GREECE Law and Practice Contributed by: John C. Dryllerakis, John Papadakis and Nikos Kalantzis, Dryllerakis Law Firm
tion of this tax has been suspended in recent years pursuant to successive legislative extensions. • Individuals (non-tax residents): Non-resident individuals are subject to Greek income tax only on income sourced in Greece. Rental income from immovable property located in Greece is therefore taxable in Greece under the same progressive rates applicable to residents. Non-residents are required to file a Greek income tax return for such income. Capital gains from the disposal of Greek immovable property are likewise taxable in Greece (subject to the current suspension of the capital gains tax regime). • Legal entities: Greek tax resident legal entities are taxed on their worldwide income, including income from immovable property, at the standard cor - porate income tax rate (22%). Non-resident legal entities are taxed in Greece on income derived from immovable property situated in Greece, at the same corporate income tax rate applicable to resident entities. The above treatment is subject to the provisions of any applicable double taxation treaty. However, under most treaties concluded by Greece, income from immovable property may be taxed in the state in which the property is situated, in accordance with Article 6 of the OECD Model Tax Convention. 3.2 Business Profits Business taxation in Greece is imposed on the net profits from business activities, determined based on accounting results prepared under Greek Accounting Standards and adjusted in accordance with the provi - sions of the Income Tax Code (Law 4172/2013). Business profit is defined, in accordance with Arti - cle 21 of Law 4172/2013 (Income Tax Code), as the total income derived from business transactions, after deducting allowable business expenses, tax-deducti - ble depreciation and provisions for bad debts. Subsequently, tax adjustments are applied, including the disallowance of non-deductible expenses, limita - tions on interest deductibility under the thin capitalisa - tion rules, transfer pricing adjustments to ensure com - pliance with the arm’s length principle and specific rules for depreciation and loss carry forwards.
Business profits of self-employed individuals are taxed at progressive personal income tax rates, rang - ing from 9% to 44%. Corporate profits are taxed at the standard corporate income tax rate of 22%. Tax losses may generally be carried forward for up to five years to offset future profits, subject to statutory limi - tations. In addition, Greek corporate taxpayers are required to make advance payments of corporate income tax for the following fiscal year. These prepayments are calculated as a percentage of the current year’s tax liability (typically 80%) and are credited against the final tax due for the next fiscal year. 3.3 Passive Income Passive income, including dividends, interest and roy - alties, is generally subject to withholding tax at source, with the rate and treatment depending on the type of income and the recipient’s tax residence. Greece has an extensive network of double taxation treaties, generally based on the OECD Model Tax Convention. Treaty provisions override domestic law where applicable and may reduce or eliminate with - holding taxes on dividends, interest and royalties. Dividends received by resident or non-resident indi - viduals are generally subject to 5% withholding tax, which exhausts their final income tax liability. Legal entities In the case of corporate recipients, it is first necessary to determine whether the conditions of Article 63 (1) of the Income Tax Code, implementing the EU Parent- Subsidiary Directive 2011/96/EU (eg, minimum share - holding percentage, minimum holding period, etc), are met. If not, the following distinctions apply. • Dividends paid to Greek legal entities are subject to withholding tax, which does not exhaust the final tax liability. These dividends are treated as busi - ness income (Article 47 (2) of the Income Tax Code) and the withheld tax is credited against the final corporate income tax. If the withheld tax exceeds Dividends Individuals
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