Private Company | IKE - Frequently Asked Questions
The Corporate Tax of the Private Company
Companies resident in Greece are subject to corporate income tax on their worldwide income from all sources. Non-resident companies that have a permanent establishment in Greece are subject to corporate income tax on income derived through the permanent establishment. Companies are deemed to be resident if they are incorporated in Greece (the registered office is in Greece) or have their place of effective management in Greece. The fiscal year usually runs from 1 January to 31 December.
However, all companies maintaining a double- entry accounting system can choose to have the fiscal year ending on 30 June. Also, if a Greek company is a subsidiary of a foreign parent company with the parent company holding a minimum of 50% of the share capital, the Greek company can choose to align the fiscal year with that of the foreign parent company.
The tax rate applicable to undistributed profits is 24% for all forms of companies including Public Limited Companies (SA), Limited Liability companies (EPE) and branches of foreign companies.
Distributed profits are subject to an additional income tax of 5%. Dividends paid to parent companies based in European countries are exempted from such dividend tax if certain conditions are met.
Branches Corporate Tax
The calculation of tax on the taxable profits of branch offices of international companies is the same as the tax applicable to Greek companies in general. The tax is calculated at 24% of net taxable income. There is no branch remittance tax in Greece.
Value Added Tax Rates - VAT in Greece
VAT is imposed on the sale of goods and supply of services at a standard rate of 24% which applies to the majority of goods and services. For specific categories of goods and services a reduced rate of 13% and an extra reduced rate of 6% applies. The above rates are reduced by 30% for sales to a few specific remote Aegean islands but this reduction is expected to be abolished in the near future
What are the rates of Corporate Tax?
Current Corporate Tax rates in Greece are:
Type of Business Tax Rate
Societe Anonyme SA; EPE; IKE, branches 24%
Other corporations OE, EE 24%
How much is the Divident Tax in Greece?
The Divident Tax is 5% on the dividents’ amount.
Except of the Corporate tax, are there any other taxes are imposed?
Yes, a Private Company must pay every year a Lump Sum Tax ( Telos Epitidevmatos) of 1000 euros.
For the first year only, the company will pay a percentage of the lump sum tax depending on the date you establish the company.
What is the way that the tax is calculated for the Private Company?
The tax is calculated on the net profit of the company. The corporate tax rate on the net profit are 24%. Every year you have to pre calculate and pay a tax advance of 50% for the first 3 years and then 100% for the years onwards.
The equation for the calculation of the tax is the following:
regular tax 24% on the net profits
(+) 50% ( for first years) advance payment of the next year’s tax
(- ) the advance payment of previous year tax
In which period of year the Private Company must pay its taxes ( if any )?
The tax payment starts on the end of July once the Corporate Tax Returns is submitted ; then the company can either pay all the tax at once or in 6 monthly instalments from July and the months after.
What if we establish our Holding Company in Greece?
There is no tax withholding if a double treaty provides so and also if tax relief is available under the EU Parent – Subsidiary Directive (90/435/EEC – EU holding company has more than 10% participation in the Greek subsidiary for at least two consecutive years). Dividends received by Greek parent companies from subsidiaries established in other EU member states (has more than 10% participation in the EU subsidiary
for at least two consecutive years) are exempt from tax at the shareholder level to the extent that they are registered under a tax free reserve account. If these dividends are subsequently distributed or capitalized a 15% tax is applicable.
What if we have a group of companies and we make cross border transactions among them?
Greece follows internationally recognised Transfer Pricing (TP) rules where cross-border trading and financial transactions between affiliated entities have to be conducted on an arm’s length basis. The price and terms should be the same as if the transactions had been between completely independent parties.
The arms length principle applies to all transactions made between a Greek company / branch and its foreign affiliates. It is wise to be ready at all times to satisfy the tax authorities on pricing policies involving both ways of trading. For management fees and royalties above the rates accepted by the tax authorities special approval by the Ministry of Finance is required. Companies with inter group transactions, over and above the limits of the transactions as specified by the ministry of finance, are required to file a return for all intergroup transactions and also the method used to account for these transactions. They are also obliged to have a documentary file proving the method used.
