Greek Tax Reform and Tax Reduction

1. 4646/2019 is a new tax bill ratified by the Greek parliament introducing amendments to the Income Tax and Procedural Tax Code. It adopts a new non-domicile regime for foreign tax payers with high net wealth, improves the rules for the deductibility of corporate expenses, provides capital gains tax relief for Greek holding entities under certain conditions and also provides VAT relief and tax incentives for individuals investing in new real estate properties constructed after 2006 and properties requiring renovation.

What are the main tax reliefs for legal entities?

• The corporate income tax rate has been reduced from 28% to 24% as of the financial year 2019 for corporate income business entities.
• Dividends distributed by local business entities with double entry bookkeeping are subject to a reduced withholding tax rate of 5% as of 1 January 2020 onwards.
• Changes to deductible expenses from 1 January 2020:
• Rental expenses only in case of payment by electronic means or via a payment service provider.
• New increased depreciation rates are provided for means of transport, cargo and mass transit
• Expenses related to corporate social responsibility actions
• Specific environmental costs
• Capital gains derived from the sale of shares in Greek and EU subsidiaries are tax exempt as of 1 July 2020 under the following conditions:
• They have a minimum participation of 10% and
• A minimum holding period of at least 24 months
• For the fiscal year 2018 only: The tax advance assessed on the submitted income tax return will be recalculated to 95% of the respective tax due. Where the relevant amounts have already been settled, the difference will be refunded.
• Countries that apply a CIT rate equal to or less than 60% of the applicable Greek CIT rate are considered as states with a preferential tax regime

What are the main tax reliefs for individuals?

• A new non-domicile regime for foreign taxpayer high net wealth individuals is adopted which introduces alternative taxation on source income earned by individuals (and/or their relatives) who transfer their tax residence to Greece under certain conditions.
• New tax rates have been introduced by reducing the introductory rate of 22% to 9% for income up to EUR 10,000 and reducing the rate applied for income exceeding EUR 10,000 by 1%.
• The provisions regarding benefit in kind are clarified. Benefit in kind amounts in excess of EUR 300 are added to the income of the recipient.
• Stock options will be exempt from salaried income taxation and taxed as capital gains at a rate of 15% provided they are held for at least 24 months. Where they relate to small start-up entities, they will be taxed at a rate of 5%, provided that they are held for at least 36 months under certain conditions.
• There will be an income tax reduction equal to 40% of the amount of expenditure for the provision of certain services taking place from 1 January 2020 to 31 December 2022. This will be distributed over a period of 4 years and limited to an expenditure of EUR 16,000.

For further information please contact:

Dimitrios Leventakis, Managing Director, ECOVIS HELLAS LTD, Athens, Greece

Anastasia Moschovaki, Tax Lawyer, ECOVIS HELLAS LTD, Athens, Greece

www.ecovis.com