GREECE 2016
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Web Site: www.shermannigretti.it E-mail: info@shermannigretti.it Tel. +39 (0)2 7722951 Mob. +39 335 6030346 Twitter: @ShermanNigretti Linkedin: Gianmauro Sherman Nigretti
GEOGRAPHY AND POPULATION CAPITAL:
ATHENS
POPULATION:
10,8 MILLION
POLITICAL SYSTEM:
PARLAMENTARY REPUBLIC
FORMS OF BUSINESS ORGANIZATIONS INCORPORATION OF A ‘LIMITED BY SHARES’ COMPANY A ‘limited by shares’ company, known as ‘Anonymous Etairia’ (AE), can be established by one or more persons or become a single shareholder. INCORPORATION OF A LIMITED LIABILITY COMPANY A limited liability company, which is known under Greek Law as ‘Etairia Periorismenis Efthinis’ (EPE), has some caratheristics of both a partnership and of a corporation. It is a form of organisation for both small and medium-size enterprises. The liability of the participants is limited to the amount of their contribution (Law 3190/55). OTHER ENTITIES USEFUL TO FOREIGN INVESTORS OFFSHORE COMPANIES Foreign commercial or industrial entities of any legal form which exclusively engage in commercial activities outside of Greece may establish offshore branches in Greece according to Law 89/1967. TAXATION Commercial and industrial companies establishing offshore offices in Greece are subject to taxes on a plus cost basis which is determined by the Ministry of Development.
ACCOUNTING The International Financial Reporting Standards (IFRS) were introduced in Greece, according to the Law 2992/2002, in relation to companies listed on the Athens Stock Exchange. These companies are obliged to present their annual or periodical financial statements (including consolidated statements) prepared for periods ending after 1 January 2005 according to the new accounting standards imposed by the new Law. Non-listed companies can optionally apply IFRS after that date, on the condition that there is a relevant decision by the General Assembly of the Shareholders and a five-year application at least. Taking into account that the accounting results will differ from the taxable results, reconciliation will be presented in the notes to the financial statements.
AUDITING Currently accounting audits of banks, insurance companies, government organisations, companies on the Athens Stock Exchange and companies which for two next following years fulfil two of the three criteria (assets at least EUR 1.5 million, turnover at least EUR 3 million and personnel at least 50 employees) may only be performed by a recognised Auditing Firm of certified auditors (i.e. a member of the Institute of Certified Auditors “SOE�).
CORPORATE TAXATION Companies resident in Greece are subject to corporate income tax on their worldwide income and capital gains. Non-resident companies that have a permanent establishment in Greece are subject to corporate income tax on income and capital gains derived through the permanent establishment. A financial period is 12 months and usually coincides with the calendar year. Also, the financial period of a company, in which a foreign enterprise has at least a 50% capital participation, may coincide with that of the foreign enterprise. The tax rates applicable to undistributed profits are as follows: • • • •
Public limited companies (SA) 26% Banks 26% as above Limited liability companies (EPE) 26% as above Branches of foreign companies 26% as above.
Distributed profits are subject to an additional income tax at 10%. Dividends paid to parent companies based in European countries, which maintain the participation for at least 24 months, are exempted from such tax. Income tax is payable in eight (maximum) equal monthly instalments commencing in the fifth month from the end of the financial period, in which the tax return must be filed.
Capital Gains Tax •
Companies - The income earned by a company from the sale of shares is treated like any other income. It is added to the company’s profits and it is taxed as corporate tax at a rate of 26%.
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Foreign companies - Selling Greek shares is considered like selling any other movable goods. To the extent that these sales do not constitute a permanent establishment in Greece, the profit from the sales is tax free. It is not clear when a foreign company has a permanent establishment in Greece, especially where certain conditions which demonstrate a trade activity are met.
INDIVIDUAL TAXATION The profits from the sale of stock listed companies are tax free upon the condition that the shares sold represent less than 0.5% of the company’s capital. Otherwise the profit is taxed with 15%. However if a person makes continuous transactions on listed companies (more than 10 transactions every three months, values more than 250,000 Euro, for 4 continuous quarters) and the value of his portfolio exceeds 500,000 Euro, this person is considered to have a trade activity and his profits are taxed as such. An individual is subject to income tax on his total net income in Greece and abroad. Net income sourced in Greece is taxed irrespective of the residence of the individual. Income arising abroad is taxed if the relevant individual is a resident of Greece. The tax year is the calendar year. Taxable income is calculated after deducting the social security contributions. The remaining amount is taxed as follows:
INCOME SCALE Euro
TAX RATE %
< 5.000
-
7.000
10%
10.000
25%
14.000
35%
20.000
38%
40.000
40%
Over 100.000
45%
VAT VAT is charged on every supply of goods and services by a commercial enterprise, with the exception of the Aghion Oros area. The VAT rate is 23%, except for specific categories of goods and services for which the tax rate is 13% and 6.5% respectively. The above rates are reduced by 30% in certain circumstances. Public services (health, education, insurance etc.) are not subject to VAT. These services are considered VAT exempt. Exports of goods are zero-rated.
DISCLAIMER This publication must not be regarded as offering a complete explanation of the taxation and corporate matters that are contained within this publication. This publication has been prepared on the express terms and understanding that the publishers are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication. The publishers and the authors expressly disclaim all and any liability and responsability to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person, and ensuring that such edvice specifically relates to their particular needs.