• Overview
  • Basic Principles
  • Imputed Versus Actual Income
  • Determination Of The Income Tax Liability
  • Deductible Expenses
  • Tax Credits
  • Income Tax Scale/Tax Rates
  • Return Filing And Payment Procedures
  • Illustration Of Tax Calculation
  • Income Tax Withholdings On Salary
  • Professional Income
  • Fringe Benefits
  • Investment Income
  • Profit Sharing
  • Dividends
  • Interest
  • Mutual Funds
  • Capital Gains Tax
  • Inheritance and Donations (Transfer) Tax
  • Foreign Employees


Persons permanently resident (domiciled) in Greece are liable to income tax in Greece on their worldwide income, whether remitted to Greece or not. Where tax has already been paid outside Greece on non-Greek source income, it may be deducted up to the amount of tax payable in Greece on the same income.

Non-residents and persons who are temporarily resident in Greece are taxed only on Greek source income.

The determination of whether an individual is a permanent resident or not depends on the individual's intention to adopt Greece as his place of permanent residence. Such intent must be apparent from objective evidence such as the acquisition of a house with the intention of adopting Greece as the country of domicile, etc.


Taxable income is classified into six categories (rental, investment, employment, agricultural, business and professional). Income from each source is separately computed and individuals are subject to tax on the aggregate of income from all categories.

Married persons are subject to tax separately on their own income but are required to file a joint tax return.

Individuals are subject to income tax at progressive rates, which commence at 0% and increase to a maximum rate of 45% on taxable income in excess of Drs 15 000 000. For foreign residents, the progressive income tax rates commence at 5% and not 0%. Where tax is paid in one lump sum (including tax withheld at source on salary income) a 5% discount is granted, reducing the overall effective tax rate.


The legal provisions designed to prevent tax evasion specify that individuals are taxed on the higher of their declared income or imputed income.

Income is imputed on the basis of living expenditure or acquisition of certain assets. The main factors considered in imputing income from living expenses or acquisitions are the engine size of owned motor vehicles, the cost of maintaining household staff, the amounts of loans granted by the individual to EPE companies or partnerships in which there is a participation, the purchase of a business or acquisition of parts in a partnership or shares in an AE company, the participation in a capital increase in an EPE or partnership, the repayment of loans or credit, the purchase of real estate, the construction of buildings, the cost of operating pleasure boats, rental paid for a summer home exceeding 120 sq.m. in size, the deemed rental income from use of own summer home exceeding 120 sq.m. in size etc.

Income thus imputed will constitute taxable income if it is more than 20% higher than declared family income (i.e. that of the taxpayer, his spouse and his dependants), unless there is evidence that the difference between the imputed income and the declared income is covered by borrowing, or savings that have been taxed or exempted from tax in the past, from gifts which have been subjected to or exempted from gift tax, from income taxed abroad and imported to Greece, etc.


Certain personal deductions and tax credits are available to permanent and temporary residents in computing their taxable income. These deductions and credits are not available to persons who are non-resident.

Deductible Expenses

The following deductions comprising expenses of a personal nature are allowed on condition that appropriate receipts exist:

- Rent deduction equal to 30% of the annual rent paid for the taxpayer's principal residence up to Drs 240 000 per year and not exceeding 15% of declared income. For the use of owner occupied homes, an amount equal to the imputed income arising from the ownership of up to 200 square metres of the home is exempted from the imputed rental income arising from such use.

- Life insurance premiums, limited to a maximum of Drs 200 000 per annum for both spouses but not exceeding 4% of declared family income.

- Donations to the State, municipalities and certain other local institutions (religious, philanthropic, educational etc.). However, in certain cases, donations are deductible only to the extent of 10% of taxable income. In order to be recognised, donations exceeding Drs 80 000 must generally be deposited with the Fund of Deposits and Loans.

- Medical expenses of the taxpayer and his dependants.

- Obligatory contributions to social insurance funds and the stamp duty on employment income.

- 30% of legal fees paid up to Drs 200 000 but not exceeding 10% of declared income.

