Within the scope of the continuous information disclosed to you on part of our company, we would like to inform you that from 01.10.2015 and onwards the VAT rates will increase in all product categories and the applied rates will become equal to the rates of the rest of the country, that means that

the normal rate of 16% will become 23%,

the reduced rate will increase from 9% to 13% and

the highly reduced rate will increase from 5% to 6,5%.

These increases will apply to the following islands: Rhodes, Mykonos, Paros, Naxos, Santorini, Skiathos.

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.

After the implementation of Law 4334/16.07.2015, par. 7 of article 1, the rates for the imposition of Solidarity Levy on yearly income exceeding the amount of € 30.000,00 have increased.

The new rates to be retroactively effected as of 01.01.2015, but shall be implemented from 16.07.2015 and onwards, are set as follows:

The tax calculation shall not include a retroactive withholding of solidarity levy as of 01.01.2015, but shall implement the new rates from the salary calculation of the month July 2015 and onwards.

The final tax calculation shall be effective with the submission of the yearly income tax return of the tax year 2015.

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.

Under the provisions of the above tax law, the provisions of which have reformed fundamentally the basic law regarding the income taxation (L.  2238 / 1994), which applied for decades in our country, among others also the provisions have been modified which define the deductible expenses of an entity through its business activities.

More specifically, a general rule has been defined, that the business expenses are deducted from the gross income of each financial period, if the following conditions are cumulatively met:

• Expenditure incurred in the interest of the business or in the ordinary course of trade.

• They correspond to real transaction, the value of which is not considered inferior or superior to the market value according to the information which are available to the Tax Authorities.

• They have to be entered in the accounting books of the company in the period they incurred and substantiated by adequate supporting documents (the concept of the supporting documents foreseen by the law is wider than the tax documents and they include: data as they are provided by the relevant provisions of the newly published Greek General Accepted Accounting Principles, such as public or private documents, outturn data, etc.)

• And under the precondition that they do not belong to the limitative list of non-deductible expenses of Articles 23 and 48 of the Income Tax Code.

The non-deductible expenses are:

• Interest on loans taken by the company from third parties, other than bank loans, interbank loans and debenture loans, issued by public companies limited by shares to the extent that they exceed the interest, which would arise, if the interest rate was equal to the rate on loans overdrafts to non-financial corporation (this rate is taken each time from the publications of the Central Bank of Greece).

• Any kind of expenses which relate to the purchase of goods or receiving services worth over € 500,00 from Greece or abroad, in case the partial or total repayment has not been done by using a banking payment instrument (transfer, deposit, debit or credit card, check, etc.).

• The unpaid social security contributions. Social security contributions, which are paid on time in their legal payment deadline or any extension thereof, even in the next financial year, are deductible from the income of the financial year to which they relate.

• Social security contributions which relate to the financial years 2014 and later, which are paid with delay, are deductible from the taxable income of the financial year in which they were paid regardless of the year concerned.

• Any kind of provisions, excluding provisions for bad debts. For these provisions, the specific rules of Article 26 of the Income Tax Code apply accordingly.

• The fines and penalties, including surcharges (late payment penalties), imposed because of non-performance of contractual obligations by enterprises or breaches of legal provisions, etc.

• Income tax.

• Entrepreneur’s tax.

• The special tax levies on earnings from business.

• The value added tax (VAT) corresponding to non-deductible expenses, provided that this tax is not deductible as input VAT from the output VAT, according to the provisions of codified Law 2859 / 2000 about VAT.

Taxes, which are not deductible from the gross income of each financial period, are listed exhaustively in the relevant sub cases and consequently, other taxes not included in these list are deductible (e.g. property tax (ENFIA), annual circulation vehicles tax, stamp duty, State fees for the National Committee of Telecommunications and Post, etc.)

• The imputed rent from the own use of real estate property to the extent that it exceeds three percent (3%) of the objective value of the property.

• Expenses for organizing and conducting informative workshops and meetings related to food and accommodation or for the customers or the employees of the company.

• Entertainmentcosts.

• Personal consumption expenses.

• Costs, which relate to intra-group dividends, which are exempt from income tax.

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.

Residents abroad (principal residence abroad) are required to submit an income tax return (form E1) for the income they earn  in Greece, taxable in any way (e.g. according to the general provisions or independently) or free of tax in any way. The tax is imposed only on the income earned in Greece and not on the income derived abroad.

