|Corporate Income Tax Rate (%)||29|
|Capital Gains Tax Rate (%)||29 (a)|
|Branch Tax Rate (%)||29|
|Withholding Tax (%)|
|Bank Interest||15 (c) (d)|
|Interest of Treasury Bills and Corporate Bonds||15 (c) (d)|
|Repos and Reverse Repos||15 (c) (d)|
|Paid to Greek Legal Entities||15|
|Paid to Foreign Legal Entities||15 (d) (e)|
|Royalties from Patents, Know-how and similar payments||20 (d) (e)|
|Technical Service Fees, Management
Service Fees, Consulting Service Fees
and Fees for Similar Services
|Net Operating Losses (Years)|
a) For details regarding the taxation of capital gains derived by legal persons or legal entities, see Section B.
b) The 10% withholding tax rate applies to dividends and interim dividends distributed by a Greek corporation (anonymos eteria, or AE; (in certain countries, a corporation is referred to as a société anonyme, or SA) and profits distributed by a Greek limited liability company (eteria periorismenis efthinis, or EPE). This 10% withholding tax is subject to rates applicable under double tax treaties or under the European Union (EU) Parent-Subsidiary Directive (amended by Directive 2011/96/EC).
c) This 15% withholding tax is subject to rates applicable under double tax treaties or under the EU Interest-Royalties Directive.
d) This is a final tax if the beneficiary is a legal person (for example, a company) or legal entity that satisfies both of the following conditions:
- It does not have its tax residency in Greece.
- It does not maintain a permanent establishment for corporate income tax purposes in Greece.
e) This 20% withholding tax is subject to rates applicable under double tax treaties or under the EU Interest-Royalties Directive. No tax is withheld on payments of royalties made to legal persons or legal entities that have their tax residence in Greece or that have a Greek permanent establishment in Greece.
f) If the 20% withholding tax does not exhaust the final Greek corporate income tax liability of the beneficiary, it is credited against the beneficiary’s final Greek corporate income tax liability.
Taxes on corporate income and gains
Corporate income tax. Greek companies are taxed on their worldwide income. Foreign business enterprises are taxed only on income derived from a permanent establishment in Greece or on profits generated in Greece. An AE, SA or EPE is Greek if its corporate seat or place of effective management is located in Greece.
A legal person or entity is considered to be a Greek tax resident in the following cases:
- It is incorporated or established under Greek law.
- It has its registered office in Greece.
- Its place of effective management is in Greece at any time during the tax year.
The “place of effective management” concept should be reviewed on an ad hoc basis in the context of the factual background of each case. For this purpose, indicative criteria are listed, such as the following:
- The place where the day-to-day management of the company takes place
- The place where strategic business decisions are made
- The place where the annual general meeting of shareholders or partners or the board of directors takes place
- The place where the accounting books of the company are held
- The residence of the members of the board of directors
In addition, the Greek tax administration may examine additional factors, such as the residence of the majority of the shareholders or partners.
Rate of corporate income tax. The standard corporate income tax rate is 29%.
Capital gains. Capital gains earned by legal entities are treated as business income and are subject to corporate income tax at the standard rate of 29% if they derive from the following:
- Disposals of fixed assets
- Transfers of businesses as going concerns
- Disposals of real estate property that do not constitute a business activity per se
- Transfers of securities (such as listed shares, unlisted shares, interests in partnerships, treasury bills, Greek state bonds and derivatives)
Sales of listed shares are also subject to a 0.2% transaction duty.
Administration. The fiscal year coincides with the calendar year. Legal persons or entities keeping double-entry books may set their tax year to end on 30 June or on any other date coinciding with the tax year-end of their foreign shareholder. An option for a tax year exceeding 12 months is not available. Greek SAs or AEs, Greek EPEs and branches of foreign companies must file an annual corporate income tax return by the end of the sixth month following the end of their fiscal year.
In general, on filing their annual corporate income tax return, legal entities must make an advance payment against the next year’s income tax liability. Such advance payment equals the amount calculated by applying a rate of 100% to the income tax due for the year for which the return is filed. The final payment of tax is calculated by subtracting the advance payment made in the preceding year and other prepayments of tax (including taxes withheld at source) and foreign taxes paid on foreign-source income from the amount of tax due. The foreign tax credit cannot exceed the amount of Greek tax otherwise payable on the foreign-source income.
A description of the penalties is provided below; if more than one penalty applies to the same tax offense, only the provision providing for the largest penalty applies.