- Rent deduction of 30% up to the amount of Drs 120 000 for the accommodation of children attending courses in approved schools (universities etc.) in Greece and not exceeding 10% of the declared income.

- 40% of the amount paid for each child or for the taxpayer for home tuition, up to a maximum of Drs 150 000.

- All the interest paid on mortgaged loans from banks or other credit institutions for the acquisition of the taxpayer's primary residence. This deduction is also available where the mortgage is provided by insurance companies to their employees. Interest on debts to the State in connection with inheritances or donations may be deducted from taxable income subject to a maximum of 25% of aggregate family income.

In addition to the expenses listed above, there is a further 30% deduction on all other family purchases of goods and services, except for expenses that relate to food, beverages, fuel, water rates, sewage transportation, power, insurance, circulation tax and also expenses which are used to assess deemed income (i.e. car purchases etc.). This deduction cannot exceed Drs 300 000 for both spouses and is apportioned between the two spouses in accordance with their level of income. The tax saving itself cannot exceed 15% of the total value of this deduction (i.e. Drs 45 000 for both spouses). Appropriate expense receipts are required.

Additional deductions are available where the taxpayer and/or his dependants are disabled.

Expenses incurred by individuals in connection with the earning of investment income (brokerage, management fees, etc.) are not deductible.

An individual who earns only employment income may not deduct expenses such as depreciation on motor cars, home computers etc.

Tax Credits

A tax credit is given to the parent with one or more children in his/her care. Thus, the following amounts are deducted from the tax payable in respect of each child:

Number of children                       Tax deducted per child

1 or 2                                   Drs          20 000
3                                        Drs          30 000
4 or more                                Drs          40 000

For taxpayers employed or residing in border areas, the tax credits are increased by Drs 10 000 for each child. Unused credits may be transferred to the spouse.

Income Tax Scale/Tax Rates

The income tax scale and corresponding tax rates are as follows (amounts in drachmae):

Income              Tax        Tax in       Aggregate      Aggregate 
                    rate       bracket      income         tax

First 1 000 000       0%             0      1 000 000             0
Next  1 500 000       5%        75 000      2 500 000        75 000
Next  1 500 000      15%       225 000      4 000 000       300 000
Next  3 000 000      30%       900 000      7 000 000     1 200 000
Next  8 000 000      40%     3 200 000     15 000 000     4 400 000
Excess               45%

For salary income, the first bracket is increased to Drs 1 300 000 (with a corresponding decrease in the second bracket).

There is also a tax which is computed at the rate of 3% or 6% on the gross income from real estate. The 6% rate applies where the real estate in question is used for residential purposes and exceeds 300 square metres in size. This tax cannot exceed the primary tax payable on such income. Foreign residents must also pay tax at the rate of 5% on the first Drs 1 000 000 of their income.

Salaries, wages and severance payments are subject to stamp duty at the rate of 1.2% which is equally shared by the employer and the employee.

Return Filing and Payment Procedures

The tax year for individuals ends on 31 December and they are generally required to file an income tax return by 2 March of each year. Individuals who declare employment or pension income may file the tax return by 17 March of every year and those declaring income from commercial or industrial activities (under certain circumstances) or income from abroad or non-residents declaring Greek source income may file the tax return by 15 April.

Payments of income tax become due when the assessment is issued by the authorities. The income tax may be paid in three equal instalments, the first of which is due one month following the assessment of the income tax. If the tax due following the assessment is paid in one lump-sum, then a 5% discount is available. If the assessment is received later than October of that year, then the lump sum payment only results in a 3% discount.

The tax assessment will include an amount equal to 50% of the relevant year's tax payable as an advance against the following year's tax, except where the income declared has tax withheld at source (e.g. salaries) and/or the income arises from the self-use of residential real estate.


Personal Tax Calculation for Income earned in 1995

Assumptions: Married salaried resident living in Athens with two children whose spouse has no taxable income and who is a home owner with qualifying annual interest of Drs 1 350 000 on a mortgaged bank loan. Monthly salary of Drs 1 000 000. No tax has been withheld at source.

