GREECE Law and Practice Contributed by: Fotodotis Malamas, Bernitsas Law
1. Tax 1.1 Tax Regimes
Capital income Capital income is defined as income gained from divi - dends (taxed at 5%), interest (taxed at 15%), royalties (taxed at 20%) and real estate (taxed at 15%–45%). Gross income from rental property is automatically subject to a 3.6% stamp duty (excluding residential rentals). Capital gains derived from the sale of real estate property are taxed at a flat rate of 15% of the sale price, minus acquisition costs and related expenses. Capital gains tax for the sale of real estate prop - erty has been suspended until 31 December 2024. Moreover, Greece introduced a new tax regime for high net worth individuals, employees and pensioners who transfer their tax residence and invest in Greece, which has been included in Articles 5A, 5B and 5C of Law 4172/2013. Tax on Income Acquired Abroad In an effort to attract specific groups of taxpay - ers, Greece recently introduced three tax incentive schemes which resemble similar tax schemes that already apply in other EU countries, such as Italy. The new initiatives currently applicable in Greece tar - get the following: High net worth individuals transferring their tax resi - dence to Greece may be subject to the alternative income taxation method for income acquired abroad, if the following requirements cumulatively apply: • they have resided abroad for seven of the last eight years; • the investment is higher than EUR500,000 and is in the form of real estate property, securities or shareholdings; and • the investment was concluded within three years from the date of the application. In this regard, the recently issued Decision 46834/20.05.2023 (as recently amended by way of • high net worth individual investors; • employees and freelancers; and • pensioners. High net worth individuals
Following more than ten years of tax increases, Greece has now introduced tax reductions and tax breaks on Greek-sourced income. In an effort to smooth the financial impact of the COVID-19 pandemic, new relaxed rules have been enacted with regard to pri - vate debt to the State, mainly under the scheme of temporary settlements. Greek tax-resident individuals are liable to pay taxes on their global income, and non-Greek tax residents are liable to pay taxes on their income from Greek sources. Taxable income includes employment, busi - ness activity, capital and capital gains income, and is generally an aggregate of all types of income, minus income-generating expenses and applicable deduc - tions. Tax Deductions Employment Income from employment, pension and business activities is taxed at a maximum rate of 44% for income exceeding EUR40,000. Severance payments Special treatment applies to severance payments upon termination of employment. This applies to every lump sum severance payment that is provided by any employer, and covers any reason resulting in the termination of the employment relationship or other agreement that connects the employer with the beneficiary of the payment. The maximum tax rate in this case is 30% for severance payments exceeding EUR150,000. Annuities A favourable tax regime applies to annuities paid within the framework of group pension plans that are taxed at source, with the rate varying depend - ing on the payment period. Periodically paid benefits are taxed at 15%, while lump sum payments of up to EUR40,000 are taxed at 10% and any amount above that at 20%; both are increased by 50% in the case of early redemption. Tax is withheld by life insurance companies and uses up the relevant tax liability of the employee.
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