Tax reforms in Greece

The Hellenic Parliament, with the purpose of meeting the financial targets of the third bailout program, adopted the new Laws 4387/2016 and 4389/2016 by virtue of which significant changes have been introduced to the Hellenic Tax Regime.

A. Income Tax: Employment, Pension and Individual Business Activity
The new framework has increased tax rates on income from employment, pensions and individual business activity and amended the respective income scales as following:

table 1

The tax which arises from the application of the above tax rates will be decreased by 1,900 euro for a taxpayer without children, provided that the taxable income from salaries and pensions does not exceed the amount of 20,000 euro per year. The decrease of the tax amounts up to 1,950 euro for a taxpayer with one dependent child, 2,000 euro with two dependent children and 2,100 euro with three dependent children. If the payable tax amount is lesser than the above amounts, then the decrease is limited to the respective tax amount.

For taxable income from employment and pensions that are above 20,000 euro, the amount of the decrease is limited to 10 euro per 1000 euro taxable income from employment and pensions.
The above tax decrease is not applicable to taxpayers who have income from individual business activity.
Finally, the above tax rates and tax decreases apply also to the income from individual agricultural business.
The above tax rates are applicable on income earned from 1.1.2016 onwards.

B. Dividends
The withholding tax rate on income from dividends has been increased from 10% to 15%. The new tax rate is applicable for income generated from 1.1.2017 and onwards.

C. Immovable Property
The tax rates on the income from immovable property and respective scales have also been amended, as follows:

table 2

The above tax rates are applicable on income earned from 1.1.2016 and onwards.

D. Special Solidarity Contribution
New Special Solidarity Contribution is imposed on individuals with income exceeding the amount of 12,000 euro per year. In order for the contribution obligation to be imposed, the total income is taken into account as this arises from the summation of the income from employment and pension, as well as from freelance services, capital, capital transfer gains, taxable or tax exempted, real or presumptive.
Exempted from this Special Solidarity Contribution are blind people as well as disabled persons with at least 80% disability. Also, the severance payment upon the termination of an employment agreement and the long-term unemployed persons are exempted from this Contribution.
The Special Solidarity Contribution which is imposed on the total net income, as mentioned above, is calculated as follows:
table 3

The above tax rates are applicable on income earned from 1.1.2016 and onwards.

E. Persons with single entry books
The profits gained within the fiscal year 2016 and onwards from business activity by legal persons (mainly O.E., E.E., associations etc) which keep single entry books are now taxed with a tax rate of 29%.

The Standard VAT Rate has been increased from 23% to 24% and is applicable as from 01.06.2016. Accordingly, discounted applicable VAT for Aegean Islands has been increased from 16% to 17%. The discounted applicable VAT has been fully abolished for Thira, Mykonos, Naxos, Paros, Rodos, Skiathos, as from 1.10.2015 and for the Islands Syros, Thasos, Andros, Tinos, Karpathos, Milos, Skyros, Alonnisos, Kea, Antiparos and Sifnos, as from 1.6.2016.

G. New duties and consumption taxes are introduced
1.“Accommodation Tax” is imposed per daily use of the accommodation place and varies based on the category and type of accommodation from 0.50€ to 4.00 €, applicable as from 1.1.2018.
2.“Pay-TV Duty” imposed on Pay TV Subscribers equal to 10% of the total amount of the monthly bill, applicable as from 1.6.2016.
3.“Fixed Telephone Subscriber Duty” imposed on Fixed Telephony and Broadband Subscribers equal to 5% of the total amount of the monthly bill, applicable as from 1.1.2017.
4. “Consumption Tax” will be imposed on a) electronical liquids for electronic cigarettes equal to 0.10€/ml, b) different types of coffee ranging from 2€ to 4€ per net kg as from 1.1.2017.

H. Gambling
The Hellenic Government shall participate by 35% (up from 30%) in the Income from Gambling activities calculated on the gross profit from the exploitation of the licensed holders’ activities, as from 1.1.2016.

I. Tax on beer
The 3% municipal tax on beer which applied on imports, intracommunity acquisitions and domestic sales of beer has been abolished. However, the excise duty rate on beer has been increased.

J. Annual Real Estate Property Tax (ENFIA)
Significant changes have been introduced in order to increase the overall annual taxation of the real estate properties in Greece, applicable as from 1st of January 2016.

The Government has expressed the opinion that the new changes to be applied will result in social fairness; nevertheless it is a matter of time to see the real effects of these on the economically lower and middle social classes.

Maria Sarantopoulou
Tax and Legal Advisor
Eurofast Greece