- Overview: Greece
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global PEO and Payroll in Greece
Getting your business up-and-running in Greece can be challenging, especially if you do not speak the native language. Establishing your own business entity in Greece is an option to be considered as you expand abroad. But before you invest valuable resources in setting up business in Greece, you should be fully aware of the risks involved.
Acumen’s Global PEO and Payroll solution was designed especially for companies like yours, to smooth the way for quick, easy and risk-free business operations in Greece, without having to establish a legal business entity.
Acumen International – Your Professional Employer Organization in Greece
Navigating the Greek legal system and adhering to regulations governing employment and taxation can be challenging for businesses, especially if you are not a native Greek speaker. Partnering with Acumen International as a global Professional Employer organization (PEO) provides you with the local knowledge and support you need to conduct business in Greece without concern for legal and compliance risks.
Whether you represent international client companies or you are taking your own business operations abroad, Acumen International’s Global PEO and payroll service allows you to hire and payroll local and expat employees in Greece. With Acumen in your corner, you can quickly and easily onboard and compensate your employees without risk of legal repercussions.
International Global Payroll and Taxation in Greece
Personal Income Tax (PIT). In principle, subject to relevant tax treaty provisions, 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. As of 1 January 2013, income tax depends on the source of the income (e.g. employment, rental) and is calculated accordingly.
In addition, on 8 May 2016, the Law ‘Unified Social Security System – Reform of insurance and pension system- Income taxation and gaming taxation regulations’ has been adopted, introducing important amendments mainly to individual income taxation. Said law also constitutes a fundamental pension reform. The tax scale applying to employment income, pensions, and business profits is illustrated below:
|Income tax scale (salaries, pensions, and business profits)|
|Amount of income (EUR)||Tax rate (%)||Corresponding tax (EUR)||Total income (EUR)||Total tax (EUR)|
New tax rates and broadened tax basis applicable on income derived from real estate are introduced. In particular:
|Income tax scale (rental)|
|Amount of income (EUR)||Tax rate (%)||Corresponding tax (eur)||Total income (EUR)||Total tax (EUR)|
An incentive is available pertaining to the upgrading of buildings as regards the energy efficiency, functionality, and aesthetics in case these have not or will not be included in a building upgrading programme. In detail, the income tax reduction equals 40% of the amount of the relative expenditure effected from 1 January 2020 to 31 December 2022.
The general rule considered for the determination of an individual’s tax residence status is one’s physical presence in Greece in any 12-month period.
Foreign nationals may be taxed as “residents” or “nonresidents”. Residents are subject to Greek income tax on their worldwide annual income, regardless of their nationality and the place where this income has been generated, paid or remitted. Nonresidents are taxed only on income derived from a source within Greece or outside Greece, which is related to their Greek duties.
The individual income tax for a resident is calculated at progressive rates that vary from 22% to 45%. The 45% rate is applicable to annual income arising from employment services, pensions, freelancer’s activities and agricultural activities, which is the aggregate in excess of € 40,000.
The individual income tax for a nonresident is calculated at progressive rates that vary from 22% to 45%. The 45% rate is applicable to annual income arising from employment services, pensions, freelancer’s activities and agricultural activities, which is the aggregate in excess of € 40,000.
Nonresident individuals subject to Greek income tax are required to obtain a Greek tax identification number so called “AFM” and appoint a tax representative against the Greek tax authorities in order to file an annual income tax return with the competent tax office.
Foreign taxpayers who qualify as non-Greek tax residents may enjoy the tax reliefs of Greek tax residents provided that they maintain their residence in an EU or European Economic Area (EEA) country and (i) generate at least 90% of their worldwide income in Greece or (ii) are able to prove that their taxable income is so low that they would be entitled to tax relief in their country.
The non-resident legal person, legal entity, or individual pursuing business activity may elect to be taxed on income from royalties and fees for technical services, administration fees, and fees for consulting or similar services in accordance with the rules applicable to tax residents who receive such fees and then credit the WHT against the income tax due.
Corporate Tax Income (CTI). The employer is responsible for making the contributions to Solidarity Tax, Income Tax and Social Security Contributions (IKA).
Taxes of Employer:
- 13.33% – Pension Fund
- 4.55% – Health Care
- 3.25% – Supplementary Insurance
- 3.68% – Additional Contributions.
Payroll Cycle in Greece
Greece has no legislation concerning standard pay days in employment relationships. However, it is common that salary is paid monthly at the end of the calendar month for work performed during that month via a deposit in his bank account.
Depending on the personal status of the employee (for example, whether he or she is married, has children, has previous working experience, etc.), the National General CLA provides that the employee is entitled to additional allowances on top of the minimum basic salary (i.e., marriage and children allowance, multiple years of service allowance, etc.).
Furthermore, employees are entitled to an additional one month of salary at Christmas as a Christmas allowance, one-half month’s salary at Easter as an Easter allowance, and one-half month’s salary at annual vacation time as vacation allowance, thereby receiving 14 monthly salaries per year.
Non-payroll taxes in Greece
The standard VAT rate is 24% (applicable, inter alia, to all standard and processed foods, transportation services, food services, repair services, medical and dental services, and entertainment tickets [excluding theatre tickets]).
