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Income Tax in Greece



As of 1 January 2016 personal income tax returns must be filed up to 30 June of the year following the year of income. The tax year for individuals is the calendar year (ends on 31 December each year).
By exception, individuals who submit an application for the transfer of their tax residence and have timely provided the required documents (please refer to the relevant section below) should submit their personal income tax return no later than the end of the tax year following the year related to their transfer request (i.e. no later than 31 December).
The tax year for income tax purposes is the calendar year (1 January - 31 December).

Tax Compliance

Residents
Greek residents file tax return 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 are submitted via the internet by using a unique username and password.

Penalties
Where the taxpayer or any other person fails to file timely or does not file a tax return in relation to income and/or withholding tax or does not respond to the Tax Administration’s request for information, does not cooperate during the tax audit, does not proceed with registration with the tax authorities as a taxpayer and/or upon appointment as a tax representative, registers more that one time with the Greek tax authorities ,  fails to comply with any obligation regarding the maintenance of books and records or to file notifications with the tax authorities, the following administrative penalties are imposed:

· EUR 2 500 where any taxpayer fails to register or registers more than one time with the Greek tax authorities.

· EUR 100 in case of non-filing, or late filing or filing an inaccurate tax return from which no tax arises or is submitted for informational purposes  (in case of salaried employees or pensioners).

If the same omission occurs within a period of five years, the penalty is doubled while in case of any subsequent occurrence of the same type of omission, the penalty is quadrupled.

In case of filing of an inaccurate tax return the following penalties are imposed:

· 10% of the additional tax not reported, if such additional tax is equal to or higher than 5% but less than 20% of the tax due based on the tax return;

· 25% of additional tax not reported, if such additional tax is higher than 20%  but less than 50% of the tax due based on the tax return;

· 50% of the additional tax not reported, if such additional tax is higher than 50% of the tax due based on the tax return

Non-residents
Non-Greek tax 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 in Athens) on condition that they earn actual Greek source income.

Tax Rates

Employment Income Tax Slab for 2017

Taxable Income Bracket
Tax Rate
From EUR
To EUR
Percent
0
20,000
22
20,001
30,000
29
30,001
40,000
37
Above 40,000
45

Special scales apply in case of (a) severance payments and (b) annuity payment in the framework of group pension plans.

Specifically, severance payments are taxed at source which extinguishes any further tax liability for the individual, based on the following progressive tax scale:

Taxable Income Bracket
Tax Rate
From EUR
To EUR
Percent
0
60,000
0
60,000.01
100,000
10
100,000.01
150,000
20
Above 150,000
30

Furthermore, amounts payable to beneficiaries that correspond to insurance premiums paid by a company for group pension plans for their employees are taxed at source as follows:

· 10% for the first EUR 40 000 and 20% for the part exceeding EUR 40 000.

· 15% for every periodically paid benefit.

The above rates are increased by 50% in case of early redemption. The tax is withheld by the life insurance company.

Additionally, for income earned as of 1 January 2016, a special solidarity contribution applies based on the following progressive tax scale:

Taxable Income Bracket
Tax Rate of Income in as of 2016
From EUR
To EUR
Percent
0
12,000.99
0
12,001.00
20,000.99
2.2
20,001.00
30.000.99
5.00
30,001.00
40,000.99
6.50
40,001.00
65,000.99
7.50
65,000.99
220,000.99
9.00
Above 220,000.99
10.00

We shall draw your attention that the special solidarity contribution is imposed on the total overall declared or deemed income, taxable and non-taxable. Specifically for tax year 2016 the above solidarity contribution tax scale is progressive. However, for tax year 2015 the applicable rate was imposed on the total income declared (i.e. in case of EUR 123 000 the applicable rate on the total income is 6%).

Non-residents
Above tax rates apply to non–Greek tax residents as well.



Corporate Tax Rate
The tax rate is 29% on profits of Corporations (AE companies), Limited Liability companies (EPE), partnerships, cooperatives and joint ventures. Distributed dividends/profits are subject to a withholding tax at the rate of 15% (not applicable where single entry accounting books are maintained). The 10% withholding tax does not apply to profits which are credited or remitted by a branch in Greece to its head office abroad nor to dividends paid by a Greek subsidiary to its EU affiliate (subsidiary) (provided certain conditions are met as per the EU Directive 2011/96).

Under the beneficial provisions of Law 89/67, foreign entities may establish a presence in Greece with the exclusive purpose of providing certain services to their head office or any other foreign affiliate company (such as consulting, centralized accounting support, quality control of production, processes and services, project planning services, advertising and marketing and data processing services). Such establishments will be taxed on the higher of the actual revenues reported in their accounts or the deemed revenues that will be defined on a cost plus basis by application of a certain mark-up which is pre-agreed with the Ministry of Finance according to their specific sector and service, and in any case not lower than 5%.

Foreign shipping companies may establish a branch or an office in Greece under Law 27/75 enjoying a beneficial tax regime provided that certain conditions are met. According to this regime as currently in force payment of Greek tonnage tax for foreign flagged ships managed by a Greek ship management office results in the full exemption of profits derived from the exploitation of such ships from any other Greek income taxes (foreign tonnage tax paid abroad is credited against the corresponding Greek tonnage tax). Such branches/offices were also established under Law 89/67 until 2006 and although they now fall under Law 27/75, they are still commonly referred to as Law 89 offices etc. Moreover, an annual special contribution has been imposed for calendar years 2012 up to 2019 on such shipping offices which are engaged in activities other than the management and exploitation of Greek or foreign flagged ships. Furthermore, a 15% withholding tax is applicable on dividend distributions to Greek tax residents by such offices which are engaged in activities other than the management and exploitation of Greek or foreign flagged ships.

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This blog is Created by CA Anil Kumar Jain.