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Doing Business in Greece

Doing Business in Greece. Prepared by Prooptiki Ltd September 2010. Strategic Link to the: Balkans Eastern Mediterranean Region. Eastern Europe Black Sea. Country - General Information. Population: 11.3 million Working force: 4.6 million Euro-zone since 2001 Capital: Athens

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Doing Business in Greece

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  1. Doing Business in Greece Prepared by Prooptiki Ltd September 2010

  2. Strategic Link to the: Balkans Eastern Mediterranean Region Eastern Europe Black Sea Country - General Information • Population: 11.3 million • Working force: 4.6 million • Euro-zone since 2001 • Capital: Athens • 5.5 million inhabitants

  3. Basic Economic Figures • GDP growth rate • -1.5% (Q2 2010) • Unemployment Rate: • 11.8% (Q2 2010)

  4. Tourism 15% of GDP Construction Telecommunications Energy Production Textiles Food Processing Shipping Over 4.5% of GDP Chemicals Tobacco Processing Metal Products Mining Petroleum Major Industries

  5. Investment OpportunitiesSectors to Invest • Tourism • Energy • ICT • Food & Beverage • Life Sciences • Environmental Management

  6. Investment Opportunities Why Invest in Greece? • Foreign Direct Investment • Gross FDI inflows: €6.48 million (2008 data) • Net FDI inflows: €3.46 million (2008 data) • Investment Incentives • Investments Incentive Law • Greek Economy • Member of the Euro-zone • Trade • Exports grow steadily • Infrastructure • Due to the Olympic Games 2004 • Human Capital • Access to Financing & Venture Capital in Greece • wide selection of alternatives for their financing needs • Emerging National Markets • Southeast Europe and the Eastern Mediterranean

  7. Labor Regulations • Minimum Age limit: 15 years old • Most common working hours • 5-day week • 8 hour day • Minimum Wage Levels

  8. Labor Regulations • “Overwork”: 1 extra hour per day • 20% premium of the hourly wage • “Overtime”: any extra hour after “overwork” • Up to 120 hrs a year: 40% premium • More than 120 hrs a year: 60% premium

  9. Labor Regulations • Employee Compensation • Dismissal Notice

  10. Taxation in Greece • Individual Taxation • Corporate Taxation • Capital Gains Taxation • Real Estate Taxation • Inheritance & Gift Taxation • Other Taxation

  11. Individual TaxationIncome Tax Scale • Directly connected to the collection of receipts of expenses • Income up to €12,000 shall collect receipts to the amount of 10% of the income • Income more than €12,000 need to collect 30% of their income on receipts

  12. Individual Taxation • The non-taxable amount of income is increased by: • €1,500 for individuals with one dependent child • €3,000 for individuals with two dependent child • €11,500 for individuals with three dependent children, increased by €2,000 for each additional child. • Non-residents: • are allowed to avail of deductions and credits, if: • they are residents of EU member states and • 90% of their worldwide income is from Greek sources. • are liable to pay taxes on their income from Greek sources. • are liable to pay a surtax of 5% on income up to €12,000; unless they are residents of EU member states and 90% of their worldwide income is from Greek sources.

  13. Individual TaxationBonuses • Bonuses exceeding 10% are taxed as follows:

  14. Individual Taxation • 10% withholding tax • on accrued interest of a foreign bond or coupon earned by Greek residents. • EXCEPTION: Non-Greek residents having deposits in Greek banks in foreign currency.

  15. Individual TaxationDeduction Expenses • The total amount of medical expenses • Mandatory contributions to social security funds. • if the taxpayers are disabled, blind etc. • 20% of the purchase price of Mutual Funds, • if the fund is not sold for three years • the maximum deduction can be € 3,000. • Interest of loans for the acquisition of a first residence • Max size of residence 120 m2 • Max loan amount €200,000. • The contract of the loan shall have been signed until December 31, 2002.

  16. Individual TaxationTax Credits • Hospital expenses • tax credit of 20% • up to 6,000€ of the expenses??? • Personal Insurance expenses for life health and personal accident • Tax credit of 20% • up to amount of € 1,200 for unmarried and €1,200 for each spouse when the taxpayer is married. • Interest of loans for the acquisition of a first residence • Tax credit of 20% • Max residence size 120 m2 • Max loan amount €200,000. • Contract after January 1, 2003. • Annual rental of the main residence and private lessons • Tax credit of 20% • Up to €1,200

  17. Individual TaxationTax Credits • Donation and grants to the state and non-profit institutions in monetary sums • Maximum of 10% on taxable income • Each receipt shall be more than €100 • Alimony • Tax credit of 20% • Maximum tax credit €600. • Legal advice expenses • Tax credit of 20% • Maximum credit of 10% of taxable income when theoretical income is taken into account. • Installation of central A/C, natural gas, solar panels • Tax credit of 10% • Maximum amount of expenses € 6,000.

