Most foreign businesses choose to formalize their presence in Greece by establishing a Corporation (AE company), a Limited Liability Company (EPE company) or a branch. Foreign entities may also establish an offshore office for the provision of specified services to their head office or other foreign affiliated companies under the provisions of Law 89/67 as revised by Law 3427/2005. Nevertheless, even if it is not formally registered in Greece, the activities of a foreign enterprise could lead to the acquisition of a "permanent establishment" in Greece, giving rise to corporate tax on income arising in Greece as well as other tax and accounting obligations. The provisions of the ITC in conjunction with those of the applicable Double Taxation Treaties between Greece and the foreign entity’s jurisdictions define when a permanent establishment arises (normally the maintenance of a branch, factory, or other fixed place of business). 

Furthermore, all foreign companies who construct buildings on their land in Greece or expand existing buildings owned by them or earn income from real estate in Greece must maintain accounting books and issue/receive certain tax records, even if they have no establishment in Greece. All other foreign companies who merely own real estate have much fewer obligations. 

Tax withholdings apply on certain payments made to foreign tax residents even when they have no presence in Greece.

The tax rate is 29% on profits of Corporations (AE companies), Limited Liability companies (EPE), partnerships, cooperatives and joint ventures. Distributed dividends/profits are subject to a withholding tax at the rate of 15% (not applicable where single entry accounting books are maintained). The 10% withholding tax does not apply to profits which are credited or remitted by a branch in Greece to its head office abroad nor to dividends paid by a Greek subsidiary to its EU affiliate (subsidiary) (provided certain conditions are met as per the EU Directive 2011/96). 

Under the beneficial provisions of Law 89/67, foreign entities may establish a presence in Greece with the exclusive purpose of providing certain services to their head office or any other foreign affiliate company (such as consulting, centralized accounting support, quality control of production, processes and services, project planning services, advertising and marketing and data processing services). Such establishments will be taxed on the higher of the actual revenues reported in their accounts or the deemed revenues that will be defined on a cost plus basis by application of a certain mark-up which is pre-agreed with the Ministry of Finance according to their specific sector and service, and in any case not lower than 5%. 

Foreign shipping companies may establish a branch or an office in Greece under Law 27/75 enjoying a beneficial tax regime provided that certain conditions are met. According to this regime as currently in force payment of Greek tonnage tax for foreign flagged ships managed by a Greek ship management office results in the full exemption of profits derived from the exploitation of such ships from any other Greek income taxes (foreign tonnage tax paid abroad is credited against the corresponding Greek tonnage tax). Such branches/offices were also established under Law 89/67 until 2006 and although they now fall under Law 27/75, they are still commonly referred to as Law 89 offices etc. Moreover, an annual special contribution has been imposed for calendar years 2012 up to 2019 on such shipping offices which are engaged in activities other than the management and exploitation of Greek or foreign flagged ships. Furthermore, a 15% withholding tax is applicable on dividend distributions to Greek tax residents by such offices which are engaged in activities other than the management and exploitation of Greek or foreign flagged ships. 

The taxable profits of construction companies engaged in public or private construction projects are subject to taxation in the same manner as all other legal entities on the basis of their accounting profits. A 3% withholding tax that is set off against the final tax is applied on all payments made to construction companies. 

All expenses that meet certain criteria are deductible except for certain expenses that are specified as being non-deductible.

In particular, all actual and evidenced business expenses are deductible if they are incurred for the benefit of the business or are carried out in the course of its ordinary commercial transactions, their value is not considered lower or higher than the market value on the basis of information available to the tax authorities and they are recorded in the entity’s accounting books in the period in which they arose and evidenced by proper supporting documentation. Moreover, such business expenses must be incurred for the purposes of generating income in order to be deductible. The non-deductible expenses which are specifically defined include: interest on loans (other than bank loans) to the extent that the amount exceeds interest that would have been payable on revolving lines of credit provided to non-financial institutions, expenses exceeding EUR 500 whose partial or total payment was not effected through banks, unremitted social security contributions, fees for illegal activities, income tax/penalties (including entrepreneurship duty and special solidarity contributions) as well as VAT which apply to non-deductible expenses, amounts paid to individuals or non-EU legal entities that are tax resident in non-cooperative countries or in countries with a preferential tax regime (unless the tax payer can prove that such payments relate to actual and ordinary transactions and they do not reflect the transfer of profits, income or capital gains for tax avoidance purposes) etc. 

The maintenance of tax free reserves (except for reserves formed pursuant to Investment Incentive Laws) is not permitted.

Losses may be carried forward for five subsequent years from the end of the tax year in which they arose unless there has been a transfer of more than 33% of the (direct or indirect) shareholdings or of voting rights of the taxpayer and the taxpayer cannot prove that this transfer was carried out exclusively for commercial or business reasons and not for tax evasion/tax avoidance purposes.

Capital gains (or losses) are generally regarded as ordinary business income (or losses).

Intra-group transactions should follow the arm’s length principle. More specifically, when intra-group transactions are carried out cross-border or domestically, under different economic or commercial conditions from those that would apply between non-associated persons or between associated persons and third parties, any profits which would have been derived by the domestic company without those conditions, but were not derived due to the different conditions, will be included in the profits of the company only to the extent that they will not reduce the amount of tax payable. An extensive definition of “associated person” is provided. 

The ITC explicitly refers to the OECD Guidelines as far as the interpretation and application of its provisions relating to intercompany transactions is concerned. Moreover the documentation requirements of intercompany transactions is included in a separate law, i.e. the Tax Procedure Code. 