Gross annual salary
   (Drs 1 000 000 x 14* )                       Drs   14 000 000
Less Stamp Duty
   (Drs 14 000 000 x 0.6%)                               (84 000)
Less Social Security Contributions
   (Drs 446 750**  x 15.9% x 14*)                       (994 466)

Taxable salary income                                 12 921 534
Less deduction (mortgage loan interest)               (1 350 000)

Taxable income                                  Drs   11 571 534

Calculation of income tax payable
   Tax on Drs 7 000 000 of employment income     Drs   1 185 000
   Tax on Drs 4 571 534 x 40%                          1 828 614
Less Child Tax Credits (Drs 20 000 x 2)                  (40 000)
Income Tax Payable (by instalments)              Drs   2 973 614
Less 5% discount if paid in one lump sum                 148 681
Net Income Tax Payable (in one lump sum)***      Drs   2 824 933
* - Salaries are paid 14 times per year.
** - Maximum monthly ceiling for purposes of calculating contributions. This ceiling is not valid for employees insured after 1 January 1993.
*** - This final tax also applies if payroll tax had been withheld at source (which would reduce net tax payable) and where the final amount assessed after filing of tax return is paid in one lump sum.


Employers are required to withhold income tax from salaries, wages and other remuneration paid to their employees. The amounts withheld are determined in accordance with the scale of withholding rates applicable to individuals, except when payments are of a non-recurring nature (e.g. bonuses). In this case, tax is generally withheld at the rate of 15%. At the end of the year the employer is obliged to prepare an annual return of amounts paid and taxes withheld.

Amounts withheld are accounted for by the employer to the tax authorities on a quarterly basis except for businesses employing over 500 persons, where the tax withheld must be accounted for monthly. The withholding tax is reduced by 10% for a married person (no children), by 15% for one dependent child and up to 55% for four or more dependent children. The difference between the amount withheld and the amount determined in accordance with the scale of rates must be accounted for by the employee at tax return time.

Tax is withheld on employment income in accordance with the following table, which, in addition to the reductions in respect of dependants outlined above, are decreased by the 5% discount:

           Annual Taxable Income                          Withholding

Up to      1 600 000                                      0.0%
from       1 600 001    to    2 000 000                   2.0%
from       2 000 001    to    2 500 000                   3.0%
from       2 500 001    to    3 000 000                   4.5%
from       3 000 001    to    3 500 000                   6.0%
from       3 500 001    to    4 500 000                   8.0%
from       4 500 001    to    5 500 000                  12.0%
from       5 500 001    to    7 000 000                  16.0%
from       7 000 001    to   10 000 000                  20.0%
from      10 000 001    to   15 000 000                  24.0%
from      15 000 001    and over                         30.0%

By 15 February of each year the employer is required to issue to each employee a statement of the amounts paid and tax withheld, a copy of which must be filed with the tax authorities by 31 March together with the return listing all employees and detailing for each employee amounts paid and tax withheld during the year.

No income tax is withheld on any remuneration paid to administrators of an EPE and on fees paid to members of the Board of Directors of an AE if such payments are made from corporate profits that have been taxed in the hands of the corporation. On the imputed remuneration of an Administrator/Partner, tax will be withheld at the rate of 15%. In the case of fees (other than from taxed profits or fees which are considered employment income) paid to directors of AEs, taxes will be withheld at the rate of 15%, 35% or 40%, depending on the nature of such income (i.e. professional, investment or commercial) and depending on the nature of the company's issued shares. A withholding of 35% or 40% is considered a final tax.


Fees paid to freelance professionals are subject to a withholding tax at the rate of 15%.


Generally speaking, all fringe benefits per se are subject to income tax in Greece in the hands of the recipient employees. Reimbursement of expenses incurred by the employee for the purpose of carrying out assigned employment duties (such as travel and promotional expenses, etc.) should not, however, be deemed to be employment income. In any case, the exemption from income is conditional to the expense being evidenced by the appropriate tax document (i.e., receipt, invoice etc.) as required by the Code of Books and Records. Accordingly, general allowances paid to employees which are not supported by the appropriate tax record would in any case be deemed to be employment income, even if they are designated to cover expenses of the employee in carrying out his employment duties.


