The Greek authorities have reduced the taxation rate of dividends from 10% to 5% effective from 1 January 2020 onwards. As a result, the percentage of the withholding tax on dividends has been reduced to 5% as well. Certain clarifications to Article 24 of the Law in question (4646/2019) have recently been issued.
Below is an overview analysis of the application of the new reduced tax rate and withholding tax rate (5%) in certain cases of profit distribution
Profits of S.A., Ltd and private companies
In those type of companies, the decision from the authorized director (or B.o.D) concerning the distribution of the profits must be taken after the 1 January 2020 ( for the distribution of 2019 profits ). Alternatively, if this decision is taken before that date, the tax rate remains at 10%.
In case that interim dividends or temporary distributions have been paid within 2019 where the 10% withholding tax was applied, the reduced tax rate is finally applied and the difference will be refunded as an unduly paid amount.
Distributed profits of General or Limited partnership companies and similar holding or joint venture entities
The above type of entities must keep double entry books. Additionally, for the new rates to be applicable, dividends must be cashed out after 1 January 2020.
Income from dividends of foreign origin
In cases of income from dividends sourced from outside Greece, the reduced rate ( 5% ) is applied in case that the decision of the right to be collected is taken after 1 January 2020. In case such date is not easy to determine, the collection date of the relevant amount will be used.
Kostas Sakkas, Chief Accountant, Eurofast Athens