The Greek Parliament adopted Law 4472 /2017 (Government Gazette 74/19.5.2017) titled “Public Pension provisions and amendment of Law 4387/2016, application measures of budgetary targets and reforms, social support measures and labour regulations. Mid-term Financial Strategy Framework 2018-2021 and other provisions”, which sets out certain provisions required for the commencement of the debate regarding the medium-term measures necessary for the viability of the Greek debt bail-out program. In this context, the provisions’ goal is not only to ensure that international obligations are respected, but also to provide support of the welfare state through the introduction of a series of measures supporting the social majority as well laying the foundations for its restoration. Amongst those measures, basic tax reforms have been adopted which include the following:
A. Corporate taxation
The corporate tax rate will be decreased from 29% to 26% for income acquired during the fiscal year commencing from 1.1.2019 and onwards. This measure is expected to enhance the business development in Greece.
B. Amendments to the Tax Reductions
- The reduction of the payable tax on income from employment and pension (provided that such income does not exceed EUR 20,000), is adjusted as follows:
- - to EUR 1,250 (from EUR 1,900) for a taxpayer without dependents ,
- - to EUR 1,300 (from EUR 1,950) for a taxpayer with one child
- - to EUR 1,350 (from EUR 2,000) for a taxpayer with 2 children
- - to EUR 1,450 (from EUR 2,100) for a taxpayer with more than 3 children
These provisions will be applicable for income acquired from 1.1.2020 onwards.
- The existing income tax rate of 22% which is currently applicable to employment and pension income band ranging from 0 to EUR 20,000 will be decreased to 20%. This measure is applicable from 1.1.2020.
C.Special Solidarity Contribution
The special solidarity contribution shall not be applied to income not exceeding EUR 30,000, as from 1.1.2020. Currently, it is not applied on income not exceeding EUR 12,000.
Additionally, the rate of special solidarity contribution is decreased to 2% from the current 6.5% applicable to income ranging between EUR 30,000.01 – 40,000 and to 5% from the current 7.5% for income from EUR 40,000.01 to EUR 65,000. For income above EUR 65,000 the rates remain the same, namely 9% for EUR 65,000 – 220,000 and 10% for income above EUR 220,000..
D. ENFIA (Single Property Tax)
In cases when the total amount of ENFIA does not exceed seven hundred euro, a reduction of 30% is granted, but not exceeding seventy euros. In cases of financial inability to pay the total debt for the relevant year, the threshold of seven hundred euro shall be doubled.
The above provisions (A, B, C, D,) shall be applicable to the extent that they cause no deviation from the medium-term budgetary targets as defined in the Economic Adaptation Program.
Services associated with agricultural production will be added to the list of services to which the lower VAT rate of 13% is applicable (as opposed to the standard 24%). This amendment will be valid as from 1.7.2017 and the purpose is to enhance one of the most important business sectors in Greece.
F. Electronic Payments
Certain changes have also been introduced to electronic payments. Namely, the provision introduces the total length of the adjustment period following which the beneficiaries of payments must comply with the obligation to accept card payment instruments. This adjustment period may not exceed three (3) years from the date of publication in the Government Gazette.
The Tax and Legal Department of Eurofast Global Ltd in Athens remains at your disposal for any further question and update in regards to both national and international tax matters.