For each tax year, a Transfer Pricing Documentation File supporting the appropriate transfer pricing method must be prepared and a Summary Information Sheet must be submitted (both within 6 months from year end). 

The obligations apply to all intercompany transactions with one or more associated persons unless the value of all transactions do not exceed the amount of EUR 100 000 in total where the gross revenues of the financial year of the taxpayer does not exceed the amount of EUR 5 000 000, or EUR 200 000 where the gross revenues of the financial year for the taxpayer exceed the amount of EUR 5 000 000. 

Companies may obtain an Advance Pricing Agreement (APA) covering the transfer pricing methodology of specific cross-border intra-group transactions for a certain duration. Special rules and conditions apply. 

Currently, the transaction tax on the sale of shares held by foreign tax residents is 0.20% on the sale price for shares listed on the Athens Stock Exchange (not applicable to transactions effected by Market Makers in certain circumstances). Relief for this transaction tax is not available under the terms of the applicable Double Taxation Treaties. 

Profits arising from the transfer of shares (listed and non-listed) are treated as business income for legal entities disposing of the shares and taxed at the corporate tax rate (currently 29%). This tax does not apply to non-resident entities with no permanent establishment in Greece.

The transfer of shares (listed and non-listed) by individuals is subject to capital gains tax at the rate of 15%. There is specific exemption from taxation of capital gains arising from the sale of listed shares that were acquired after 1 January 2009 when their seller owns less than 0.5% of the share capital of the company whose shares are being sold. The same exemption also applies as regards listed shares that were acquired before 1 January 2009 (irrespectively of the seller’s percentage of ownership of the share capital of the company). 

Notwithstanding the above, the withholding tax may be reduced for the sale of listed and non-listed shares where a Double Taxation Treaty between Greece and the foreign tax resident’s jurisdiction is evoked. 

Tax is withheld in Greece on payments effected to foreign tax residents according to the following rates: 

• Dividends: 15%
  
• Interest: 15%
  
• Royalties: 20%
  

Payments for services may also be subject to withholding tax in Greece at the rate of 20% (i.e. service fees for technical projects, management fees, consultancy and other related services). Exceptionally, the rate is 3% on payments made to construction companies as indicated above. No WHT applies, if paid to non-Greek tax residents with no Greek PE.

The rates in the Double Taxation Treaties concluded between Greece and other jurisdictions apply where they are lower than the above rates provided under Greek Tax Law.

The most important indirect tax is Value Added Tax (VAT) (the normal rate is 24%) and it applies on the majority of sales of goods and service supplies. 

VAT at the rate of 24% also applies to the first transfer by businesses of newly constructed buildings whose construction license was issued on or after 1 January 2006, on the condition that such buildings have not yet been used prior to their transfer (exemptions may apply for the purchase of a primary residence). 

Under certain conditions, foreign entities are required to register for VAT purposes in Greece, before carrying out activities triggering Greek VAT implications. 

Other taxes include capital concentration tax (1%) on certain capital injections and stamp duty (1.2% to 3.6%) which applies to certain transactions such as loans, assignments, etc.

Currently, individuals and legal entities owning real estate in Greece are subject to the Unified Real Estate Tax (UREOT), irrespective of their citizenship, residence or registered address. UREOT is imposed on property owned as at 1 January of each year. Real estate subject to the tax includes plots of land located outside city limits. Exemptions continue to apply and cover certain categories of real estate and taxpayers (e.g. the State, public legal entities, churches, monasteries, museums etc.). 

UREOT consists of a main tax and a supplementary tax and is determined by the tax authorities on the basis of E9 returns where tax payers declare all their real estate holdings. The main tax for real estate located within city limits ranges between EUR 2 and EUR 13 per square meter for buildings and between EUR 0.0037 and EUR 11.25 per square meter for plots of land. The main tax for plots of land located outside city limits is EUR 0.001 per square meter and it is increased fivefold if a residence is built on the plot of land. The above rates are multiplied by coefficients that depend on a number of factors deemed to affect a property’s value, such as its location, surface area, age, etc. 

The supplementary tax is imposed on individuals owning real estate whose cumulative aggregate value exceeds EUR 200 000 and it is calculated on the excess value at progressive rates ranging from 0.1% up to 1.15%. Legal entities are also subject to supplementary tax, which is generally calculated at the rate of 5.5‰ on the total value of their real estate, unless the property is used for own business purposes, in which case the rate reduces to 1‰. 

Under conditions, partial or full reductions of tax can be granted to individuals and postponement of tax can be allowed for legal entities. 

In addition, Greek and foreign companies owning or having usufruct rights on (use of) real estate located in Greece are subject to a special annual tax calculated at the rate of 15% on the objective tax value of real estate, unless certain conditions are fulfilled (including (a) if their ultimate individual shareholders are revealed/obtain a Greek tax number, and (b) certain entities, such as listed entities, banks, etc.). 

Furthermore, the holding of Greek real estate gives rise to certain municipal property taxes (not normally of significant value), which are collected through electricity bills. 

Real estate transfer taxes apply for transfers of real estate not subject to VAT (see above), with the current rate being equal to 3% (exemptions may apply for the purchase of a primary residence).

Currently, Greek tax legislation requires a tax audit to be carried out by a Greek Certified Auditor for all AE and EPE companies and Greek branches of foreign banks that are obliged to have their statutory audits carried out by a Greek Certified Auditor. If the Annual Tax Audit Certificate is issued without any reservations, the tax affairs of the company are considered final and the tax authorities will not normally carry out their own audit except where the taxpayer is selected for a sample audit. For periods starting from 01 January 2016 onwards, the requirement for an Annual Tax Audit Certificate is optional.