CORPORATE TAXES
SIGNIFICANT DEVELOPMENTS
There have been no significant tax or regulatory developments in the past year.
TAXES ON CORPORATE INCOME
Corporations (SAs) and limited liability companies (EPEs) are taxed on total annual profits before disribution of dividends, profits, fees to directors, and profits to employees/workers. Profits are taxed only at the company level. There is no withholding tax on dividends or profits otherwise distributed and no income tax in the name of the EPE members. If total annual profits of SAs and EPEs include dividends or profits from participations in other companies, these profits are deducted to arrive at taxable profits of SAs and EPEs. If total annual profits include tax-free income or income taxed on the basis of special regulations with termination of the reated tax liability, taxable profits are adjusted accordingly.
Domestic SAs and EPEs are subject to income tax at the following rates on total profits less allowable transfers to tax-free reserves.
1.For domestic corporations with registered and bearer shares not listed at financial year-end on the Athens Stock Exchange, domestic banking corporations and purely credit cooperatives-40%.
2.For domestic corporations listed at financial year-end on the Athens Stock Exchange-35%.
3.For domestic EPEs-35%.
Specifically for EPEs, the rate of 35% applies to tatal net profits after being reduced by business fees to dministrators/members (up to three with the greatest praticipation percentages). Business fees are calculated by
applying these percentages to 50% of total net profits.
The above rates are reduced by 40% for profits of companies derived from activities carried out on islands with less than 3,100 inhabitants.
With respect to domestic SAs and EPEs that are taxed on the basis of imputed profits, if following the distribution of profits of the specific financial year there remains a balance of untaxed profits shown in the account "Tax-free profits of technical and construction companies," 40% of this is taxed in the name of the legal entity at the rate of 405 or 35%, depending on the legal entity concerned. A special income tax return must be filed by the end of the ninth month from its year-end and the tax due paid in three equal monthly installments. These profits, after the deduction of the tax payable, should be shown in a special account in the books of the company and may be distributed or capitalized without any
further tax charge. These provisions also apply to state enterprises, cooperatives and branches of foreign companies and are effective for technical projects undertaken from the publication of the new law in the Government Gazette (February 17,1998) and thereafter.
CORPORATE RESIDENCE
Corporate residence is determined primarily by place of incorporation. However, subject to related tax treaty provisions, foreign corporations are subject to Greek taxation if operations, such as maintaining inventories from which orders are filled and leasing machinery or equipment, are carried on in Greece.
OTHER TAXES
Value-added tax/The standard rate is 18%. There is a reduced rate of 8% on basic necessities (4% on books, newspapers and periodicals). Supplies of goods and services to individuals and legal entities subject to VAT and established in European Union (EU) countries (intra-Union supplies) are exempt from VAT. Exports of goods and certain services to non-EU countries
are also exempt.
Contribution tax on capital accumulation/A 1% tax contribution is imposed on capital accumulation (i. e., formation of business companies and joint ventures, capital increase, ect.) by (1) business companies and joint ventures; (2) cooperatives of all degrees and any other from of company, legal entity, or union of persons or society aiming to make profits; and (3) branches of foreign companies.
Special tax on banking activities/As from May 1,1993 the special tax on banking activities on loans and credit agreements was abolished, and as from January 1,1994 the rate of the special tax on gross revenues of banks (i. e., interest commissions, discounts, currency or exchange differences,
ect.) was reduced from 8% to 4%. As from September 1,1997 this rate has been further reduced to 3%.
Real estate tax/As from January 1,1997 a real property tax is assessed on all property owners except those owning certain categories of property, i. e., farming or stock farming expanses, mining rights, woody expanses, and buildings and machinery used in business operations, including hotels. New
buildings are exempt for a maximum period of seven years. In addition, certain categories of owners are exempt, such as the Greek state; state corporations, including social security funds and utilities; embassy and consular property of foreign governments; and hotels for one-half of their land's value. For legal entities t
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