Located in south-eastern Europe, at the tip of the Balkan Peninsula, Greece shares a border with Turkey, Bulgaria, North Macedonia, and Albania. Being a founding member of the United Nations, Greece was the tenth member to join the European Communities (the precursor to the European Union) and has been part of the Eurozone since 2001. It is also a member of numerous other international institutions, including the Council of Europe, NATO, the OECD, the WTO, and the OSCE. The country’s main trading partners are Italy, Germany, Turkey, Russia, and Iraq. Its principal exports include food (especially fruit and nuts), clothing and apparel, machinery, and refined petroleum and petroleum-based products. Machinery and transportation equipment, chemicals and chemical products, foodstuffs, ships and boats, and crude petroleum are the country’s main imports. Greece has been a WTO member since 1 January 1995 and a member of the GATT since 1 March 1950.
The business environment of Greece is more favorable to the companies as the economic policies are framed to invite foreign direct investment from various businesses. The policies are aimed at inviting long-term investments for archiving long-term economic growth. Due to the relaxation in the registration process, many companies are willing to invest in Greece.
Greece is a full member of the European Monetary Union. Greece is undergoing a number of economic, institutional, and social reforms to foster new direct investment and job opportunities. The legal framework is constantly changing in order to simplify corporate processes and transformations.
Greece has signed a number of double taxation agreements and continues to develop several agreements for the avoidance of double taxation to ensure that income will not be taxed in more than one country. It currently has more than 57 signed treaties with other countries for this purpose.
Formerly, the employment market in Greece was one of the most regulated in Europe. However, reforms have led to significant deregulation aimed at fostering a more employer-friendly environment for domestic and foreign businesses alike.
Greece’s legal system has been subject to vast reform in recent years to increase efficiency and speed. The complete judiciary procedure, including court of appeals cases, is expected to take an average of two to three years (down from the current average of five to six years).
Greece is in a radical process of digital transformation and reform. Digital transformation is considered to be the key to the country’s modernization and return to regularity in the post-pandemic era ,being one of the main pillars of the Greek National Recovery and Resilience Action Plan.
In Greece, income tax is payable by all individuals earning income in Greece, regardless of citizenship or place of permanent residence. Permanent residents are taxed on their worldwide income in Greece.
Benefits in kind are, in principle, subject to payroll withholding taxes (WHTs). However, as of 1 January 2015, and considering the difficulty in evaluating the taxable basis of such benefits at the time of their granting, no employment withholding is effected thereon. Instead, their value (since such benefits are taxable) is added to the employment income of the beneficiaries and taxed upon the assessment of their personal annual income tax return.
The tax scale applying to employment income, pensions, and business profits is illustrated below:
The income tax reduction equals 40% of the amount of the relative expenditure effected from 1 January 2020 to 31 December 2024.
Resident corporations are taxed on their worldwide income. Non-resident corporations are taxed in Greece on any Greek-source income they derive therefrom. For the tax year 2021 onward, the corporate income tax (CIT) rate of legal entities, with the exemption of credit institutions, has been reduced to 22%.
Furthermore, credit institutions are taxed at a rate of 29% only if and for those tax years that they are subject to the specific provisions of Art. 27A of the Income Tax Code (ITC) regarding deferred taxation.
Greek and foreign companies that are engaged in the management of vessels flying a Greek or foreign flag (that are subject to tonnage tax) as well as in other activities approved by the licence of operation are exempt. Passenger coastal ships or merchant vessels that perform internal routes are exempt.
No municipal or local taxes on income are paid at the local level.
There are two main types of companies incorporated in Greece:
In SA Share capital is divided into shares of equal value. Strict provisions against disclosure, the establishment, and subsequent acts Long life of the company Limited liability of partners and shareholders Majority voting Allowance for three bodies (the General Assembly, the Board of Directors, and the Auditors). The establishment of the SA requires notarized documents involving lawyers and various administrative authorizations as appropriate.
The minimum share capital is 4,500 euros for establishing the company. Division of capital into shareholdings Disclosure requirements for the establishment and subsequent obligations Prediction of specific time duration of the company, according to articles of the statute and Law 4072/2012, Limitation of liability of partners Majority voting of persons and capital Establishing a Limited Liability A company requires a notary and a lawyer with expertise in company formations.
P.C. is a new form of company formation in Greece. It is commercial and is considered a legal person. It has minimised the administrative operating costs (lawyer, notary, and publications). Minimum share capital of one euro. The shareholding is separate from the capital. Every contribution is recognised (capital, labour, or guarantor liability). It simplifies the relations between partners and the operated company. Flexibility in choice and changes/amendments due to its versatile identity both as a public and a private company.
• Non-requirement to provide the necessary minimum capital.
• Existence of general partners and limited partners A limited partnership is only limited by the amount of their contributions to the company.
• The limited partnership may be established via a simple private agreement.
• Non-requirement to provide the necessary minimum capital.
• All partners of a general partnership are jointly and severally liable, along with all their personal properties, for corporate obligations.
• With the dissolution of the company, there is still personal liability of partners for obligations of the company for a specific period of time.
• The general partnership may be established under a private contract.
• A privately held company is one where the sole proprietor is liable for all the debts of the company with his or her fortune.
• Flexibility in controlling every area and making quick decisions as it is dependent on a single person.
• There is no minimum capital requirement for company formation in Greece.
• Set up time is minimal.
Located in south-eastern Europe, at the tip of the Balkan Peninsula, Greece shares a border with Turkey, Bulgaria, North Macedonia, and Albania. Being a founding member of the United Nations, Greece was the tenth member to join the European Communities
Author: Chandrawat & Partners
Topic: Doing Business in Greece
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