Doing Business in Greece

On the shores of the Mediterranean, Greece represents a gateway between Europe, Asia and Africa. Considered the birthplace of Western civilisation, Greece was also the source of many modern cultural, economic, educational and political systems. Greece has a highly developed, open economy - one of the largest in both the Balkans and the world - which relies heavily on the service, industry and agricultural sectors. Tourism is also a significant part of Greece’s economic profile: with a range of beautiful natural environments including UNESCO world heritage sites, Greece has become the 7th most-visited country in the world according to the United Nations World Tourism Organisation. Greece struggled in the aftermath of the 2008 global economic crisis, but has introduced recovery measures - including the Stability And Growth Program - aimed at reducing the budget deficit and increasing employment. Greece is an important regional investor and, as its economy reemerges, is introducing initiatives to stimulate investment and boost competition. In 2013, Greece achieved a budget surplus for the first time since the crisis, while economic growth returned in 2014, making Greece the fastest growing Eurozone economy in the third-quarter of that year. Greece is a member-nation of the EU, NATO, the OECD, and the WTO, and was ranked 67 on the World Bank’s Ease of Doing Business Survey 2018. 

Why Invest in Greece?

There are plenty of reasons to target Greece for investment opportunities, including:

  • Economic Resilience: Figures show that Greece’s economy is expected to grow by 2.7% in 2017, and by 3.1% in 2018. With IMF support, Greece’s budget deficit is being kept below 3%, representing a period of ongoing economic stability.
  • European Gateway: Greece stands at the crossroads of Europe, Asia, and Africa - and offers excellent opportunities for inter-continental connection. Within the Schengen Area, residents of Greece benefit from easy access to other member-states, while Greece’s highly-developed shipping infrastructure offers a platform from which to venture into nearby markets around the Balkans, the Black Sea, and the rest of Eastern Europe.
  • Tourism Prospects: Greece’s tourism industry remained strong throughout the financial crisis - and continues to be vital to the country’s economy. Tourism ventures are creating opportunities for infrastructure and investment in locations across the country.
  • Government Initiatives: In an effort to attract investment, Greece’s government is pursuing a number of initiatives. The recently-passed law for the ‘Creation of a Business-Friendly Environment for Strategic and Private Investments’ aims to raise liquidity, streamline regulation, and improve the institutional framework for private investment in the country.
  • Business Opportunities: The service sector is an important part of Greece’s financial profile, but other sectors, including the IT sector, bio-technology, healthcare and property management, hold numerous attractive investment opportunities. The renewable energy sector is also growing in importance: in 2014, around 42% of the country’s electricity came from renewable energy.

Foreign Direct Investment in Greece 

Greece is an appealing investment location because it offers businesses a wide variety of investment opportunities.  Greece is a natural gateway to more than 140 million consumers in South East Europe and the Eastern Mediterranean.  It is a hub of diverse emerging markets, with strong demands in consumer goods, infrastructure and modernization, technology and innovation networks, energy and tourism development.

Registering a Company and Establishing an Entity in Greece

In order to process payroll in Greece a company must have a legal entity set up.  The estimated completion of this process will depend on the type of company (e.g. IKE, Ltd, A.E.) and it will take approximately 2 months to complete.

In order for a company to start processing payroll in Greece a company will need a tax number (obtained from the tax authorities) and an AME number (obtained from the social contributions authorities).  It is estimated that registering with the tax and social contributions authorities will take 5 working days.

No license is necessary before making any tax/social security fillings on behalf of a client.  A proxy will be required; however, the client can provide the authorization for this.

Business Banking in Greece

Usually banks are open Monday to Thursday 8am to 3.00pm and 8am to 2:30pm on Fridays.

It is not mandatory for employees to be paid via Greek bank account.  It is however mandatory for the authorities (income tax and social contributions) to be made via a Greek bank account.

Working Days in Greece

The Working Week in Greece is Monday to Friday, with the weekend being Saturday and Sunday.

Basic Facts about Greece

General Information

Greece is located on the Mediterranean Sea with the Ionian Sea to the west, and the Aegean Sea to the east - and shares land borders with Albania, Macedonia, Bulgaria and Turkey. Long regarded as the cradle of western civilisation, Ancient Greece developed many of the foundations of language, culture, mathematics, science and philosophy which endure to this day. As an empire, Greece’s influence stretched across much of Europe, but the country was eventually absorbed into the Roman Empire around 200 BC. Today much of Greece’s ancient heritage still influences global culture, and the country itself has become a developed parliamentary republic, with strong political and economic ties to the rest of the world. Characterised by hilly and mountainous landscapes, Greece has the longest coastline in the Balkans and boasts numerous idyllic beaches and coastal beauty spots. With a hot, sunny Mediterranean climate, Greece attracts holidaymakers and tourists from around the world, who arrive for warm, beach-friendly weather, or to explore a variety of historic sites.   

