Greece operates a comprehensive tax system that impacts both employers and employees. Understanding these obligations is crucial for businesses operating within the country and for individuals earning income there. The system includes income tax, social security contributions, and various other levies, with specific rules governing withholding, reporting, and compliance.
For companies employing staff in Greece, navigating payroll taxes and social security contributions is a key responsibility. Similarly, employees are subject to income tax on their earnings, with provisions for various deductions and allowances that can affect their final tax liability. Staying informed about the relevant rates, thresholds, and deadlines is essential for ensuring compliance and avoiding potential penalties.
Employer Social Security and Payroll Tax Obligations
Employers in Greece are primarily responsible for contributing to the social security system on behalf of their employees. These contributions cover various benefits, including pensions, healthcare, unemployment, and other social welfare programs. The contributions are calculated as a percentage of the employee's gross salary, up to a certain ceiling. Both the employer and the employee contribute, with the employer paying a larger portion.
The main social security fund is the Hellenic Social Security Fund (EFKA). Contribution rates can vary slightly depending on the specific sector or profession, but general rates apply to most private-sector employees.
| Contribution Type | Employer Rate | Employee Rate | Total Rate |
|---|---|---|---|
| Main Pension | 13.33% | 6.67% | 20.00% |
| Supplementary Pension | 3.25% | 3.25% | 6.50% |
| Healthcare (in cash) | 4.30% | 2.15% | 6.45% |
| Healthcare (in kind) | 2.55% | 1.27% | 3.82% |
| Unemployment | 2.49% | 1.00% | 3.49% |
| Occupational Risk | 1.00% | 0.00% | 1.00% |
| Total (Approximate) | 26.92% | 14.34% | 41.26% |
Note: Rates are subject to change and may vary based on specific circumstances or collective agreements. A maximum insurable earnings ceiling applies annually.
Beyond social security, employers may also be responsible for other minor contributions or levies depending on the industry or specific circumstances. Payroll tax itself is primarily handled through the income tax withholding mechanism applied to employees' salaries.
Income Tax Withholding Requirements
Employers in Greece are required to withhold income tax from the salaries and wages paid to their employees on a monthly basis. This withheld amount is an advance payment towards the employee's annual income tax liability. The amount to be withheld is calculated based on the employee's gross income, taking into account the applicable income tax brackets and any eligible tax allowances or deductions.
Greece has a progressive income tax system, meaning higher income is taxed at higher rates. The tax rates and brackets applicable to employment income are typically as follows:
| Annual Taxable Income (€) | Tax Rate (%) |
|---|---|
| 0 - 10,000 | 9 |
| 10,001 - 20,000 | 19 |
| 20,001 - 30,000 | 28 |
| 30,001 - 40,000 | 36 |
| 40,001+ | 44 |
Note: These brackets and rates apply to income earned from employment and pensions.
The withholding calculation also considers the tax-free threshold, which is effectively granted through a tax credit. This credit is higher for taxpayers with dependent children. The annual tax credit is then typically divided by 12 to determine the monthly amount that reduces the calculated monthly tax liability.
Employee Tax Deductions and Allowances
Employees in Greece can benefit from certain tax deductions and allowances that reduce their taxable income or the amount of tax payable. The primary mechanism for reducing the tax burden on lower incomes is the tax credit system linked to the tax-free threshold.
The annual tax credit is calculated based on the number of dependent children:
- No dependent children: Base tax credit providing a tax-free threshold.
- 1 dependent child: Increased tax credit.
- 2 dependent children: Further increased tax credit.
- 3 or more dependent children: Highest tax credit.
This tax credit is applied against the calculated annual tax liability. If the tax credit exceeds the tax liability, no income tax is due, and the excess credit is not refundable.
Certain expenses may also be deductible or provide tax relief, although the scope of deductible expenses has been limited in recent years. Common areas that might offer some form of tax benefit include:
- Specific types of insurance premiums.
- Donations to approved charities.
- Certain medical expenses (often subject to thresholds or specific conditions).
- Expenses related to energy upgrades for property.
Employees are generally required to maintain documentation for any expenses they wish to claim as deductions or for tax credits beyond the standard allowances.
Tax Compliance and Reporting Deadlines
Employers in Greece have significant reporting obligations related to payroll and employee taxes. The primary monthly obligation is the submission of the Analytical Periodic Declaration (APD) to EFKA, detailing employee earnings and social security contributions. This declaration is typically due by the end of the month following the payroll period.
Employers must also file monthly withholding tax returns (Form F24) for the income tax withheld from employee salaries. The deadline for this submission and payment is usually the last working day of the month following the payment of salaries.
Annually, employers are required to issue employees with a certificate of earnings (similar to a W-2 or P60) detailing their gross income, withheld income tax, and social security contributions for the previous tax year. This certificate is essential for employees to file their personal income tax returns.
Employees are required to file their annual personal income tax returns (Form E1) electronically through the AADE (Independent Authority for Public Revenue) online portal. The deadline for filing is typically in June or July of the year following the tax year, although extensions are sometimes granted. Tax payments resulting from the annual return can usually be made in several installments.
Special Tax Considerations for Foreign Workers and Companies
Foreign individuals working in Greece are subject to Greek income tax on their Greek-sourced income if they are non-residents for tax purposes. If they are considered tax residents of Greece, they are taxed on their worldwide income. Tax residency is generally determined by factors such as physical presence (more than 183 days in a calendar year) or having Greece as their center of vital interests.
Greece has a network of Double Taxation Treaties (DTTs) with many countries. These treaties aim to prevent individuals and companies from being taxed twice on the same income and often determine which country has the primary right to tax specific types of income, including employment income. The provisions of a relevant DTT can impact the tax obligations of foreign workers and their employers.
For foreign companies employing individuals in Greece, establishing a permanent establishment (PE) can trigger corporate tax obligations in Greece. However, even without a PE, a foreign company may still have payroll obligations (social security and income tax withholding) if they directly employ individuals residing and working in Greece. Utilizing an Employer of Record service is a common strategy for foreign companies to legally employ workers in Greece without establishing their own local entity or PE, transferring the payroll, tax, and compliance burdens to the EOR.
Greece also offers certain special tax regimes, such as the non-domicile tax regime for high-net-worth individuals who transfer their tax residency to Greece, and potentially incentives for attracting foreign talent, although the applicability of these to standard employment income and payroll obligations needs careful assessment.
