GREECE Law and Practice Contributed by: Anastasia Dritsa, Elisabeth Eleftheriades, Vicky Kriketou, Irene Kyriakides, Ioanna Kyriazi, Victoria Mertikopoulou, Claire Pavlou and Panagiotis Pothos, Kyriakides Georgopoulos Law Firm
• From EUR20,000.01 to EUR30,000, the tax rate is 26%. • From EUR30,000.01 to EUR40,000, the tax rate is 34%. • From EUR40,000.01 to EUR60,000, the tax rate is 39%. • For income over EUR60,000, the tax rate is 44%. With regard to tax breaks/incentives available for employees, from FY 2021, a taxpayer/employee who transfers their tax residence to Greece may qualify for a special tax regime if certain conditions are met, including prior non-residence in Greece and relocation from an eligible country (ie, an EU or EEA member state or from a state with which Greece has an admin - istrative co-operation agreement in the field of taxa - tion in force). Under this regime, 50% of employment income earned in Greece is exempt from income tax for up to seven tax years. 5.2 Taxes Applicable to Businesses Under domestic tax rules, a company is subject to corporate income tax either based on its tax resi - dence or if it maintains a permanent establishment under domestic rules or applicable double tax treaty provisions. Accordingly, a company is considered tax resident in Greece and subject to tax on its worldwide income if any one of the following conditions is met; in essence, a company is regarded as tax resident in Greece if it has been incorporated or established under Greek law, or if it has its registered seat in Greece, or if its place of effective management (POEM) is located in Greece for any period during the tax year. With regard to taxable income and applicable tax rates, a Greek company and a permanent establishment are subject to corporate income tax at a rate of 22%, after deducting business expenses, provided that all the relevant conditions provided for the deduction under the Greek Income Tax Code (GITC) are met, as well as depreciation and provisions for doubtful receivables (with respect to a permanent establishment, subject to the provisions of any applicable double tax treaty, which may override domestic provisions). Taxable business profits are generally determined on the basis of accounting profits, as adjusted by the specific rules and classifications set out in the GITC.
In principle, they correspond to total revenues minus deductible business expenses, tax-allowable depre - ciation, and certain provisions for bad debts. As a rule, incorporated businesses are taxed on an accrual basis, while any profits not previously taxed become taxable upon distribution or capitalisation. Withholding Tax on Income: Interest, Royalties, Dividends Income derived from interest, royalties, and dividends falls under the general category of investment income and is subject to withholding tax at a rate of 20% for Greek-source royalties, 15% for Greek-source inter - est, and 5% for dividends, subject to the provisions of any applicable double tax treaty) or, where applicable, the provisions of the EU Interest–Royalties Directive and the Parent–Subsidiary Directive. In short, dividend exemption applies where the con - ditions of the EU Parent–Subsidiary Directive are met, including a minimum 10% participation held for at least 24 months, qualifying EU tax residency and inclusion in Annex I companies, as well as subject- to-tax requirements without exemption options; simi - larly, exemption from withholding tax on interest and royalties applies to payments between qualifying EU associated companies where a minimum 25% direct or indirect participation is held for at least 24 months, and the beneficiary satisfies the requirements of the EU Interest and Royalties Directive regarding quali - fying entity status, EU tax residence (without third- country treaty residence), and full corporate tax liabil - ity without option or exemption. Until the minimum holding period is completed, a bank guarantee may be provided for the withholding tax due, instead of immediate payment of the withholding tax and sub - sequent refund claim. A special anti-avoidance rule prohibits the withholding tax exemption on the qualifying dividend payments where the relevant exemption is claimed in the context of artificial arrangements. Pillar 2 Directive, Law 5100/2024 Greece has implemented EU Council Direc - tive 2022/2523 (Pillar Two Directive) through Law 5100/2024, establishing a global minimum taxation
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