A reduced VAT rate of 13% applies, inter alia, to fresh food, to care of children, the elderly, and the disabled, and to accommodation in hotels or similar establishments (including holiday accommodation and letting of places in camping or caravan sites). A super reduced rate of 6% for medicines of CN3003 and 3004, and vaccines of CN3002 intended for human consumption, is applicable. The aforementioned rate is also applicable for children’s books, colouring and drawing books, newspapers, magazines, and theatre tickets. As of 20 May 2019, some basic types of foodstuff (e.g. oil, coffee, sugars) along with food services supplied by restaurants have been reclassified to the reduced VAT rate (13%). Furthermore, the supply of electricity and gas, as well as distinct heating, has been reclassified to the super reduced rate (6%).Furthermore, as of 12 December 2019, immunological products for human treatment of heading 3002 are transferred to the super reduced VAT rate, in addition to vaccines for which this rate was already applicable.
In addition, as of 1 January 2020, the reduced VAT applies for the following commodities:
- Infant and child nutrition products, packaged for retail sale
- Bicyclist helmets
- Items for the safety and protection of infants (absorbent diapers for infants and child car seats).
Supplies of goods and services to individuals and legal entities subject to VAT and established in EU countries (intra-Community supplies) are exempt from VAT (zero rated). Exports of goods and certain services to non-EU countries are also exempt (zero rated). With the following exceptions, real estate leases are generally exempt from VAT. Lease contracts for shopping centres and logistics centres may be subject to VAT on the condition that the taxable person opts for the submission to taxation of the leasing right. Additionally, a right to elect to subject leases of property used for the exercise of professional activities, either independently or as part of mixed contracts, to VAT applies. Furthermore, VAT will be suspended until 31 December 2022 and real estate transfer tax will be levied on all unsold real estate with a construction permit issued from 1 January 2006 onwards, upon relevant application by taxable persons.
By virtue of Decision A.1470/2019, an extension of the reduced VAT regime (30% reduction) until 30 June 2020 was granted for the following islands of the Aegean Sea:
Moreover, by virtue of Law 4334/2015, for transactions exceeding 3,000 euros (EUR) between entrepreneurs that are obligatorily settled through the use of a professional bank account or bank cheque and for transactions exceeding EUR 500 between entrepreneurs and individuals that are obligatorily settled through the use of a credit or debit card or e-banking or bank deposit or a bank cheque, the intermediary bank is obligated to withhold the relevant VAT amount corresponding to the total amount of the transactions and to pay said VAT directly to the Greek state within five days from said payment, by issuing the respective certificate on the collected amount of VAT to VATable persons. Banks should not charge any fee or other charges for the implementation of the above-mentioned services. The above provision is known as the ‘VAT split payment’ provision. By this provision, an obligation to immediate payment of the VAT due is imposed by the separation/split of the transaction value from the corresponding VAT due and the block of the VAT amount until its payment to the Greek state (‘split payment’ system). The recipient of the invoice or the retail receipt must pay the transaction through the use of a bank payment instrument, separating/splitting the VATable value from the corresponding VAT, so that the credit institution may transfer the VAT due automatically to a blocked bank account. The procedure of application of said provision and any other issue relating to the payment and refund of VAT will be regulated by a decision to be issued by the Independent Authority for Public Revenue. However, up to date, no such Decision has been issued, and the provision remains, in practice, inactive. Moreover, by virtue of L. 4446/2016, the quantitative threshold of annual turnover up to which taxable persons may pay the VAT to the state upon settlement of the invoices (special regime of Article 39 (b) of the Greek VAT Code) was increased from EUR 500,000 to EUR 2 million.
Moreover, by virtue of Article 67 of L. 4484/2017, Article 39 (a) of the Greek VAT Code (L. 2859/2000) was amended as regards the goods and services that are subject to the domestic reverse-charge mechanism. Based on the new provision, the domestic supply by a taxable person to another one of mobile telephones, being devices, game consoles, tablet personal computers (PCs), and laptops, are subject to the reverse-charge mechanism. The above amendment constitutes an incorporation of the relevant provisions of Article 199a of EU VAT Directive (2006/112/EC) into the Greek legislation. Further clarifications have been granted through Circular 1150/2017. The above provisions are applicable as of 1 August 2017. Moreover, based on L. 4549/2018, the taxable value, in case of transactions between related parties as determined for income tax purposes, is considered to be the actual value, in case the consideration agreed is lower, provided that the supplier or the recipient do not have full right to deduct VAT.
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How Acumen’s International PEO and Payroll Service can Benefit Your Business in Greece
Compensating your local and expat workforce in Greece and closely adhering to Greek taxation requirements can divert your attention and resources from activities that help your business grow. A reliable global employment solution like Acumen’s Global PEO and Payroll service can take a substantial burden off your shoulders so you can focus on running your company.
Outsourcing the administrative and compliance tasks involved in employee payroll is one approach, but we have a better solution. Acumen International offers a global PEO and payroll solution that goes beyond outsourcing. We hire and compensate your global workforce on your behalf, and take care of all the details of payroll while ensuring full compliance with Greek labor and taxation laws.
It is important to note that Acumen does not provide international global payroll services as a standalone solution, but only as a part of our global PEO and Payroll solution.
Our comprehensive global PEO and payroll services are just some of the benefits of partnering with Acumen International. We make it easy for you to achieve your business goals in Greece by officially employing and compensating your best selected global talent – both locals and expats – without concerns for legal and compliance risks faced by global employers.
Disclaimer: Any of the above information is subject to changes imposed by Greek laws. To get the latest updates on taxation in Greece and in 190 countries worldwide, contact Acumen’s team of global employment experts.