Direct distribution in Greece

Direct distribution

May a foreign supplier establish its own entity to import and distribute its products in your jurisdiction?

Yes, under the same terms and conditions as Greek natural or legal persons. See also questions 3 and 4.

May a foreign supplier be a partial owner with a local company of the importer of its products?

Yes.

What types of business entities are best suited for an importer owned by a foreign supplier? How are they formed? What laws govern them?

Importers owned by foreign suppliers may carry out business in Greece in a variety of legal forms. Most importantly:

• sociétés anonymes (SAs) are regulated by the recently adopted Law No 4548/2018, amending Law No. 2190/1920 and are liable for debts and obligations with their own assets. Shareholders are liable only to the extent of their capital contribution. The minimum capital required is €25,000 (in certain cases, a larger amount may be required). The establishment of the company is completed upon registration with the General Commercial Register;
• limited liability companies are regulated by Law No. 3190/55 and are liable for debts and obligations with their own assets. Their partners are liable only up to the extent of their capital contribution. They resemble partnerships in the way decisions are made since both the majority of the partners and the majority of the capital is required. The capital is determined by the partners (with no restrictions to the amount). All actions necessary for the establishment of a limited liability company are carried out by a notary public. The establishment of the company is completed upon registration with the General Commercial Register. Foreign partners must acquire a tax registration number in Greece;
• private capital companies are regulated by Law No. 4072/2012. Private capital companies are liable for debts and obligations with their own assets. Partners are liable only up to the amount specifically agreed in the articles of association (partners who participate with a guarantee contribution may assume liability for all the company’s debts towards third parties up to the amount of their contribution). The capital is determined by the partners and there are no restrictions to the amount. In principle, the articles of association need not take the form of a notarial deed; a private document suffices. The establishment of the company is completed upon registration with the General Commercial Register;
• general partnerships are regulated by Law No. 4072/2012 and the Greek Civil Code. Partners are personally liable for the debts of the partnership without any limitation. There are no minimum capital requirements. The articles of association must be signed before a notary public and are filed with the General Commercial Registry;
• limited partnerships are regulated by Law No. 4072/2012 and the Greek Civil Code. Partners are liable for the debts of the partnership without any limitation except for the limited partner (at least one) whose liability is limited to his or her capital contribution. There are no minimum capital requirements. The articles of association must be signed before a notary public and are filed with the General Commercial Registry;
• joint ventures (JVs) are not specifically regulated by Greek law. JVs can be subject to corporate law if the parties decide to carry out commercial activities and form a corporate entity which must be registered with the General Commercial Registry (in this case the provisions regulating general partnerships apply); and
• a branch may be registered under Law No. 4548/2018 (as a branch of a foreign SA) or under Law No. 3190/1955, (as a branch of a foreign limited liability company). The branch is administered by an individual (representative) appointed by the foreign company.

Does your jurisdiction restrict foreign businesses from operating in the jurisdiction, or limit foreign investment in or ownership of domestic business entities?

There are no restrictions on foreign suppliers entering the domestic market. The general principles of free movement of goods, persons, services and capital apply in Greece, as a member state of the European Union. See also question 1.

May the foreign supplier own an equity interest in the local entity that distributes its products?

Yes.

What are the tax considerations for foreign suppliers and for the formation of an importer owned by a foreign supplier? What taxes are applicable to foreign businesses and individuals that operate in your jurisdiction or own interests in local businesses?

Foreign companies usually choose to operate in Greece by establishing subsidiaries or branches. The corporate income tax rate in Greece is 29 per cent. Dividends to non-residents are subject to a withholding tax of 15 per cent. No withholding tax applies to dividends paid by a Greek subsidiary to its EU affiliate (under certain conditions, eg, a 10 per cent shareholding is held for an uninterrupted period of 24 months). The same applies to profits that are credited or remitted by a branch in Greece to its head office abroad.

The withholding tax on interest paid to non-residents is 15 per cent, subject to bilateral tax treaty relief.

The tax withheld in Greece for royalties paid to non-residents is 20 per cent, subject to bilateral tax treaty relief.

Payments for services are subject to a 20 per cent withholding tax in Greece (eg, management fees, consultancy fees), unless paid to non-residents with no Greek permanent establishment.

Bilateral tax treaties for the avoidance of double taxation between the country of the supplier and Greece usually regulate all issues regarding the payment of royalties, interest, dividends, capital gains, among others.

A foreign company may be subject to corporate tax in Greece if it obtains ‘permanent establishment’ in Greece. The provisions of the ITC and the relevant bilateral tax treaties define the term ‘permanent establishment’.

Value Added Tax (VAT) in Greece is 24 per cent and applies on the majority of sales of goods and services.

Intra-group transactions must be carried out based on the arm’s-length principle (transfer pricing).

A withholding tax is imposed on salaries paid to employees. Moreover, employers must contribute to the social security funds of the employees.