Greece enacted a new Law 5246/2025, titled “Tax Reform for Demographics and the Middle Class - Support Measures for Society and the Economy,” with numerous tax provisions mainly for individuals that will be effective from January 1, 2026.1
WHY THIS MATTERS
These reforms carry significant implications for globally mobile employees and employers with personnel in Greece. Reduced income tax rates and adjusted brackets may lower the tax burden for employees, potentially affecting net compensation and assignment costs. Adjustments for age and dependent children further support younger employees and families.
Changes to real estate income taxation and expansion of rental income exemptions may affect expatriates renting or investing in property. The extension of electronic payment incentives and VAT suspension on real estate transactions may also influence relocation, housing, and broader operational decisions.
Key Highlights
Reduction of Personal Income Tax (effective from tax year 2026)
The tax brackets and rates applicable to the taxation of income earned by individuals from employment, pensions and business activities, have been revised.
New Tax Scale as of January 1, 2026 | |
Income (salary, pension, business activity) in EUR | Tax Rates |
0 - 10,000 | 9 percent |
10,000.01 - 20,000 | 20 percent |
20,000.01 - 30,000 | 26 percent |
30,000.01 – 40,000 | 34 percent |
40,000.01 – 60,000 | 39 percent |
> 60,000 | 44 percent |
For comparison purposes, below is the tax scale that was applicable before the introduction of the new law.
Previous Tax Scale until December 31, 2025 | |
Income (salary, pension, business activity) in EUR | Tax Rates |
0 – 10,000 | 9 percent |
10,000,01 – 20,000 | 22 percent |
20,000,01 – 30,000 | 28 percent |
30,000.01 – 40,000 | 36 percent |
> 40,000.01 | 44 percent |
Moreover, the new law provides for further reductions of tax rates per income bracket, depending on the number of dependent children that the taxpayer has or the age of the taxpayer. Specifically, it is stipulated that the tax rate for the first two brackets, i.e., for taxable income up to EUR 20,000, is zero for taxpayers up to 25 years old, and nine percent for taxpayers in the age group between 26 and 30 years old.
Reform of the tax scale for real estate income (effective for income earned as of January 1, 2026)
The tax scale applicable to individuals’ income from real estate is being revised. An intermediate tax rate of 25 percent is introduced for annual income exceeding EUR 12,000 and up to EUR 24,000. In addition, the threshold for the third tax bracket is increased by EUR 1,000, so that it now applies to income up to EUR 36,000 instead of the previous limit of EUR 35,000.
New Tax Scale as of January 1, 2026 | |
Real estate income (in EUR) | Tax Rates |
0 – 12,000 | 15 percent |
12,000.01 – 24,000 | 25 percent |
24,000.01 – 36,000 | 35 percent |
>36,000 | 45 percent |
For comparison purposes, below is the tax scale that was applicable before the introduction of the new law.
Previous Tax Scale until December 31, 2025 | |
Real estate income (in EUR) | Tax Rates |
0 – 12,000 | 15 percent |
12,000.01 – 35,000 | 35 percent |
> 35,000 | 45 percent |
Extension of incentives for electronic payments
The tax incentives (introduced in 2022 for the first time), for the use of electronic means of payment in transactions by individuals in certain sectors (e.g., healthcare, housing, recreation, etc.) are extended to also apply for the tax year 2026.
Reduction of minimum imputed expenses for residences, cars and boats and abolition of minimum imputed expense for dependent children (effective from tax year 2025)
Significant reductions have been introduced to the minimum annual imputed expenses of individuals in relation to their residences (in which case the reduction ranges from 30 percent to 35 percent), as well as for private cars and boats. Furthermore, the annual minimum imputed expense of EUR 3,000 for dependent children, who have their own income, is abolished.
Expansion of the tax exemption incentive for long-term rental income (effective for rentals concluded as of November 11, 2025)
Income of individuals arising from the long-term rental of residences up to 120 sq.m. (increased if the taxpayer has dependent children) is exempt from income tax for 36 months after the conclusion of the relevant lease agreement, assuming certain conditions are met. Specifically, the lease agreement must have a duration of at least three years and must be signed between September 8, 2024, and December 31, 2026. In addition, for the three previous tax years (or for the years 2022 and 2023 if the lease is concluded in 2024), the property must have been declared as vacant or not declared as leased/owner-occupied/granted for use, or must have been used exclusively for short-term rental (e.g. Airbnb) during the tax year preceding the signing of the lease agreement. It is worth noting that the exemption ceases to apply if, within the 36-month tax exemption period, the property becomes vacant or is used for short-term rental; however, the exemption may continue if the property is leased again under a long-term lease.
Extension of VAT suspension on real estate until December 31, 2026 (effective from January 1, 2026)
The option for building constructors to select VAT suspension on unsold properties is extended until December 31, 2026 (instead of December 31, 2025). Moreover, VAT suspension already granted and currently in force until December 31, 2025, is also extended until December 31, 2026.
KPMG INSIGHTS
In light of the changes, the organizations may wish to:
- Update payroll and tax calculation tools to reflect the new rates and brackets beginning in 2026.
- Review assignment cost projections for employees relocating to or working in Greece.
- Advise employees, especially those under 30 or with dependent children, regarding eligibility for reduced rates.
- Inform expatriates and mobile employees of changes to real estate income taxation and rental income exemptions.
- Monitor compliance with electronic payment requirements to maximize tax incentives.
- Track eligibility for long-term rental income exemption and ensure lease documentation meets the new requirements.
Any questions or concerns can be addressed to the employee’s tax service provider or to the GMS / tax team with KPMG in Greece (see the Contacts section).
FOOTNOTE:
1 See (in Greek) “Φοροελαφρύνσεις και μέτρα στήριξης της κοινωνίας φέρνει το νομοσχέδιο της ΔΕΘ”, published by Ministry of National Economy and Finance, Ελληνική Κυβέρνηση on September 30, 2025.
RELATED RESOURCE
The article is excerpted, with permission, from "The Provisions of the new tax Law 5246/2025," published in TaxNewsflash (November 20, 2025), a publication of the KPMG International member firm in Greece. In English click here and in Greek click here.
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