GREECE Law and Practice Contributed by: Maria Zoupa, Daphne Cozonis, Ioanna Tapeinou and Diana Tsourapa, Zepos & Yannopoulos
3.3 Restrictions on Retention of Earnings by Closely Held Corporations There are no tax rules that prevent closely held cor - porations from accumulating earnings for investment purposes. 3.4 Taxation of Individuals on Shares in Closely Held Corporations Dividends Greek tax-resident private individuals are subject to 5% income tax on profits and dividends from closely held corporations. Profits of small partnerships (in the form of an OE or EE) keeping single-entry books are taxed only at company level, with no further income taxation on profit distributions at the level of partners. AE, EPΕ and IKE companies cannot keep single-entry books. Capital Gains Capital gains of Greek tax-resident private individu - als derived from the transfer of shares in closely held corporations are subject to 15% income tax. Gains on the transfer of shares in closely held corporations are, in certain circumstances, calculated in an imputed manner set by the relevant rules on the basis of the level of the corporation’s equity. Capital gains realised by employees and shareholders as a result of transferring shares in non-listed start-up companies purchased through the exercise of stock option rights acquired within a period of five years of the company’s establishment are subject to 5% capi - tal gains tax on the condition that there is a minimum period of three years between the stock options grant and the disposal of the relevant shares. In the case of all other companies except start-ups, employees are subject to 15% capital gains tax on the condition that there is a minimum period of two years between the stock options grant date and the transfer of the relevant shares. If minimum holding periods are not met, the relevant benefits are classified and taxed as employment income. No minimum holding period applies for the capital gains taxation of such gains arising upon transfer of shares acquired for free by an employee in the context of a share award plan.
Capital Losses Capital losses from transfer of shares and other secu - rities by Greek tax-resident private individuals can be carried forward for five years to be set off against future capital gains deriving from similar transactions only. 3.5 Taxation of Individuals on Shares in Public Corporations Dividends The individuals’ tax regime established for dividends from shares in closely held corporations also applies to shareholdings in publicly traded corporations. See 3.4 Taxation of Individuals on Shares in Closely Held Corporations for further details. Capital Gains Greek tax-resident private individuals are exempt from income tax on gains derived from the sale of exchange-listed shares, except where they hold at least 0.5% of the total share capital and the shares have been acquired on or after 1 January 2009, in which case they are taxed at 15%. See 3.4 Taxation of Individuals on Shares in Closely Held Corporations for further details. 4. Taxation of Inbound Investments 4.1 Application of Withholding Taxes Under domestic legislation, legal entities or individ - uals that are not resident in Greece will be subject to income tax in Greece by way of withholding on Greek-source interest, royalties and dividends. Any tax so withheld exhausts their Greek tax liability. This is provided that they do not have a permanent estab - lishment in Greece to which the relevant profits would be attributable. Domestic withholding tax rates can be reduced or eliminated if payments are made to beneficiaries in income tax treaty jurisdictions. Greece currently has income tax treaties in force with 58 countries through - out the world. The treaties concluded with the USA and the UK are not based on the OECD Model Tax Convention.
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