Taxes in Greece: income tax, inheritance tax, capital gain tax
Greece’s tax system can be too complicated for many foreigners who come to work and live in the country. New language, new procedures, there are certain things to learn before you decide to buy a property, start a business or move to Greece to work. In order to make things clearer, I’m Lisbob, the expats assistant, and I have put together some basic information about taxes for expatriates in the Hellenic Republic.
Taxes for individuals
In Greece all personal income is subject to tax. Income tax rates in the country are progressive and go up to 44%. This means that they increase according to how much money you have earned.
Individual income can be salary, pension or business profits.
Less than 10K euros, the income tax is 9%;
Between 10K and 20K euros, the income tax is 22%;
Between 20K and 30K euros, the income tax is 28%;
Between 30K and 40K euros, the income tax is 36%;
Any income over $40,000 is taxed at 44%.
Greek tax residents are allowed to claim a deduction from personal income tax. The amount of the deduction is influenced by:
Family household composition
If the employer respects a quota for the purchase of Greek or European products and services
In addition, it is possible to deduct compulsory social security contributions or donations to recognized charities.
For example, a single person with no dependents. Whoever has earned less than 12,000 euros in a year can receive almost 800 euros in return.
Social security contributions
As a self-employed person, you must pay your income tax in advance. It is possible to adjust tax payments based on future income. The help of an accountant is strongly recommended.
When working for a Greek employer, in addition to the taxable income, you have to pay social security contributions (EKA). Effective January 1, 2021, contributions are 14.12%, with an additional 22.54% of salary contributed by the employer. These payments cover pension, medical insurance and any unemployment benefits.
You will know everything about taxes in Greece
Capital gains tax
Taxes on capital gains from interest and dividends, including government bonds, are 15% and 5%, respectively. All dividends or interest earned within the country are subject to local income tax, plus withholding tax at the applicable rate.
Apart from that, the capital gain on corporate bonds of a company registered in the European Union is not subject to tax. In addition, there is an income tax exemption if a government or corporate bond remains your property until it is redeemed. And in some cases, they can reduce the capital gains tax for a non-resident to 13% and even 6%, depending on his nationality.
The table below shows the standard withholding tax rates for different types of capital gains:
Inheritance tax in Greece
The rate of Greek inheritance tax depends on the relationship of the taxpayer to the deceased. In the case of close relatives, the inheritance rate is 1% to 10% of the taxable value, excluding the tax-exempt amount. Otherwise, the rate can be as high as 40%, excluding tax.
There are three scales for inheritance tax in Greece, namely
Spouses, parents, children and grandchildren
Grandparents and above, great-grandchildren and below, adopted children, stepparents, children from previous marriages, siblings and in-laws
All others not included in the first two categories.
Each scale is linked to a scale factor specified as a percentage and a tax scale in euros and correlated to the assessed property value. The system is very complicated, and for this reason I strongly recommend that you consult an estate lawyer to ensure correct calculations of the tax due.
Corporate income tax in Greece
When setting up a company in Greece, it is important to know how the company’s profits will be taxed. The general corporate tax rate is 24%. The Greek government plans to reduce it to 22% from 2022, but nothing has been confirmed. Certain businesses such as banks, credit institutions and lenders are subject to a 29% corporate income tax.
As with individual income, worldwide corporate profits become a tax liability in Greece if the company is resident. Non-residents pay taxes only on income from business activity in Greece.
The capital gains tax is also 24%. You will pay this tax if the business assets or capital assets owned increase in value.