COMPENTENT TAX AUTHORITY:

• Those foreigners, who are doing business in Greece, have to submit their declaration (tax return) to the competent local tax office of the area in which the seat of the Business is registered.
• Those who have appointed a tax (fiscal) representative who regarding the tax return belongs to the prefecture of Attica, have to submit the tax return to the “Tax Office for Residents Abroad”.
• Those who have appointed a tax (fiscal) representative who regarding the tax return belongs to a tax office out of the prefecture of Attica, have to submit the tax return to the tax office of the prefecture's capital.
• Those who have appointed a tax (fiscal) representative who regarding the tax return belongs to a tax office of the prefecture of Dodecanese and Cyclades, have to submit their tax return to the tax office in which the tax representative belongs.
• If the capital of a prefecture has more than one tax office, the responsible tax office for submitting the tax return is always the first tax office (tax office A’), except in the prefecture of Thessaloniki in which responsible is the fourth tax office (tax office D’) of the city.

For the fiscal year 2014 (income earned from 01.01.14 to 31.12.14), the tax return has to be submitted during the period from 1 February to 30 June 2015. In case the taxpayer dies or moves his residence abroad, the tax return has to be submitted by the per case corresponding tax liable  parties,  during the whole tax (fiscal) year (2015).

An amended tax return, because of an error or omission, shall be submitted any time, although not after the announcement of a tax audit or by the statute of limitation of the right of the tax authorities to check the original tax return.

The amended tax returns are submitted electronically since 2014 (fiscal year  2013).

How is any possible difference arising between the real income and the imputed income justified, and the acquisition  of assets.

• With real income earned by the taxpayer, his /her spouse,  and dependants in Greece, which are exempt from tax or have been taxed in a special way.
• With funds that are not considered as income in Greece.
• With funds deriving from the disposal of assets in Greece.
• With importation of foreign exchange for persons: a) who are tax residents abroad, b) who have lived at least 3 years abroad and whose  importation of foreign exchange has been made within two years of their relocation, c) who have lived at least 5 consecutive years abroad and whose imported amount of foreign exchange comes from i) deposits in their name or in the name of their spouse  in a bank account opened in an EU country or in a Greek bank branch abroad at the time residing abroad or from ii) deposits in general  within one (1) year from their move to Greece, without  this foreign exchange having been re-exported abroad.
• With loans concluded  in Greece.
• By donation or parental provision of funds in Greece for which the relevant tax return has been submitted till the end of the year in which the expense has been held.
• With capital consumption for which it is proven it has been taxed in the previous years or it has legally been exempted from tax in Greece.

There are four categories of income in Greece:

a) Income from employment and pensions,

b) Income from business activities,

c) Income from capital (dividends, interest, royalties, real estate) and

d) Income from gains realized by capital transfer (e.g. shares, units or shares in private companies, government bonds and treasury bills or corporate bonds, financial derivatives).

The income tax scales

• The taxable income from employment and pensions is subjected to tax in accordance with the following scale:

• Profits from business activity is taxed according to the following scale:

The income tax is paid in three (3) equal bimonthly installments.

Certain income arising  in Greece is taxed separately, as follows: a) dividends (10%), b) interest (15% - exemption for interest on bonds and Treasury bills of Greek State bonds and interest of the European Financial Stability Fund), c ) rights (20%) and d) Gains realized by  the transfer of titles / securities (15% if it is not a business activity - tax relief  for citizens of countries with which Greece has concluded a Double Taxation Treaty for the avoidance of double taxation of income, for this they have to submit a certificate of tax residence).

The above shall apply as subject to the provisions of the Double Taxation Treaty (DTT)for the avoidance of double taxation of income, which Greece has concluded.

Change of residence

Individuals who wish to transfer their tax residence abroad must submit till the last working day of the first 10 days of March of the year following the tax (fiscal) year of departure, to the relevant Tax Office they belong to, the following:

Application (form M0) enclosing forms M1 & M7 and a written statement with verification of the signature authenticity for the appointment of a tax (fiscal) representative in Greece.

Exceptionally, for the tax (fiscal) year 2014, the deadline for the submission of the M0-M1-M7 forms is the last working day of the first 10 days of May.

In addition, individuals are required to present the following no later than the last working day of the first 10 days of September of the year following the fiscal year of the relocation:

i) Certificate of residence for tax purposes by the competent tax authorities of the State in which they are tax residents, in which this is clearly stated.  In case the taxpayers are relocated in a country with which a (DTT) exists and in the case that they have an income in our country, they can submit, instead of the certificate, the application  for the implementation of the Double Taxation Treaty  or

ii) A copy of the clearance of the tax returns which has been submitted in another country.

iii) In case of absence of a clearance, a copy of the income tax return should be submitted.

The authenticity of foreign public documents should be certified in accordance with the provisions of the Hague Convention (Apostille) or the international legal procedures (consular process) for documents from countries which are not included in this convention. An official translation in the Greek language is also required for all documents which are going to be submitted to Greek financial authorities.

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.