Investment income (e.g. interest on loans) is generally subject to a withholding tax of 20% with a few exceptions. The gross interest is taken into account in arriving at the tax liability and the 20% is merely used as an advance tax against the ultimate liability.

Profit Sharing

The distribution of corporate profits under employee profit sharing schemes is treated as employment income in the hands of the employees. It is thus subject to social security withholding, if applicable, but not to an income tax withholding (nor ultimate tax liability) since the underlying corporate tax will have been paid.


No dividend withholding tax is imposed, since distributions are made out of taxed corporate profits


A 15% tax is levied on interest earned by individuals from bank deposits in drachmae, from certain bonds and certain other interest bearing securities. This is a final tax and there is no further tax liability. Interest earned on government bonds, certain bonds issued by international institutions, treasury bills, deposits in foreign currency and for non-residents only, bank deposits in drachmae, remains free of tax. Where a double taxation treaty applies, the rate of withholding may be further reduced.

Mutual Funds

These entities are established under law 1969/1991 as amended. There are several tax exemptions provided by the law which benefit Mutual Funds and their unit holders, the most important being that gains earned by these entities on the sale of securities held by them are not taxed at the level of the entity nor upon distribution in the hands of the unit holders. Some payments made to mutual funds are subject to withholding tax, which extinguishes all further tax liability in the hands of the mutual fund and the fund holders (e.g. interest). Furthermore, the distribution of certain tax-free income (e.g. tax exempt interest), foreign source income and gains from the disposal of securities, is subject to withholding tax at the rate of 15% which extinguishes all further tax liability in the hands of the fund holders


Individuals are not subject to capital gains tax in Greece


Inheritance/donations (transfer) tax is based on the value of property acquired through inheritance or through the receipt of a gift. The tax is based on a graduated scale of rates which increases as the value of the property increases.

The rates also vary depending on the degree of relationship between the deceased or donor and the recipient of the property. Less tax is imposed on close family members than that imposed on distant relatives or unrelated persons. The tax rates range from 5% to 65%.

This tax applies to all property located in Greece as well as movable property located abroad owned by Greek citizens or foreign nationals permanently resident in Greece.

The recipient of an inheritance or donation is obliged to file a tax return within six months of the death of the legator or from the publication of the will or from the receipt of a donation.


Foreign nationals employed in Greece who are temporary residents are subject to tax only on income from a Greek source, including income from services rendered in Greece. Unless otherwise specified in a tax treaty with the country of which the individual is a resident, such income will be taxed in the same manner as that of a person domiciled in Greece.

The tax treaties usually dictate that the resident of another country will not be subject to income tax in Greece where the following are true:

- The individual is present in Greece for 183 days or less in any tax year.

- The remuneration is received from an employer who is not a resident of Greece.

- The remuneration is not deducted as an expense of a permanent establishment which the employer has in Greece.

Income from employment includes all receipts of cash as well as benefits in kind received in connection with services rendered to the employer. However, where the benefit received by an employee is in effect a reimbursement of an expense incurred by the employee for the purpose of enabling him to carry on his work, it does not constitute income of the employee as long as the appropriate tax records for the expenses have been obtained. For expatriate employees, it has been possible for items such as company provided housing, car and school fees etc. to be non-taxable reimbursements given that they offset losses of the expatriate due to relocation.

For foreign employees not residing permanently in Greece and for Greek employees with a permanent residence outside Greece, all of whom are employed by Law 89 companies and certain shipping companies, the determinants of imputed annual expenditures do not include the imputed car expenditure or rent.

For further information contact Marios T. Kyriacou or Angela Iliadis, KPMG Peat Marwick Kyriacou, Athens, Tel: +301 77 52 001; Fax: +301 77 04 182 or enter text search 'KPMG Peat Marwick Kyriacou' and 'Business Monitor'.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.