Greece has a well-structured system of taxation and social security contributions that applies to both local and foreign employees working within the country. Understanding these obligations is crucial for anyone planning to work in Greece, whether as an expatriate or a returning Greek national. This guide will walk you through the key aspects of taxes and social security for employees in Greece, including income tax rates, social security contributions, deductions, and compliance requirements.
1. Income Tax Rates in Greece
Greece operates a progressive income tax system, meaning that the more you earn, the higher the percentage of your income you pay in taxes. As of 2023, the income tax brackets are as follows:
Tax Brackets for Individuals (Resident Taxpayers):
- Up to €10,000 : 9%
- €10,001 – €20,000 : 22%
- €20,001 – €30,000 : 28%
- €30,001 – €40,000 : 36%
- Above €40,000 : 44%
Additional Solidarity Contribution:
In addition to regular income tax, Greece imposes a solidarity contribution surcharge on higher-income earners. The rates for this surcharge are:
- €20,001 – €30,000 : 2.2%
- €30,001 – €40,000 : 5%
- €40,001 – €65,000 : 6.5%
- €65,001 – €220,000 : 7.8%
- Above €220,000 : 9%
These rates apply to resident taxpayers, who are taxed on their worldwide income. Non-residents are only taxed on income earned within Greece.
2. Social Security Contributions
Social security contributions in Greece are mandatory for all employees and employers. These contributions fund pensions, healthcare, unemployment benefits, and other welfare programs. Both the employee and employer share the burden of these payments.
Employee Contributions:
Employees contribute approximately 13.33% of their gross salary to social security. This percentage may vary slightly depending on specific circumstances, such as whether the employee is covered by a special fund (e.g., for lawyers, doctors, or engineers).
Employer Contributions:
Employers are responsible for contributing around 24.56% of the employee’s gross salary to social security. This rate also varies based on the industry and any applicable collective bargaining agreements.
Ceiling on Contributions:
There is a cap on the amount of income subject to social security contributions, known as the “maximum insurable earnings.” For 2023, this ceiling is set at €6,500 per month .
3. Tax Deductions and Allowances
Greek tax law provides several deductions and allowances to reduce taxable income. Some of the most common include:
Personal Tax-Free Allowance:
All taxpayers benefit from a basic tax-free allowance of €12,000 annually. This means that the first €12,000 of your income is not subject to income tax.
Family Allowances:
If you have dependents, additional tax-free allowances may apply:
- First child : €1,500
- Second child : €3,000
- Third child or more : €4,000
Deductions for Expenses:
Certain expenses can be deducted from taxable income, including:
- Donations to charities : Up to 10% of taxable income.
- Medical expenses : A portion of medical costs exceeding €500 annually.
- Home loans : Interest paid on primary residence mortgages.
- Insurance premiums : Premiums for life, health, and accident insurance policies.
4. Filing Taxes in Greece
Employees in Greece must file an annual tax return, even if their employer withholds taxes via payroll deductions. Here’s what you need to know about the process:
Tax Year and Deadlines:
- The Greek tax year runs from January 1 to December 31.
- Tax returns must typically be filed by June 30 of the following year.
How to File:
Most taxpayers use the online platform Taxisnet , managed by the Independent Authority for Public Revenue (AADE). To access Taxisnet, you’ll need a username and password, which can be obtained from a local tax office.
Documents Required:
When filing your tax return, ensure you have the following documents ready:
- Proof of income (e.g., payslips, P60 forms).
- Details of deductible expenses (e.g., receipts for medical bills, donations).
- Information about any foreign income or assets, if applicable.
5. Special Considerations for Expats
Foreign employees working in Greece should be aware of certain rules that may affect their tax status:
Residency Status:
- Resident Taxpayer : You are considered a resident if you spend more than 183 days in Greece during a calendar year. Residents are taxed on their global income.
- Non-Resident Taxpayer : If you spend fewer than 183 days in Greece, you are only taxed on income sourced within the country.
Double Taxation Treaties:
Greece has double taxation treaties with over 60 countries to prevent individuals from being taxed twice on the same income. If you’re a non-resident earning income in Greece, consult the relevant treaty to determine your obligations.
Special Regime for High Earners:
To attract skilled professionals and investors, Greece offers a favorable tax regime for certain categories of high-income earners, such as executives transferred to Greece by multinational companies. Under this scheme, qualifying individuals may benefit from a flat tax rate of €100,000 annually on their foreign-sourced income for up to 15 years.
6. Compliance and Penalties
Failing to comply with Greek tax laws can result in significant penalties. Key points to keep in mind include:
Late Filing Fees:
If you miss the June 30 deadline, you may incur fines ranging from €200 to €1,000, depending on the severity of the delay.
Underpayment Penalties:
If your tax return underestimates your liability, you could face interest charges on the unpaid amount, calculated at a rate determined annually by the government.
Audits:
The Greek tax authorities conduct random audits to verify compliance. Keeping accurate records of your income, expenses, and supporting documentation is essential to avoid issues.
7. Healthcare and Social Benefits
Contributions to social security entitle employees to various benefits, including:
Healthcare Coverage:
All employees covered by Greek social security are entitled to public healthcare services through the National Organization for Healthcare Services Provision (EOPYY). Additional private insurance options are available for those seeking enhanced coverage.
Pensions:
Social security contributions build toward retirement benefits, which are calculated based on years of service and average earnings.
Unemployment Benefits:
Eligible employees who lose their jobs involuntarily may qualify for unemployment assistance, provided they meet specific criteria, such as having contributed to social security for a minimum period.
