Simple Tax Guide for Americans in Greece
US Expat Taxes - Greece
At Taxes for Expats we have been preparing U.S. tax returns for U.S. Citizens and green card holders working in Greece for over 10 years. We have been checked by the State Department and are listed on the list of approved Tax Preparers by the US Consulate in Athens. Our clients hail from all parts of the country - Athens and Thessaloniki, Patrai and Heraklion, Larissa and Peristeri.
As a U.S. Citizen or green card holder you are legally required to file a U.S. tax return each year regardless of whether you already pay taxes in your residence country.
We offer professional tax services. That means we figure out the best and most optimal way to file your U.S. tax return and avail you of all possible exclusions and deductions. But just as importantly - avoid the errors that would allow IRS to disallow your return and levy fines & penalties on top. You can also do them yourself - not that we recommend it. For more information please see IRS.
The expatriate Foreign Earned Income Exclusion can only be claimed if you file your tax return on a timely basis. It is not automatic if you fail to file and can even be lost.
We have many clients living in Greece and know how to integrate your U.S. taxes into the local income taxes you pay. Any Greek income tax you already pay can be claimed as against the tax liability on your U.S. return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the calendar year as is standard in Greece for U.S. tax purposes). You must, however, pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these form or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
We have helped hundreds of expats around the world catch up with their past U.S. taxes because they have failed to file U.S. tax returns for many years. This is, in fact, our specialty and we offer a 10% discount to clients to wish to file multiple tax returns at once and get in full compliance with the IRS.
Work with a recognized expert to help you prepare your American tax return. We can also provide tax planning and advice with other expatriate tax; we look forward to working with you.
Below we include information on the Greek Tax System for the American Expatriates.
Personal Income Tax Rates in Greece
Personal income tax rates in Greece are progressive up to 45%.
Tax scale for 2018:
|Income bracket||Tax Rate|
|From EUR 20,001 to EUR 30,000||29%|
|From EUR 30,001 to 40,000||37%|
|Solidarity Tax Contribution (applies to both residents and non-residents)||Progressive rates from 2.2% for income exceeding EUR 12,000 to a maximum of 10% for income exceeding EUR 220,000 annually|
The income tax is reduced based on certain expenditures for annual personal living. More specifically, the maximum amount of tax reduction (applicable to salaried and pension income) is EUR 1,900 for income up to the maximum of EUR 20,000 for a single person or for a married person with no dependents.
Resident and nonresident taxpayers receive a 10% tax credit for qualifying medical and hospital expenses (up to a maximum of EUR 3,000) and donations and EUR 200 per disabled household member. Exemptions are provided for relocation expenses, insurance premiums and other business expenses. Greek residents receive personal allowances for employment income of up to EUR 2,100.
Alimony paid by divorced spouses (only to each other) based on a notary deed is also deductible, up to a maximum allowed deduction of EUR 1,500.
Nonresidents are taxed only on Greece-source income but are not exempted from the solidary tax surcharge.
Foreign taxpayers who qualify as non-Greek tax residents may enjoy the tax reliefs of Greek tax residents provided that they maintain their residence in a European Union (EU) or European Economic Area (EEA) country and (i) generate at least 90% of their worldwide income in Greece or (ii) are able to prove that their taxable income is so low that they would be entitled to tax relief in their country.
The tax year is the calendar year.
Income taxed separately:
- interest on bank deposits
- interest on Greek State Treasury Bonds
- profits from the shipping business
- gains from the sale of shares quoted on a Stock Exchange
Capital gains tax ranges from 0% to 20%, depending on the type of gain.
Deductions and allowances Various deductions are allowed for expenses and certain allowances are available.
Greece Corporation Tax
Company Tax in Greece is 29% (26% as of 1 January 2019 for all businesses except for credit institutions). A company is considered a resident if it is incorporated in or its place of effective management is in Greece. Resident companies pay tax on worldwide income while non-resident companies only pay tax on Greece-sourced income.
A financial period is 12 months and usually coincides with the calendar year.
In certain cases, however, it may start on 1 July and end on 30 June of the following year. Also, the financial period of a company in which a foreign enterprise has at least a 50% capital participation may coincide with that of the foreign enterprise.
Income tax is payable in eight equal monthly instalments commencing in the fifth month from the end of the financial period in which the tax return must be filed. Societe Anonyms: Profits which are distributed to the shareholders are subject to additional dividend tax 10% (effective from 1 January 2009).