A failure to file a corporate income tax return or to file in time a corporate income tax return results in the imposition of an administrative penalty ranging from EUR100 (if no tax is due) to EUR500 (if tax is due).
A failure to pay corporate income tax as a result of filing an inaccurate corporate income tax return results in the imposition of the following penalties:
- If the filing of an inaccurate corporate income tax return results in a difference of corporate income tax of 5% to 20%, the penalty equals 10% of the amount of the difference between the tax assessed on the basis of the tax return and the corrective tax assessment.
- If the filing of inaccurate corporate income tax return results in a difference of corporate income tax exceeding 20% but not exceeding 50%, the penalty equals 25% of the amount of the difference.
- If the filing of inaccurate corporate income tax return results in a difference of corporate income tax exceeding 50%, the penalty equals 50% of the amount of the difference.
A failure to file a corporate income tax return when corporate income tax would be due results in the imposition of a penalty equal to 50% of the amount of corporate income tax avoided.
In addition to the above, interest in arrears for the late payment of corporate tax is assessed; the current rate is 0.73% per month.
A failure to file a withholding tax return and pay withholding taxes in time results in the imposition of a penalty equal to 50% of the amount of the unpaid tax.
At the time of writing, it was expected that new legislation would revise the above penalty rates.
Dividends. A 10% withholding tax is imposed on dividends and interim dividends distributed to Greek or foreign beneficiaries by Greek SAs and profits distributed by Greek EPEs, unless an applicable double tax treaty provides otherwise (see Section F) or unless tax relief is available under the EU Parent-Subsidiary Directive (90/435/EEC), as amended by Directive 2011/96/EC). For details regarding the rules in this directive, please see below. This tax represents the final tax liability of the recipient with respect to the dividends received if the recipient is a legal entity that does not have tax residency in Greece and does not maintain a permanent establishment in Greece.
A Greek subsidiary is not required to withhold the 10% withholding tax from dividends and interim dividends distributed to their EU parent companies if all of the following conditions are satisfied:
- The EU parent company holds a minimum 10% participation in the Greek subsidiary.
- The EU parent company holds the above participation in the Greek subsidiary for at least two consecutive years.
- The recipient EU parent company satisfies all of the following additional conditions:
— It has one of the legal types listed in Annex I of EU Directive 2011/96/EC.
— It is tax resident in one of the EU member states (and is not considered tax resident in any non-EU country).
— It is subject to one of the taxes listed in Annex I of Section B of EU Directive 2011/96/EC, with no option for a tax exemption.
Effective from 1 January 2014, if a Greek tax resident legal person distributes dividends to its parent company and if the parent company has not completed the two-year holding period for a 10% participation but meets the rest of the exemption requirements (see above), the distribution can be exempt from withholding tax, provided that the local Greek tax resident legal person deposits a bank guarantee in an amount based on a specific calculation. This amount is almost equal to the amount of the dividend withholding tax due.
Foreign tax credit. Foreign-source income is usually taxable with a credit for foreign income taxes paid, up to the amount of Greek tax corresponding to the foreign-source income. The credit cannot exceed the amount of Greek tax payable on the same amount.
Determination of trading income
General. Taxable income for all legal entities consists of annual gross income, less allowable deductions. In principle, expenses may be deducted only from gross income for the fiscal year in which they are incurred.
In general, effective from 1 January 2014, all ordinary business expenses and specific items mentioned in the tax law may be de – ducted for tax purposes (with the exception of certain expenses that the law explicitly indicates are not deductible for tax purposes) only if the following conditions are satisfied:
- They are made in the interest of the business or in the ordinary course of its business transactions.
- They reflect an actual transaction that has a value not considered lower or higher than the actual value, based on indirect audit methods (cross-checks).
- They are recorded in the accounting books for the period in which they are incurred and are supported by proper documentation.
Special reference is made to the deductibility of expenses made for scientific and technological research.
The new Income Tax Code also includes a list of nondeductible expenses.
Inventories. Effective from 1 January 2014, inventory and semifinished products must be evaluated according to current accounting principles. The tax law does not determine any official method for stock valuation. However, beginning with the tax year in which a valuation method is first used by a company for valuation of its inventory and semifinished products, the company must use the method for a minimum of four years.
Provisions. Bad debt provisions and write-offs are deductible for corporate income tax purposes at a rate defined on a case-by-case basis, based the amount of the uncollected debt and the time period during which the debt remains uncollected.
For uncollected debts that do not exceed EUR1,000 and that are overdue for a period of more than 12 months, the taxpayer may establish a provision equal to 100% of the debt.