  18. Individual TaxationRental Income • Surtax • Property < 300 m2 • 1.5% • Property > 300 m2 • 3% • This surtax cannot be higher than tax income. • Stamp Duty • Applicable to all Buildings except Houses • 3.6% of the actual rental value of the property

  19. Corporate TaxationAccording to Legal Form • Societe Anonyme • Limited Liabilities Company • General Partnership • Limited Partnership

  20. Corporate TaxationSA & Ltd • Tax advance: • 80% • Non-distributed profits are taxed as follows: • Dividends taxation: • 40%

  21. Corporate TaxationSA & Ltd • Capital accumulation tax • 1% on the share capital • any increases thereof payable once upon the registration of the company and upon the approval of any capital increase.

  22. Corporate TaxationGeneral & Limited Partnerships • 25% tax rate on profit • unless the partners are individuals • 20% tax rate • The 3 unlimited partners with the highest participation (not legal entities) get a «business fee» according to their share. • This fee is calculated on 50% of the company’s profits and is deductible from the taxable income of the company. • The business fee is taxed at the progressive rate of the new tax scale with other personal income.

  23. Corporate TaxationGeneral Rules • Income from immovable property • 3% additional tax rate • This additional tax cannot exceed the tax calculated of the company’s income. • The tax is paid in 8 equal monthly instalments • The main exceptions from the above taxation are the following: • Profits from the operation of ships under the Greek flag by Greek companies. Such profits are subject to specific taxation on ship owner’s profits. When profits are distributed they are not taxed. • Subject to reciprocity, profits made in Greece by foreign enterprises from the operations of ships under foreign flag and aircrafts.

  24. Corporate TaxationTaxable Income • Net income • calculated by deducting expenses and depreciation. • Allowable deductions usually include business expenses. • Depreciation is based on the acquisition value. • Companies may choose the straight method or declining method.

  25. Corporate TaxationTaxable Income • Deductible expenses shall fulfill the following criteria: • shall relate to the business activity. • shall be recorded in the book entries of the year which deduction is claimed. • shall be supported by all necessary documentation in line with the law.

  26. Corporate TaxationTax Losses • Tax losses may be carried forward for five (5) consecutive years in order to be set off against income of that time period. • Corporate tax losses generated in another country maybe set off only against foreign source income. • All these losses comes from corporation’s books and records and are in full compliance with the “code of books and records”.

  27. Capital Gains TaxationShares of Listed Companies • For shares of companies listed into the stock market acquired from January 1, 2011 onwards: • 20% withholding tax on capital gain for the short-term (until 3 months) trade of shares • 10% withholding tax on capital gain for the medium-term (within 12 months) trade of shares • There is no capital gain tax in case of more than 12 months trade of shares

  28. Capital Gains TaxationShares of Non-Listed Companies • Capital Gains • generally regarded as ordinary income • taxed at 20% for corporations and partnerships • Capital Gains = Selling Price - Book Value. • Gains from the sale of parts of a limited liability company are taxed at a flat rate of 20%

  29. Value-Added Tax

  30. Real Estate TaxationFor Individuals • For years 2010, 2011 and 2012, for property value exceeding € 5,000,000 a 2% tax rate is imposed.

  31. Real Estate TaxationFor Legal Entities • Tax Rate of 0.6% • value no less than 1€/m2. • Tax Rate of 0.3% or 0.1% • depending on non-profit making character of the entity and the use of property. • For years 2010, 2011 and 2012 • a 0.033% tax is imposed on taxable real estate for self-used real estate of hotel enterprises • without applying the minimum limit of 1€/m2.

  32. Real Estate TaxationTransfer Tax • This transfer tax is applicable both to individuals and to legal entities. • Old buildings • All real estate transfers are subject to tax at a rate of 8% until € 20,000 - part of sales price and 10% for the excess amount. • New buildings • Only VAT applicable

  33. Inheritance and Gift Taxation

  34. Other TaxationTax on Transfer of Shares • Listed Shares • Listed shares on the Athens stock exchange are subject to 0.15% tax out the transfer value until the end of 2010. • Non-listed Shares • Transfers of non-listed shares are subject to 5% income tax to the relevant transfer value. This transfer value cannot be lower the result of a calculation according a decision issued by Ministry of Finance.

  35. Other TaxationDividends, Royalties & Interest • Dividends • 40% tax rate • Royalties & Interest • Greece enjoys a transitional regime • Withholding tax on interest and royalty payments effected between associated EU companies • Tax rate of 5% until June 30, 2013 • In case the EC Directive and DTA do not apply, withholding tax on • Royalties is 20% • Interest is 40% • 25% on remunerations or royalties paid to foreign companies with no permanent establishment in Greece as well as to foreign companies that undertake studies and designs etc. in Greece

  36. Other Taxation • Service Fees • 20% withholding tax • Tax on TV Advertisements • 20% tax rate • Compensation for the interruption of the employment relationship are subject to income taxation as follows:

  37. Audit Requirements • The companies subject to audit are the companies that for two years in a row fulfil two (2) of the following criteria • Total assets > €2,500,000 • Annual revenue > €5,000,000 • Employees > 50 (average number) • during the accounting year

  38. Thank you If you need any further information, please contact: info@prooptikiltd.gr

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