According to the Law 4387 / 2016 (Government Gazette A85 / 12.05.2016), which has been recently released by the Greek Parliament, changes have been made in the income taxation of both, natural and legal persons. Specifically:

• According to Article 112, for income  obtained in the fiscal year 2016 and onwards, the taxation rates for employees and pensioners have been amended in accordance to the following scale: 

Income  (Salary, Pension, Business activity) in €	Tax rate
0 - 20.000	22%
20.001 - 30.000	29%
30.001 - 40.000	37%
40.001 -	45%

In the two new first scales the tax liability becomes lighter, while the last two rates increase resulting in the proportional burden on income amounts over € 30.001,00.

On the tax amount, which arises according to the above scale, a tax reduction is calculated (Article 16 of the Income Tax Law). This reduction on income tax, which has replaced the tax-free amounts of the income tax scale of the previous years, is now linked to the number of dependent children of the taxpayer.

More specifically, for Income which has been obtained in the tax year 2016 and onwards, the tax which arises according to the tax scale for employees - pensioners becomes reduced by the following amount:

 

 ▪ of € 1.900 for the taxpayer without dependent children,

 ▪ of € 1.950 for the taxpayer with on (1) dependent child,

 ▪ of € 2.000 for the taxpayer with two (2) dependent children and 

 ▪ of € 2.100 for the taxpayer with three (3) dependent children and more.

This reduction applies when the income of employment or pension does not exceed the amount of € 20.000.

If the tax amount is less than the mentioned amounts, the tax reduction is limited to the amount of the proportionally tax (that means that in any case no tax reimbursement applies for the taxpayer for this reason).

For taxable income from employment and pensions, which exceeds the amount of € 20.000,00, the above mentioned amount of the tax reduction is reduced by € 10,00 per excess € 1.000,00 (above the limit of € 20.000,00) taxable income from salaries and pensions.

• Further the solidarity tax from the tax year 2016 and onwards is going to be imposed on income over € 12.000,00 and it is going to be calculated from now on according to the following scale:

Solidarity tax (Tax year 2016 and onwards)
Income in €	Solidarity tax
0 - 12.000	0%
12.001 - 20.000	2,2%
20.001 - 30.000	5,00%
30.001 - 40.000	6,50%
40.001 - 65.000	7,50%
65.001 - 220.000	9,00%
>220.000	10,00%

The solidarity tax becomes part of the Income Tax Law and it has been clarified that this contribution constitutes an income tax.

For the fiscal year 2016 and onwards, it will be calculated on the basis of the scale and not by applying a proportional rate to the full amount, as it was applicable so far according to the provisions of Article 29 of Law 3986/2011.

• It is noted, that the new scale of tax and solidarity tax from salaries and pensions shall apply from the date the Law 4387/2016 will become effective, i.e. from 12.05.2016.

In most of the cases an increase of the corresponding tax is expected and as a natural consequence the reduction of the collecting net earnings. 

• The income from real estate, which is obtained from the fiscal year 2016 and onwards, will still be taxed separately in accordance with the following scale:

Income of real estate in €	Tax rate %
0 - 12.000	15%
12.001 - 35.000	35%
35.001 -	45%

• The tax burden on dividends increased from 10% to 15%. This concerns distributed profits from 01.01.2016 and onwards.

• The profits from business activities (sole proprietorship, freelancers) are taxed at the tax rate of employees / pensioners, after these amounts have been added to any existing income from salaries and pensions.

• Finally, with the paragraph 10 of article 38 of the Law 4387/2016, it is defined that from 01.07.2016 the salaries of the employees in the private sector, such as the insurance contributions and the withholding tax on salaries will be obligatorily paid / transferred through a bank institution.
  The relevant amounts will be deposited by the employer through a bank account and will be transferred accordingly from the known bank on the accounts of the beneficiary employees, the social security institution and the tax office. For this reason each liable employer has to sign a contract with a bank of his choice. 

• Regarding the above provision and its implementation, a more detailed ministerial decision is expected.

NOTE: This article does not cover advisory, but only informational purposes, and cannot serve, as a basis for further actions, on the part of   the reader. Reception of specialized advice is required.

Our company does not hold any responsibility for any actions, taken by the readers, based on the present article.