For uncollected debts that exceed EUR1,000 and that are overdue, the taxpayer may establish a provision equal to the following:
- 50% of the debt if it is overdue from 12 to 18 months
- 75% of the debt if it is overdue from 18 to 24 months
- 100% of the debt if this is overdue for more than 24 months
Restrictions are imposed on the formation of bad debt provisions for a shareholder or partner holding at least a 10% participation in a business and for business’ subsidiaries with a minimum 10% participation. Special rules are also provided for the deduction of bad debt provisions by banks, leasing and factoring companies.
Depreciation. Depreciation is performed by applying a specific depreciation rate to the acquisition or construction cost for a business asset. The depreciation of each fixed asset begins the month following the month in which the asset is first used or put into service by the taxpayer. The following table provides the annual depreciation rates, effective from 1 January 2014.
|Categories of assets||Depreciation rate (%)|
|Buildings, installations, facilities
industrial installations, non-building facilities, warehouses and special loading
and unloading vehicles
|Plots of land used for mining purposes
and quarries, except those used for
ancillary mining activities
|Public means of transportation
(including airplanes, trains and ships)
|Machinery and equipment
(except for personal computers [PCs]
|Means of transportation of individuals||16|
|Means of transportation of goods||12|
|Intangible assets and royalties and
expenses of multiannual depreciation
|PCs and software||20|
|Other fixed assets||10|
An option exists for one-off depreciation of fixed assets valued up to EUR1,500 in the year in which the assets are acquired and placed in service. Newly established companies are eligible to claim depreciation for all of their fixed assets at a 0% rate for their first three years.
Relief for losses. Tax losses may be carried forward to offset business profits in the following five consecutive tax years from the tax year in which they are incurred. The right to carry forward tax losses ceases to apply if changes in ownership or voting rights exceed 33% in value or number, unless it is proven that the transfer was not made for the purpose of tax avoidance or tax evasion. Offsetting of losses incurred abroad against business profits derived domestically is not allowed, with the exception of income arising in other EU or European Economic Area (EEA) member states that is not exempted based on an applicable double tax treaty. Losses may not be carried back.
Groups of companies. Each company forming part of a group must file a separate return. The law does not provide for consolidated tax returns or other group relief.
Other significant taxes
The following table summarizes other significant taxes.
|Nature of tax||Rate (%)|
|Value-added tax (VAT)|
|(special reduced rate of 6%)|
|Special rates||4 / 9 / 16|
|Stamp duty on private loan agreements||2.4 / 3.6|
|Annual real estate tax; imposed on the
value of real estate owned by legal entities;
the rate depends on the zone of the real estate,
its surface, year built, whether the property
faces a national road and other factors
|Special property tax; imposed on the
“objective” value of real estate property;
the tax does not apply if the company has
listed shares or if it discloses its corporate
structure and the ultimate individual
shareholders or partners are revealed
|Real estate transfer tax; imposed on taxable value||3|
Foreign-exchange controls. As of July 2015, important restrictions have been introduced with respect to the transfer of money out of Greece. As a general rule, the transfer of funds to a foreign credit institution may be subject to certain preapprovals from the side of the Greek credit institution or from the competent Administrative Credit Committee of Greece; otherwise, it is prohibited (although some exemptions exist). Readers should obtain updated information before engaging in any transaction because the relevant rules are subject to amendment on a regular basis.
Transfer pricing. The Greek tax law includes a transfer-pricing clause (Articles 21 and 22 of the Code of Fiscal Procedure) that is aligned with international standards. In addition, the transfer-pricing legislation requires that an enterprise maintain documentation files.
Effective from of 1 January 2014, a new definition of “associated/ affiliate enterprises” is introduced. The new law defines the term “associated person,” which extends to legal entities, individuals and any other body of persons. The term encompasses two persons if any of the following circumstances exists:
- One of them holds directly or indirectly shares, parts or quotas in the other of at least 33%, estimated on the basis of total value or number, or equivalent profit participation rights or voting rights.
- Another third person participates directly or indirectly in the other two in any of the aforementioned ways.
- Between them, direct or indirect management dependence or control exists or the possibility exists for one person to exercise decisive influence over the other or for a third person to do so in both of them.
Effective from 1 January 2014, the concept of advance pricing arrangements (APAs) is introduced in Greek transfer-pricing legislation.
