Greece operates a progressive income tax system, meaning that the tax rate increases as your income rises. Understanding how income taxes are calculated, along with available deductions and exemptions, is crucial for both residents and non-residents working or living in Greece. Below, we’ll break down the key aspects of Greece’s income tax system, including tax rates, deductions, and other important considerations.
1. Who Pays Income Tax in Greece?
Tax Residents:
- Individuals are considered tax residents of Greece if they spend more than 183 days per year in the country.
- Tax residents are taxed on their worldwide income , regardless of where it is earned.
Non-Tax Residents:
- Non-residents are only taxed on income generated within Greece (e.g., rental income from Greek properties or employment income earned while working in Greece).
2. Income Tax Rates in Greece (2023)
Greece uses a progressive tax system, with different tax brackets applying to various levels of income. The following table outlines the current income tax rates for individuals:
| Taxable Income (€) | Tax Rate (%) |
|---|---|
| Up to €10,000 | 9% |
| €10,001 – €20,000 | 22% |
| €20,001 – €30,000 | 28% |
| €30,001 – €40,000 | 36% |
| Over €40,000 | 44% |
Additional Solidarity Contribution (Special Tax):
In addition to the standard income tax, Greece imposes a solidarity contribution for higher-income earners. This is an extra tax designed to support social welfare programs. The solidarity contribution applies to taxable incomes exceeding €20,000 and is structured as follows:
| Taxable Income (€) | Solidarity Contribution (%) |
|---|---|
| €20,001 – €30,000 | 2.2% |
| €30,001 – €40,000 | 5% |
| €40,001 – €65,000 | 6.5% |
| €65,001 – €220,000 | 7.5% |
| Over €220,000 | 9% |
3. Social Security Contributions
In addition to income tax, employees and employers must contribute to Greece’s social security system. These contributions fund pensions, healthcare, and unemployment benefits.
Employee Contributions:
- Employees typically pay 13.33% of their gross salary toward social security.
- Employers contribute an additional 24.56% of the employee’s gross salary.
Self-Employed Individuals:
- Self-employed individuals must also pay social security contributions, which vary depending on their profession and income level.
4. Tax Deductions and Allowances
Greece offers several deductions and allowances to reduce taxable income. Here are some of the most common ones:
Personal Tax-Free Allowance:
- Every taxpayer is entitled to a personal tax-free allowance of €12,000 annually. This means the first €12,000 of your income is not subject to income tax.
Family Allowances:
- Additional tax-free allowances are available for dependents:
- Spouse: €2,000
- Each child: €2,000 (or €4,000 for children with disabilities)
Deductions for Expenses:
- Certain expenses can be deducted from your taxable income, including:
- Medical Expenses: Up to 10% of your annual income.
- Donations to Charities: Up to 10% of your annual income.
- Education Expenses: Tuition fees for yourself or dependents.
- Mortgage Interest Payments: Limited deductions for home loans.
Pension Contributions:
- Contributions to private pension plans are deductible up to certain limits.
Rental Income Deduction:
- If you earn rental income, you can deduct a flat rate of 40% of the gross rental amount as expenses before calculating tax.
5. Special Tax Regimes
Golden Visa Holders:
- Non-EU citizens who obtain residency through Greece’s Golden Visa program (by investing €250,000 in real estate) may benefit from favorable tax treatment.
- They are not automatically considered tax residents unless they meet the 183-day rule.
Non-Dom Regime (Foreign Nationals):
- Greece introduced a non-dom tax regime aimed at attracting wealthy foreign nationals. Under this scheme:
- Eligible individuals pay a flat annual fee of €100,000 (plus €20,000 for each dependent) instead of being taxed on their global income.
- This regime is valid for 15 years and requires proof of significant economic activity in Greece.
6. Capital Gains Tax
Capital gains derived from the sale of assets such as real estate or investments are subject to taxation in Greece.
Real Estate Sales:
- Profits from the sale of property held for less than five years are taxed at 15% .
- No capital gains tax applies if the property was owned for more than five years.
Investments:
- Gains from stocks, bonds, and mutual funds are taxed at 15% .
7. VAT (Value Added Tax)
While not directly related to income tax, VAT is an important part of Greece’s tax system. The standard VAT rate is 24% , but reduced rates apply to certain goods and services:
- 13% : Basic food items, water supply, hotel accommodations.
- 6% : Books, pharmaceuticals, and essential medical equipment.
8. Filing Deadlines and Payment
Filing Deadlines:
- Individual income tax returns must be filed annually by June 30 of the following year.
- For example, income earned in 2023 must be reported by June 30, 2024.
Payment Schedule:
- Taxes are typically paid in installments throughout the year, with deadlines set by the Greek tax authority (Independent Authority for Public Revenue, or AADE ).
9. Double Taxation Treaties
Greece has signed double taxation treaties with over 60 countries to prevent individuals from being taxed twice on the same income. If you’re a resident of Greece but earn income abroad, these treaties ensure that foreign taxes paid are credited against your Greek tax liability.
10. Penalties for Late Filing or Non-Compliance
Failure to file your tax return or pay taxes on time can result in penalties:
- Late Filing Penalty: A fine ranging from €100 to €1,000, depending on the severity of the delay.
- Interest on Unpaid Taxes: Monthly interest charges accrue on any outstanding tax debt.
