Capital gains tax in Greece for foreign investors

The Independent Authority for Public Revenue, which is the Tax Department in Greece, follows an extremely confusing taxation system, and you will most likely need a local lawyer to help you make sense of it all. In addition, most taxes in this country are progressive, which means that they increase along with your income or profit. And to make things even more complicated, there are dozens of exceptions and exemptions applied in most cases.

In this article, we shall explain what capital gains tax means and compare Greece with other countries in this regard. We shall then describe capital gains tax in Greece for the most common categories of profit and mention some of the most relevant exemptions to give you a general idea of what to expect in this country.

General Information

In simple terms, your capital gains refer to all the profit that you make from selling non-inventory articles, such as shares, government bonds, private property, commercial real estate and precious jewellery. The most common categories of capital gains include:

  • Dividends from company shares and government bonds,

  • Corporate profits on the stock exchange,

  • Profit from the sale of real estate,

  • Gains from the inheritance of private property.

We will discuss each case separately in the following sections, but let us first see how Greece compares to other member states of the European Union.

Capital Gains Tax in Europe

Some countries set very high capital gains taxes, while others do not impose them at all or exempt non-residents from paying them. In general, we can say that Greece is doing quite well in this respect compared to the rest of Europe, as shown in the table below:

Country

Average CGT (%)

Country

Average CGT (%)

Italy

0

Spain

19

Germany

0

Cyprus

20

Netherlands

1.60

Serbia

20

Montenegro

9

Estonia

20

Macedonia

10

Russia

20

Malta

12

Norway

24

Belarus

13

United Kingdom

28

Greece

15

Austria

30

Hungary

15

Sweden

30

Czech Republic

15

Ireland

33

Liechtenstein

17

Finland

34

Tax Residency

The first thing to establish is whether you are a tax resident in Greece at all. For example, you are not considered as such, if you reside in the country for less than six months of the year. You can save a considerable amount of money on tax reduction that way.

Besides, one of the attractive features of the Greek permanent residence permit is that the law does not specify the number of days you have to spend in the country. If you do not live in Greece permanently, make sure you stay in the country less than 183 days per year, and your foreign income will be exempt from taxation.

CGT on Shares and Bonds

As a general rule, corporate profits from stock investments and technical services in Greece are considered to be part of regular income, and they are taxed accordingly. Dividends and government bonds are taxed at the flat rates, whereas taxes on shares vary depending on the type of the latter.

For instance, if your shares are classified as non-listed, you will pay the fixed CGT of 15%. In the case of listed shares, on the other hand, specific exemptions will apply to the flat tax rate, and a 2% transfer duty will hold for the gross sales.

Additional exemptions include the following:

  1. Corporate bonds are exempt from taxation completely in the case of companies registered in the EU.
  2. Your income will not be subject to taxation if you own the bonds until they are redeemed.
  3. If you are an alien in Greece, your CGT will be reduced down to 13% or 6%, depending on your country of residency.
  4. Royalties and service fees are not subject to taxation in the case of resident companies.

The table below shows the regular withholding tax rates on capital gains in this category (in %):

Government Bonds

Dividends

Royalties

Interests

Technical Project Fees

Management and Consultancy Fees

5

5

20

15

3

20

Note: your stocks will not be subject to taxation if they add to less than 0.5% of the company's total shares.

CGT on Real Estate Sales

In the case of CGT on property sales in Greece, you should keep in mind that the tax is based on your actual profit from the sales, not the market value of the property. In other words, if you purchase a flat for, say, €200,000 and then sell it for €300,000, it is the €100,000 difference that will be subject to real estate transfer tax and capital gains tax, a shown in the table below:

Taxable Margin

CGT

Transfer Tax

Less than €12,000

15%

3%

€12,000 to €35,000

35%

3%

Over €35,000

45%

3%

Note: the taxable margin will be further reduced by €25K if you have owned the property for at least 5 years.

Capital Gains from the Inheritance of Property

The Greek Inheritance Tax is calculated based on the actual market value of the property at the time of your relative's death. The nationality of the deceased is irrelevant, the main factor is that the property is located in Greece. Real estate outside the country is not subject to this type of capital gains taxation.

The actual tax rates will also depend on the degree of relationship between the heir and the deceased, ranging between 0% and 40%. In general, the closer the relationship tie, the lower the final tax, and there are three categories thereof, namely:

  • Group A, i.e. parents, spouses, children and grandchildren.

  • Group B, i.e. all great-grands in both directions, as well as in-laws, brothers and sisters.

  • Group C, i.e. all relatives who are not included in the previous two groups.

The table below shows examples of the inheritance taxes for all three groups in relation to the market value of the inherited property. To understand the data in the table, keep in mind that €150,000, €30,000 and €6,000, respectively, are deducted from the market value as tax-free. All the taxes and values are shown in euros, and the rates in %:

Group

Market Value

Tax Rate

Tax Amount

Total Value

Total Tax

A

Less than 150,000

N/A

N/A

150,000

N/A

 

150,000

1

1,500

300,000

1,500

 

300,000

5

15,000

600,000

16,500

 

Over 300,000

10

 

 

 

B

Less than 30,000

N/A

N/A

30,000

N/A

 

70,000

5

3,500

100,000

3,500

 

200,000

10

20,000

300,000

23,500

 

Over 200,000

20

 

 

 

C

Less than 6,000

N/A

N/A

6,000

N/A

 

66,000

20

13,200

72,000

13,200

 

195,000

30

58,500

267,000

71,700

 

Over 195,000

40

 

 

 

Final Word

In this article, we have provided a very general overview of the most common cases of capital gains tax in Greece, as well as exemptions therefrom. This is just the tip of the iceberg, though, and we refer you to the appropriate professionals for more specific guidance and support.

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