Taxation in Greece

[Kilkis]

I thought some people might be interested how Greek taxation has ballooned due to the demands of the creditors. Every year I tend to calculate the tax I would pay in the UK compared to what I actually pay in Greece for the same income. Until recently they were similar with the Greek tax being slightly less despite tax rates generally being higher in Greece. That was because one income stream is classed as remaining taxable in the UK so I get the benefit of the UK tax free allowance as well as the Greek tax free allowance. I have just calculated the taxes due for 2016 and I estimate that I will need to pay 25 % more tax in Greece than I would pay in the UK for the same income. It gives you some idea how much tax has now increased in Greece. I won't know if my figures are completely accurate until my accountant does the return but I am usually quite close.

Warwick

[Mackie]

Very interesting. Thanks for sharing.
Are you able to tell us the typical Greek tax rates or point us towards where I can find it out?
I know VAT is 24% as we have been paying that on everything to do with our purchase. I was trying to talk the Lawyer out of his 24% this morning

I am assuming that anything above the 183 days stay / year, you have no choice but to pay taxes in Greece.

Cheers

[YoMo2]

.....I am assuming that anything above the 183 days stay / year, you have no choice but to pay taxes in Greece.

That might be an expensive assumption to make...... Others on here will point you in the right direction.

Andrew

[filippos]

Our accountant advises us, as retirees who have never worked in Greece, to remain UK tax resident.

See PM.

[Kilkis]

The income tax rates for employees and pensioners are as follows:

First €20,000 - 22 %
Next €10,000 - 29 %
Next €10,000 - 37 %
Above €40,000 - 45 %

There is no tax free band but there is a rebate under certain conditions:

0 Dependent children up to €1,900
1 Dependent child up to €1,950
2 Dependent children up to €2,000
more than 2 Dependent children up to €2,100

It is expressed as "up to" because you only get the full rebate if the tax you owe is at least the amount of the rebate. If the tax you owe is less than the maximum rebate then you would be rebated the amount of tax owed. The rebate is reduced by €100 for each €1,000 of income above €20,000. It is equivalent to a tax free allowance of between €8,636 and €9,545, depending on the number of dependent children. Tax residents also have to collect receipts up to 10 % of total income to qualify for the full rebate although that is changing to electronic payments.

Bank interest is taxed at 15 % and is stopped at source by Greek banks.

Dividends are taxed at 10 %.

There is also a solidarity tax with the following rates depending on total income:

Up to €12,000 - 0%
Up to €20,000 - 2.2 %
Up to €30,000 - 5 %
Up to €40,000 - 6.5 %
Up to €65,000 - 7.5 %
Up to €200,000 - 9 %
Above €200,000 - 10 %

Solidarity tax is not applied like income tax. Whichever band your total income falls into then you pay that rate on all your income. For example if your total income was €45,000 you fall in the "Up to €65,000" band and would need to pay 7.5 % on the whole €45,000, i.e. €3,375. The solidarity tax is applied to your total income, i.e. wages/pension, bank interest and dividends. Some ex-pats may have pension income that remains taxable in the UK and is not liable for income tax in Greece. It is still included for calculating the solidarity tax.

Warwick

[Stavros]

That's a very interesting topic dear Warwick...

As a freelancer in Greece I have seen my income reduced in half in the recent years and it's not just the tax...

We used pay approximately 5.000 Euros per year in insurance contributions to OAEE for a non existing cover, just two doctors available in Rethymno and a public hospital that is operating due to the strong will of the doctors and nurses...

With the new state insurance law introduced now, in effect from January, my insurance contributions are now linked to my income which means that they will double! I will be forced to pay approximately 1.000 Euros PER MONTH just to OAEE (27% of the income). Add to this the solidarity benefit 2.600 Euros and the ENFIA if you own any land or houses and one can clearly see why the Greeks are avoiding declaring their income...

The sad truth for me is that unfortunately I cannot hide my income as the company I work with declares it for me.

So for an income of 40.000 Euros we have:

Tax: 14.800 Euros
Insurance OAEE: 10800 Euros
Solidarity benefit: 2.600 Euros
Road tax for one vehicle: 400 Euros
ENFIA - property tax (approximate): 1.000 Euros

Total expenses: 29.600 Euros (74% of my income!!!)

This of course does not include utility bills or other expenses. I'd say this is a WAR!

So this is the way the state and government ''rewards'' people who do well in this country (you need these people right?) or feel honest enough not to hide their income...

Stavros

[Kilkis]

I completely agree, Stavros. The figures I gave in my post are only applicable for employees of companies and pensioners. It is worse for the self employed. Thanks for supplying the details. I think there is a Catch 22 situation with the self employed. There is a section of that group that ridiculously under declare their income and it is very difficult to prove that they do. In response the tax authority screws the whole group which forces more into the under-declaring section. I think we are witnessing the "end of days" for that spiral.

I didn't mention insurance in my original post because the amount pensioners pay is very small. For clarity an employee would also pay 16 % of their gross salary for insurance and the employer would pay 26 % I think. At least that is what it was when I was working but that is 6 years ago now.

Warwick

PS Do you know anything about the situation with IKA pensions, Stavros? I get a basic pension and an auxiliary pension, both from IKA. The basic one is reduced by about 7 % from the amount stated on the settlement paper but the auxiliary one is reduced by 40 %. The settlement paper for the basic one says that it will be reduced by 4 %. The woman behind the desk said it would be 6 % but when I compare what goes into my bank account to what it says on the settlement paper it is 7 % down. The auxiliary settlement paper does not mention any reduction at all but again when I compare the amount on the paper to what goes into my bank it is 40 % down. Any idea why? Getting information out of IKA is like getting blood out of a stone.

[Stavros]

Getting information out of IKA is like getting blood out of a stone.

It is exactly like that Warwick. As soon as you manage to make sense of a law it is changed again. We are still reading through the new insurance guidelines and new ones keep coming every day!

It is to my understanding that some auxiliary pensions will be stopped completely at some point but I am not sure which ones. Accountants usually make better sense of state pensions as they deal with them in their everyday business life.

You are also right about the self-employed (better word than freelancer!): the argument should be how to collect taxes from the ones not declaring and not punish the ones who do...

Stavros

[Kilkis]

Thanks Stavros.

Warwick