We present you the new tax bill which includes, among others,tax reliefs for individuals and businesses as well as several other development measures to stimulate the Greek economy and construction. At the same time, the tax bill provides significant incentives to attract foreign direct investment and capital that will make Greece an attractive investment destiantion.
A. For individuals and legal entities, the main tax reliefs include:
- Decrease of the corporate income tax rate from 28% to 24% for 2019, thereby reinforcing small and large businesses, while the 50% tax rate reduction of first grade startups continues to apply for the first three years of operation.It should be noted that a steady will is to further reduce the rate of income tax on legal persons in the upcoming years, in order for the Greek economy to retrieve its competitiveness more dynamically in the European and international economic environment
- Establishment of a 9% introductory tax rate for individuals, freelancers, farmers, employees and retirees, from 22% as it is today. This reduction is expected to benefit not only those with incomes below 10,000 euros, but all taxpayers, as their income is taxed scalarly. In addition, the rates for higher incomes are reduced by one percentage point.
- Establishment of a low tax rate of 10% for agricultural cooperatives.
- Reduction of the income tax advance payment to 95% of the resulting tax on legal entities (for 2018).
In addition, the income tax reduction is adjusted based on the number of children, and reduced VAT rates are applied to support vulnerable groups, as well as for reasons of social protection.
- Increase the 'tax-free' limit by € 1,000 for each protected child, irrespective of their number, and specifically for those with 5 or more children, does not apply the reduction of € 20 for every € 1,000 increase in their income if their taxable income exceeds the amount of 12,000 euros.
- Exemption from the solidarity levy on all persons with disabilities with a disability rate of 80% or more irrespective of the type of disability
- VAT reduction for baby products from 24% to 13%.
- Reduction of VAT on motorcyclist helmets and child seats from 24% to 13%
- The goodwill of stock options will be taxed at a rate of 15%.
- Payments to employees due to the acquisition of their insurance contract due to their participation in voluntary retirement are no longer an early acquisition and are not taxed at a 50% rate.
- Reduction of non-cash accrued earnings received in 2014 and thereafter, indicated separately in the annual statement of remuneration granted to the beneficiary or by any appropriate means in the year in which they are deducted, in accordance with the provisions of the corresponding year
- In-kind benefits are provided to employees in the form of a corporate car, taxed in increments, on the basis of retail price before tax and with new rates and with exemption from taxation as income of vehicles which are provided exclusively for business purposes and with a retail price before tax of up to EUR 17.000
- Regarding the in-kind benefits in the form of a loan, the in-kind benefit is no longer the whole amount of the loan,but the difference in interest resulting from the interest rate on the loan received by the employee and the interest rate on which he would be charged if he received the loan at a rate equal to the average market rate
- It is clarified that the in-kind benefit is counted in the income of the recipient, in case that it exceeds the amount of € 300 in value.
- The levy of 0.6% according to the Law 128/1975 on factoring and leasing credits is abolished in order to reduce the cost of financing and of the operation of small and medium-sized enterprises.
- The way of public utility vehicles taxation is extended
Β. Significant incentives to attract foreign direct investments and capital. Particularly:
- Aiming in attracting investments, tax legislation is being clarified and simplified concerning the tax domicile,while an alternative way of taxing foreign-origin income is introduced by paying an annual flat tax of more than EUR 500.000
- The tax rate on dividends is reduced from 10% to 5% and furthermore, is introduced the conditional exemption of legal persons who are tax residents of Greece from the capital gains transfer tax.
- Exemption from income tax and solidarity levy on corporate bonds listed on a regulated market.
C. Measures are being introduced to restart the economy in important sectors contributing to the country's GDP. Particularly:
- VAT is suspended on buildings licensed from 1-1-2006 onwards, while the suspension of VAT also applies to the contractual consideration
- The levy of goodwill tax on the transfer of real estate is suspended for three years
- Incentives are introduced to incur the costs of obtaining services related to the energy, functional and aesthetic upgrading of buildings, by granting a 40% tax deduction for the costs of the related work, with a total expenditure of € 16.000, divided equally for a 4 year period
- Increase of the maximum number of installments of fixed debt settlement from 12 to 24 and in special cases of emergency debts from 24 to 48. Integration of own debts is provided for the same debtor for the second time if the arrangement is lost for any reasons relevant to his liability.
- The leasing of public fisheries waters to fishing cooperatives is reduced from 10% to 5% on the value of the catches
D. Tax measures are introduced to promote sustainable development, such as:
- Introduction of a package of measures to promote the use of public transport and zero-emission vehicles, following the best practices of other Member States. In particular, the supply of a vehicle with a low or zero emission vehicle is not considered to be an in-kind benefit. In addition, the company is given a 30% discount over the leasing of a zero or low emissions car, while for the buying cost the company is given the discount of 30% of the above expense
- Reinforcement of the corporate social responsibility and employee benefits by:
-a deduction from the gross income for expenses relating to Corporate Social Responsibility actions, unlimited travel cards for public transportation without them being considered as income for the employee
-enhancement of the in-kind and cash donation by institutions to the State, through the deduction of income from expenditures in cash or in-kind donations to the Greek State and the local authorities
Ε. Introduction of measures for the expansion of electronic transactions. Particularly:
- Employees, retirees, and freelancers should spend the 30% of their actual income on electronic payment instruments.
Furthermore, it should be noted that in addition to the above:
- In the calculation of the actual income, the amount of the solidarity levy and the amount of maintenance for a divorced spouse or child are not included
- In the case of expenses incurred regarding the payment of individual income tax and Unified Property Tax, loan liabilities to financial institutions and rents exceeding the 60% of the actual income, the required rate of expenditure is limited from thirty percent (30%) to twenty percent (20%) of their actual income.
- For the taxpayer whose account has been seized, the expenditure limit shall be limited to five thousand euros (€ 5.000).
- Exemptions are provided for taxpayers who have objective difficulties in using electronic payment instruments.
F. Reduction of the bureaucratic burden on the Tax Administration and Businesses
- Debt write-off for individuals and legal entities up to € 10 per taxpayer. In this way, the Tax Administration is relieved of the bureaucratic costs of tracking these debts, while over 500,000 taxpayers will again be able to issue tax information, with every positive effect on their financial activity.
- Periodic write-offs of small amounts are applied for up to € 1 per taxpayer, in order to discharge the operation of the Tax Administration.
- Businesses are able to write-off amounts of debt from their clients, for amounts up to € 300 per debtor, without being obliged to previously practice all the legal procedures for their recovery, since in most cases the cost of this procedure is higher from the amount of the debt.