What is the Income / Employment tax in Greece?
for an individual is resident in Greece then they are subject to Greek tax laws. An individual is resident in Greece if they reside in Greece or has a habitual abode in the country. An abode will be regarded as ‘habitual’ if the taxpayer stays in Greece more than 183 days within a calendar year.
We would advise any new entrant to Greece or person who spends time working in Greece to take professional advice to determine whether they are Greece tax resident.
Current Personal Income Tax rates in Greece are:
Band of income (Euro) Tax rate (%)
30,001- 40,000 36%
(NB: rates are for the tax year 2020)
How much is the National Security rates for the employees?
Employers and employees also have to pay Greek social security, which is called National Insurance rates are currently about 25% for the employer and 16% for the employee on their gross salary.
It is the employers’ legal responsibility to pay over employee’s tax and social security deductions to the Greek tax authorities.
For other EU nationals exceptions may be given for a limited period of time provided they can prove they are registered at home.
Accounting - Bookkeeping Obligations of a Private company, once incorporated
Since the Business registration of the new company, a wide range of tax- accounting obligations runs in certain time periods. -We provide several packages of Tax- Accounting Compliance depending on the needs of each company.
Recording of other transactions in accordance with Greek statutory regulations, on the basis of documentation & information provided by the Company
Preparation of the monthly trial balance
Preparation of the general ledgers printouts
Monthly cash, credit cards and bank reconciliation
Insurance Policies amortization
Preparing depreciation/amortization tables both for accounting as well as for tax purposes
Preparing obligatory reports for the Central Statistical Office, National Bank and other
• Be readily available to answer questions from the staff and Accounting Unit as needed
• Other accounting/bookkeeping duties as needed
Year-end closing of the Company’s accounting books
Preparation of the closing journal entries, recording of any year-end provisions & accruals, reconciliation of year-end accounts to general ledger & supporting data
Preparation & sign off (as accountants) of the financial statements & related notes
Tax Obligations of a Private Company, once incorporated
Tax Filings for withholding taxes; Value Added Tax Filing (due monthly) Corporation Tax Filing (due annually); Accounts Filing (due Annually)
Ongoing tax compliance services
Preparation, sign off & submission of the Company’s annual income tax return
Preparation, sign off & submission of monthly & annual VAT, Intrastat & EC Sales Listing returns
Preparation, sign off & submission of the Company’s annual suppliers/client listings
Preparation, sign off & submission of the free lancers & third parties’ fees withholding tax returns monthly & annually
Preparation & filing with the tax authorities of the monthly various withholding tax returns
Preparation & filing with the tax authorities of the quarterly statement of contracts
Annual Financial Statements – Publications To General Commercial Registry Specialised Reporting for shareholders, for investors, for banks etc
Payroll Obligations if a Private Company employs staff
Monthly calculation of the gross and net salaries payable to the employees, on the basis of figures provided by the Company;
– Calculation of the amounts due for personal income tax, social and health security contributions;
– Preparation and submission of all the required data to the Social Security authorities & filing of notifications to the competent authorities regarding the contributions payable as required;
– File keeping of all documentation, related to the provision of payroll services;
– Administration of ERGANI reporting (hiring, termination of employment, amendment working hours, overtime, amendment of salary, annual leave);
– Preparation of employees’ monthly and annually pay slips in official format;
– Computation of employees’ indemnity upon dismissal;
– Monitoring of vacation days entitlement of the employees as well as the remaining untaken days per year, according to the figures provided by the company. It has to be noted though that this service is not and does not replace the update of the book leave of the company which remains under your responsibility;
– Preparation of the payroll monthly withholding tax returns.
Financial and Audit Obligations is applicable
Preparation of monthly, quarterly, and annual reports
• Preparation of schedules requested by the auditors as well as any other audit process support requested
• Preparation of year-end balance sheet, revenue and expenditure and funds flow reports for auditor
• Provide audit process support; research and resolve issues as they arise
• Meet with auditor as needed
• Assistance in budget preparation and analysis
Do you want more information about the Private Company ? Contact us!
Here are the services that we provide!
There are several ways of doing business in Greece even though the most famous one it the Greek limited liability company, called Private Company (IKE)!We can provide you with the necessary information in order to choose the right entity for your business needs.There are pros and cons in every occasion.
We are here to help you choose wisely the entity that suits to your business needs. Concentrate to your business growth and allow us to take good care of your company incorporation and much more!