Debt-to-equity rules. No deduction is allowed for interest expenses (with the exception of interest on banking loans and corporate bond loans) incurred on loans granted by third parties to the extent that the interest rate exceeds the interest that would be payable if the applicable interest rate were equal to the interest rate for loans connected with revolving accounts to non-credit or non-financial enterprises, as published by the Bank of Greece.
Under the rules applicable for fiscal years beginning on or after 1 January 2016, interest expense in excess of interest income (net interest expense) that exceeds 40% of Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) plus nondeductible expenses is not deductible for tax purposes. However, notwithstanding the above rule, interest expense in excess of interest income is fully deductible as a business expense if the cumulative amount of interest expenses recorded in the accounting books does not exceed EUR3 million per year.
The amount of interest expense that is not deductible for corporate income tax purposes in accordance with the above debt-to-equity rules may be carried forward as a deductible expense with no restriction (indefinitely).
The above debt-to-equity rules do not apply to credit institutions.
Controlled foreign corporations. Controlled foreign corporation (CFC) rules are introduced in Greece, effective from 1 Jan uary 2014. These rules are designed to deal with tax avoidance of Greek companies through the shifting of revenues to subsidiaries in low-tax jurisdictions. Basically, these rules provide for the inclusion in the taxable income of the Greek companies of undistributed passive income (for example, interest, dividends and royalties) of foreign subsidiaries under the conditions stipulated in the law.
Mergers and acquisitions. Company law regulates mergers and acquisitions in Greece. However, significant tax exemptions and relief for company restructurings may be available.
Transfers of operations. The tax law regulates the tax treatment of a group business restructuring that results in a transfer of operations (exit taxation). In the case of a local or cross-border intra-group restructuring qualifying as a transfer of functions, assets, risks and business opportunities (profit potential), the transfer of these items are considered a “transfer package” for the purposes of the law. If, within the context of such restructuring, a transfer of an intangible asset takes place (among other transfers), such transfer must be made for consideration according to the arm’s-length principle, taking into account the total value of the underlying assets and the transfer package (relevant functions and risks transferred). If the taxpayer can prove that no significant intangible assets have been transferred and that arm’s-length consideration has been paid with respect to the specific transfer that took place, the transfer-package provisions do not apply.
General anti-avoidance rule. Fiscal Procedure Code Law 4174/ 2013 introduced a general anti-avoidance rule. Under this rule, the tax administration may disregard any artificial arrangement or series of arrangements that aim at the evasion of taxation and lead to a tax advantage. An arrangement is considered artificial if it lacks commercial substance and aims for the evasion of taxation or a tax benefit. To determine if an arrangement is artificial, various characteristics are examined. For purposes of this measure, the goal of an arrangement is to avoid taxation if, regardless of the subjective intention of the taxpayer, it is contrary to the object, spirit and purpose of the tax provisions that would apply in other cases. To determine the tax advantage, the amount of tax due after taking into consideration such arrangements is compared to the tax that would be payable by the taxpayer under the same conditions in the absence of such an arrangement.
Law 89/1967 regime. Enterprises licensed to operate under the Law 89/1967 regime may enter into a favorable APA with the tax authorities. A license may be granted to enterprises under this regime if certain conditions are met. The principal condition is that the company must be exclusively engaged in the provision of specific services to foreign asso ciated companies, the foreign head office or foreign branches. The Ministry of Economy and Finance grants the license after reviewing and approving the applicant’s transfer-pricing study (based on the cost-plus method).
Treaty withholding tax rates
Under most double tax treaties, the rates in the table below apply to the extent that the amount of interest or royalties is at arm’s length. The domestic withholding tax rates apply to any excess amounts. In addition, certain recent double tax treaties include an anti-abuse clause.
Greece has implemented EU Directive 2003/49/EC. Under this directive, withholding tax on interest and royalties paid between associated companies of different EU member states was abolished, effective from 1 July 2013.
The following table provides treaty withholding tax rates for dividends, interest and royalties.