CAPITAL GAINS TAX
Capital gains are not taxed separately but are added to the company's taxable income except for the following cases:
(1) Gains from the sales of shares quoted on a Stock Exchange are taxed at a rate of 10%. This 10% tax is only a prepayment since the gains are taxed eventually according to the general provisions. If these gains are distributed at a later time, the company pays the normal company tax and dividend tax and deducts the above mentioned 10%.
(2) Sales of shares not quoted on a Stock Exchange are taxed separately at a rate of 5% on the sale value (i.e. gross proceeds). If this income is gained by a company, the above 5% tax is considered as a prepayment and the profits are taxed as any other taxable income.
(3) Profit from sales of (a) interests in any kind of company (except a public limited company), and (b) an enterprise as a whole, is taxed separately at a rate of 20%.
(4) Profit from the sale of a right, relevant to the operation of the enterprise, is taxed separately at a rate of 20%. In cases (3) and (4), the profit is taxed together with other income if the seller is a public limited company.
OTHER TAXES IN GREECE
An inheritance tax of 1% to 10% is levied for close relatives and 0% to 40% for heirs on the tax value of a real property. Real property tax is also levied depending on the characteristics of the property and the total objective value of all the taxpayer's properties. Stamp duty is levied on certain transactions at 3.6% or 2.4%.
Social security contributions are due on salary and benefits in cash or in kind granted by an employer to its employees. For the primary social security fund (IKA-ETAM), social security contributions are withheld at 16% at the level of the employee and at 25.06% at the level of the employer.
DETERMINATION OF TAXABLE INCOME
Taxable profits are determined by ascertaining total gross income and then subtracting allowable expenses. These expenses must be wholly incurred for the purposes of the enterprise. Below are some of the allowed deductions.
Fixed asset depreciation is computed annually at fixed rates, the most important of which are:
- plant and other buildings 5% - 8%
- machinery 11% - 15%
- furniture 15% - 20%, office machines 15% - 20%, computers 24% - 30% or 100%
- private cars 11% - 15%, trucks and buses 15% - 20%
Stock is valued at the lower of acquisition cost or market value.
CAPITAL GAINS AND LOSSES
Capital losses are deducted from the taxable trading income.
Dividends are taxed at a rate of 10% (reduced from 15% for dividends received on or after 1 January 2019). This tax is paid additionally to the corporate tax.
All loan interest paid at home and abroad is deductible and there are no thin capitalization provisions.
Losses incurred in a financial year may be carried forward to be set off against profits of the following five financial years.
FOREIGN SOURCED INCOME
Foreign sourced dividends are added to the taxable income of the company.
Tax incentives are given if a company makes productive investments such that:
- part of the profit is non-taxable
- part of loan interest and/or part of investment cost is covered by government
The type and the amount of incentive depend on the amount and geographical area of investment.
FOREIGN TAX RELIEF
The Greek tax liability is reduced by the tax actually paid in the foreign country on which the profits arose. Relief is restricted to the amount relating to the tax suffered on the profits in Greece.
There are no special tax provisions for corporate groups.
RELATED PARTY TRANSACTIONS
When income from a related party transaction, at home or abroad, is not at arm's length prices, a transfer pricing adjustment is carried out.
In the absence of Double Tax Treaties, withholding tax of 20% must be deducted from royalties paid to foreign enterprises or foreign persons not permanently established in Greece.
Withholding tax of 15 % is also deducted from interest income.
According to the EU Directives, there are no longer any exchange controls. Such controls still exist for transfers of capital to non-EU countries.
VAT in Greece (Value Added Tax)
The VAT rate is 24%, except for specific categories of goods and services. A reduced VAT rate of 13% applies to fresh food, to care of children, the elderly, and the disabled, and to accommodation in hotels or similar establishments. A 6% rate applies to certain medicines and vaccines, books, newspapers, magazines and hotel accommodation services. The reduced VAT rate scheme (30% discount) that applies in several Aegean islands, that was set to expire by the end of 2017, has been extended until the end of 2018.
Public services (health, education, legal, insurance, etc.) are not subject to VAT. These services are considered VAT exempt. Exports of goods and services are zero-rated.
VAT is collected at each stage of the process of production or distribution of goods and services. The burden of the tax falls on the ultimate consumer. VAT is charged on every supply of goods and services by a commercial enterprise, with the exception of the Aghion Oros area.