Full Name: The Hellenic Republic

Population: 10.75 million (World Bank, 2016)

Capital: Athens

Major Language: Greek

Major Religion: Christianity

Monetary Unit: 1 euro = 100 cents

Main Exports: Textiles and clothing, food, oil products

Internet Domain: .gr

International Dialling Code: +30

Hello Yassas

Good morning Kalimera

Good evening Kalispera

Do you speak English? Milate Aglika?

Good bye andi'o sas

Thank you Efharisto

See you later Tha ta poume meta!

Income Tax & Social Security in Greece

The tax year in Greece runs from the 1st January to 31st December each year.

The employer is responsible for making the contributions to Solidarity Tax, Income Tax and Social Security Contributions (IKA).

Income Tax in Greece

An Individual is subject to income tax on his/her total net income in Greece and abroad.  Net income that is sourced in Greece is taxed irrespective of the place of residence of the individual. Income arising abroad is taxed if the individual is a resident of Greece.  For income tax purposes, the income derived by individuals is divided into certain categories.  Taxable income is calculated based on the rules of each category and the total taxable income of the individual is the aggregate of the categories.

Corporate Income Tax

All resident legal entities that are duly registered in accordance with Greek Corporate Income Tax Law are subject to corporate tax on their worldwide income whilst non-resident companies are taxed on all income derived from Greece.

The following are exempt, on the condition that they are recorded in a tax free reserve; profits arising from another EU country as long as the parent-subsidiary relationship applies, qualifying dividends received from EU countries and dividends received from collective investment schemes or portfolio investment companies.

Nondeductible expenses include (not exhaustive); expenses over €500 not paid via bank transfer, fines and penalties and unpaid social security contributions.

The taxable period is the financial year. This may end on 31 December or 30 June.

The corporate  income  tax  return  must  be  filed  by  the  10th  day  of  the  fifth  month following  the  end  of  the  financial  year  and  the  income  tax  is  payable  in  six  equal monthly installments commencing upon the filing of the tax return.

Social Security in Greece

All salaries are subject to social insurance deductions. There are a number of different social insurance foundations. Each foundation is responsible for a different working speciality.

IKA is the largest, most common Social Security body in Greece.  IKA covers those in dependent employment in Greece or abroad for an employer who is based in Greece, as well as those who offer full-time or part-time personal labour on commissioned work agreements and are not insured with any other Main Insurance agency.  IKA covers certain groups of people who offer their labour to various employers at various times and whose insurance is realized through their Unions or Insurance Associations, (e.g. porters, news-stand vendors, slaughterhouse workers etc.) or through special provisions (e.g. exclusive nurses).

Reporting Tax in Greece

Monthly

At the end of each month there are a number of documents that must be submitted to the authorities.  These include; APD file (IKA file) (Social contributions), income tax declaration and any extra contribution file.  Submissions can be made online, or if they are last minute they must be done in person.

Yearly

The annual Company Income Tax Statement must be submitted via the relevant internet service each year.  The deadline varies each year; in 2015 the submission date was 30th April.

Employee’s annual statements will include the annual gross and net income of the employees and any withheld tax and social security amounts.  The annual statements are generated and provided by 31st March of the following financial year.

New Employees in Greece

All new employees must be registered with the Tax Office and IKA. They must obtain an AMKA (Social Security Number) in person.  New starts must be registered before the date of recruitment otherwise there will be fines.

For any expat new employees the following documentation is required: -

  • ID card/passport
  • Completion of form M1 and M7
  • Utility bill
  • Employer confirmation for his/her recruitment
  • AMKA confirmation
  • A copy of the employee’s Greek bank account details

Again the information regarding expat employees must be submitted before their recruitment date otherwise there fines will be applicable.

In order to work in Greece each employee must have a VAT number.  If employees do not have one they must obtain one from the Greek authorities.

Leavers in Greece 

When there is a leaver, a termination form must be submitted to the local authorities no later than 8 days after the employee’s termination.

If the leaver has been terminated, then payment should be on their last day.  If the leaver has resigned, payment will depend on the deadline for each allowance.

Payroll in Greece

Employers in Greece should understand the withholding obligations they have towards their employees’ salaries during the payroll process. These obligations include tax and social security contributions which must be withheld each pay cycle, and paid to the relevant authority.

Income tax rates in Greece are progressive: earnings up to €25,000 are charged at 22%, the next €17,000 at 32% - and anything over that amount at 42%. Residency status also plays a part in tax rules: non-residents may not be charged income tax depending where their permanent home is located.

Social security contributions in Greece include:

  • A 6.67% pension contribution - plus 13.33% paid by the employer
  • Health insurance (4.55% by employer, 2.55% by employee)
  • One-off benefit payment (4% of taxable remuneration)

Given the complexity of Greece’s tax system, compliance should be a priority for businesses operating within its legislative territory. With that in mind, expat businesses setting up in Greece may engage a global payroll provider to oversee their pay process and ensure compliance with the country’s tax rules and regulations.

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