GREECE Law and Practice Contributed by: John C. Dryllerakis, John Papadakis and Nikos Kalantzis, Dryllerakis Law Firm
the tax due, the excess is refunded (Article 68 (3) of the Income Tax Code). • Dividends paid to foreign legal entities without a PE in Greece are subject to withholding tax, which exhausts the recipient’s final tax liability, subject to the provisions of any applicable double taxation treaty. Interest Individuals Interest earned by resident or non-resident individuals is subject to 15% withholding tax, which exhausts the individual’s final income tax liability (Articles 37 (4) and 64 (3) of the Income Tax Code). Legal entities In the case of corporate recipients, it is first necessary to determine whether the conditions of Article 63 (2) of the Income Tax Code, implementing the EU Directive 2003/49/EC (Interest and Royalties Directive), are met (eg, minimum participation threshold, minimum hold - ing period etc). If not, the following distinctions apply. • Interest paid to Greek legal entities is subject to 15% withholding tax, which does not exhaust the final tax liability. This interest is treated as business income (Article 47 (2) of the Income Tax Code) and the withheld tax is credited against the final cor - porate income tax. If the withheld tax exceeds the tax due, the excess is refunded (Article 68 (3) of the Income Tax Code). • Interest paid to foreign legal entities without a PE in Greece is subject to withholding tax, which exhausts the recipient’s final tax liability, subject to the provisions of any applicable double taxation treaty. Royalties Individuals: Royalties earned by resident or non-res - ident individuals are subject to 20% withholding tax, which exhausts the individual’s final income tax liabil - ity (Articles 39 (2) and 64 (3) of the Income Tax Code). Legal entities In the case of corporate recipients, it is first necessary to determine whether the conditions of Article 63 (2) of the Income Tax Code, implementing the EU Directive 2003/49/EC (Interest and Royalties Directive), are met
(eg, minimum participation threshold, minimum hold - ing period etc). If not, the following distinctions apply: • Royalties paid to Greek legal entities are not subject to a withholding tax (Article 62 (5) of the Income Tax Code). Said royalties are treated as business income (Article 47 (2) of the Income Tax Code) and taxed accordingly upon filing of the annual income tax return. • Interest paid to foreign legal entities without a PE in Greece is subject to withholding tax, which exhausts the recipient’s final tax liability, subject to the provisions of any applicable double taxation treaty. 3.4 Capital Gains Capital Gains from the Sale of Immovable Property Individuals Capital gains from the sale of real estate located in Greece are generally taxable, though the application of the tax has been suspended in recent years through successive legislative measures. When applicable, gains are calculated as the sale proceeds minus acquisition cost and allowable expenses and taxed at a flat rate of 15%. Legal entities Capital gains from the sale of immovable property incurred by Greek legal entities are not subject to a withholding tax. It is treated as business income (Arti - cle 47 (2) of the Income Tax Code) and taxed accord - ingly upon filing of the annual income tax return. Capital gains from the sale of immovable proper - ty incurred by foreign legal entities without a PE in Greece are not subject to Greek taxation, as they are considered business profits. Taxation arises only if the gains are attributable to a Greek PE. Capital Gains from the Sale of Shares and Other Gains from the sale of shares listed on a regulated market are subject to 15% capital gains tax, provid - ed that the seller holds more than 0.5% of the total shares of the company. Gains from unlisted shares or other derivatives are also subject to 15% capital gains Derivatives Individuals
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