: Carried forward to offset profits over the next five tax years.

Tax Rates

Profits are taxed at 22%. However, profits from business activities acquired by agricultural cooperatives and producer groups are taxed at 13%. Any income flowing into the business (dividends, interest, rights) is taxed at 22%. If tax has been withheld on this income, it is offset against the tax payable.

Withholding Tax

Every legal entity must withhold tax on payments made as follows:
•    Dividends: 5%
•    Interests: 15%
•    Royalties: 20%
•    Management & Consulting Fees: 20%
•    Contractual Fees: 3%
•    Periodically Paid Insurance: 15%
•    Lump-Sum Insurance Up To €40,000: 10%
•    Lump-Sum Insurance Over €40,000: 20%
•    Capital Gains From Real Estate Transfer To Individuals: 15%

If the payments are made to a tax resident abroad, the withholding tax rates are governed by the Double Taxation Avoidance Agreements signed between Greece and the country where the beneficiary resides.

Our Legal Services

The Greek taxation system for businesses is multifaceted, reflecting a mix of standard practices and specific provisions that take into account the local economic climate. It's vital for businesses operating in Greece to stay abreast of these rules to ensure compliance and to make the most of any available advantages or incentives.
Whether a multinational corporation or a local non-profit organization, the prudent management of tax liabilities, understanding of withholding tax obligations, and the clever navigation of international provisions can have a significant impact on the bottom line. Engaging a local tax professional well-versed in Greek tax law could be a wise move to navigate this complex landscape.

Our law firm, with its specialized associates, will fully guide you through tax matters to ensure that you never find yourself exposed to the complex bureaucratic greek taxation system.