Changes in Income Tax and VAT in Greece

Greece/August 2015

Following the mutual agreement between the Eurozone and Greece for opening the negotiations in regards to a possible future agreement on a new ESM programme, on 16th of July the Greek government adopted the bill 4334/2015. The law includes the first set of economic measures requested from the Institutions as part of rebuilding trust. The financial measures resulted in significant changes in both the Income Taxation of Physical and Legal Entities as well as in the Value Added Tax (VAT).

The Bill introduces an extension of the maximum VAT rate of 23% on all provided services. Exceptions include the supply of theatrical shows (6%), hotel services (13%) and home care services (13%). As a result, the services that previously enjoyed a reduced rate (restaurant services, clinics, diagnostic centers, and cinema) have become more expensive for consumers.

The supply of goods which remains observing the deducted rate of 13%, as currently valid, includes the supply of raw and mainly unprocessed food and products for the disabled. Medicines receive a special treatment and the supply there of will be charged with the 6% VAT rate. Categories that do not belong to the above-mentioned types of goods will be charged with 23% VAT rate.

The favorable tax rates (30% below the normal rates) applied in the Aegean islands have now been abolished, with certain exceptions that will be announced by a Ministerial Decision.

The financial institutions will proceed to a direct deduction of VAT on transactions and will issue certificates to interested parties.

The tax rates for S.A.’s, Ltd.’s and PCC companies (Private Capital Companies) as well as for every company maintaining double-entry books, will be 29% applicable from 01.01.2015. The advance tax rate on legal persons will be 100% applicable from 01.01.2015. Temporary exceptions include partnerships, both general and limited as well as NGOs. The advance tax rate for these types of companies for 2015 will be 75%. The rate of 100% will apply from 01.01.2016.

From 01.01.2015 the luxury tax for swimming pools, private cars over 2500 cc, private helicopters, airplanes and yachts longer than 5 meters (excluding sailing boats and fishing-related boats) was increased to 13%.

Additionally, the tax rate on car insurance premiums increased to 15% from the 10% which was in force previously.

Finally, the solidarity contribution scale based on the annual personal income, changed to the following:

The new tax measures described above impact both individuals and enterprises. As a result of the amendments, companies are forced to reconsider future cash flows and to redesign their administrative and economic strategy to match the new conditions.

Maria Anastasiou
maria.anastasiou@eurofast .eu
Eurofast Global, Athens office
+30 210 8257720-22