|Austria||0/5/10 (m)(n)||0/8 (o)||0/7 (o)|
|Belgium||0/5/10 (m)(n)||0/10 (l)(o)||0/5 (o)|
|Bosnia and Herzegovina||5/10 (m)||10||10|
|Bulgaria||0/10 (n)||0/10 (o)||0/10 (o)|
|China||5/10 (m)||0/10 (l)||10|
|Croatia||5/10 (m)||10||0/10 (o)|
|Cyprus||0/10 (n)||0/10 (o)||0 (e)|
|Czechoslovakia (i)||0/10 (n)||0/10 (o)||0/10 (o)|
|Denmark||0/10 (n)||0/8 (o)||0/5 (o)|
|Estonia||0/5/10 (m)(n)||0/10 (o)||0/10 (a)(o)|
|Finland||0/10 (n)||0/10 (o)||0/10 (k)(o)|
|France||0/10 (n)||0/10 (o)||0/5 (o)|
|Germany||0/10 (n)||0/10 (o)||0|
|Hungary||0/10 (n)||0/10 (o)||0/10 (o)|
|Ireland||0/5/10 (m)(n)||5||0/5 (o)|
|Italy||0/10 (n)||0/10 (j)(o)||5 (a)(g)(o)|
|Korea (South)||5/10 (m)||8||10|
|Kuwait||0/5 (p)||0/5 (p)||15|
|Latvia||0/5/10 (m)(n)||0/10 (o)||0/10 (a)(o)|
|Lithuania||0/5/10 (m)(n)||0/10 (o)||0/10 (a)(o)|
|Luxembourg||0/10 (n)||0/8 (o)||0/7 (h)(o)|
|Malta||0/5/10 (m)(n)||0/8 (o)||0/8 (o)|
|Netherlands||0/10 (n)||0/8/10 (f)(o)||0/7 (h)(o)|
|Poland||0/10 (n)||0/10 (o)||0/10 (o)|
|Portugal||0/10 (n)||0/15 (o)||0/10 (o)|
|Romania||0/10 (n)||0/10 (o)||0/5/7 (a)(h)(o)|
|Russian Federation||5/10 (m)||7||7|
|San Marino||5/10 (m)||10||5|
|Slovenia||0/10 (n)||0/10 (o)||0/10 (o)|
|South Africa||5/10 (m)||8 (j)||5/7 (a)(h)|
|Spain||0/5/10 (m)(n)||0/8 (o)||0/6 (o)|
|Sweden||0||0/10 (o)||0/5 (o)|
|Switzerland||0/10 (n)||0/10 (o)||0/5 (o)|
|United Arab Emirates||0/5 (r)||0/10 (r)||5|
|United Kingdom||0/10 (n)||0||0|
|United States||10||0 (b)||0 (d)|
- a) The rate is 5% for royalties paid for the use of industrial, commercial or scientific equipment (7% under the Romania and South Africa treaties).
- b) The 0% rate applies if the recipient does not control directly or indirectly more than 50% of the voting power in the payer. However, the 0% rate does not apply to interest paid to US recipients to the extent that the interest is paid at an annual rate exceeding 9%.
- c) For details, see Section A.
- d) The 0% rate does not apply to cinematographic film royalties paid to US residents.
- e) The rate is 5% for film royalties.
- f) The rate is 8% if the recipient is a bank or similar entity.
- g) The rate is 0% for copyright royalties for literary, artistic or scientific works, including films.
- h) The rate is 5% for royalties for literary, artistic or scientific works, including films.
- i) Greece honors the Czechoslovakia treaty with respect to the Czech and Slovak Republics.
- j) Under the South Africa treaty, the rate is 0% for interest paid to the South Africa Reserve Bank. Under the Italy treaty, the rate is 0% for interest payments made by the Greek government, interest payments made to the Italian government and interest payments relating to government loans.
- k) The 10% rate applies to copyright royalties for literary, artistic or scientific works.
- l) The rate is 5% if the recipient is a bank. Under the China, Mexico and Turkey treaties, the rate is 0% if the recipient is a government bank.
- m) The 5% rate applies if the recipient of the dividends is a company that owns more than 25% of the payer corporation.
- n) The 0% rate applies if the conditions of the EU Parent-Subsidiary Directive are met (for Switzerland, the 0% rate applies if the conditions of the European Community (EC)-Switzerland agreement providing for measures equivalent to those in Directive 2003/48/EC are met).
- o) The 0% rate applies if the terms of the EU Interest-Royalties Directive are met; for Switzerland, the 0% rate applies if the conditions of the EU-Switzerland agreement providing for measures equivalent to those in Directive 2003/48/EC are met.
- p) The 0% rate for dividends and interest payments applies if the recipient is the government of Kuwait or a state division or subdivision, the Central Bank of Kuwait or other government organizations or government funds.
- q) The 0% rate on interest payments applies if the recipient is the government of Qatar.
- r) The 0% withholding tax rate for dividends and interest payments applies if the recipient is the government of the United Arab Emirates (UAE) or its political subdivisions, the Central Bank of the UAE or certain UAE investment authorities.