The main incentives in Greece are provided in the form of investment incentives.
Greece provides incentives for qualifying investment in most sectors. Each investment plan is evaluated on a case-by-case basis. The incentive type provided and the amount are based on the type and region of the investment and the size of the investing enterprise.
The incentive types available include:
- Tax exemption;
- Grants; and
- Leasing subsidies.
The regions of investment and the applicable incentive amount are as follows:
- Zone A - Prefecture of Attica and Viotia - 15% to 25% of the investment;
- Zone B - Prefecture with a gross national product exceeding 75% of the country's average - 30% to 40% of the investment; and
- Zone C - Prefecture with a gross national product less than 75% of the country's average - 40% to 50% of the investment.
The amounts of tax exemption, grants, or leasing subsidies must be recorded as tax-free reserves in special accounts. The reserves may not be distributed or capitalized and must be returned in case of the dissolution of the enterprise. If distributed or capitalized, the amount will be taxable and subject to certain penalties.
In the case of tax exemption, the amount of exemption that may be used is limited to 1/2 of the approved exemption amount in the fiscal year the production operation for which the investment was made is initiated. In the following year, the full approved amount may be used. The total amount should be used within 15 years.
On 25 April 2019, the government introduced new incentives for strategic investments made in Greece. Strategic investments are categorized below based on the investment amount, employment generated, and certain other factors:
- Strategic Investments 1, which are investments that create at least 150 new jobs with an investment budget of more than EUR 100 million;
- Strategic Investments 2, which include:
- investments that create at least 100 new jobs with an investment budget of over EUR 40 million;
- investments in the manufacturing (industrial) sector that create at least 75 new jobs with an investment budget of over EUR 30 million; and
- investments in specified manufacturing sectors that create at least 50 new jobs with an investment budget of over EUR 25 million.
- "Emblematic Investments," which include:
- investments carried out by distinguished internationally recognized legal entities ranked first in their global or European level, including in particular those promoting the green economy and the low-energy and environmentally-friendly economy; and
- investments in the manufacturing sector that create at least 200 new jobs with an investment budget of EUR 200 million.
- Fast-track strategic investments, which are investments that create at least 30 new jobs with an investment budget of at least EUR 20 million; and
- Incorporated strategic investments, which include public-private partnerships and investments identified as projects of common interest.
Qualifying strategic investments are eligible for either a tax exemption or accelerated depreciation under the law. The incentives vary depending on the category of strategic investment. Taxpayers are required to file applications before 31 December 2023 to be eligible for the investment incentives.
The tax exemption is provided for pre-tax profit based on the eligible investment budget amount, with an exemption of up to EUR 7.5 million (eligible aid) for investment budgets up to EUR 30 million, decreasing as follows:
- 80% of eligible aid for investment budgets exceeding EUR 30 million up to EUR 35 million;
- 60% of eligible aid for investment budgets exceeding EUR 35 million up to EUR 40 million;
- 40% of eligible aid for investment budgets exceeding EUR 40 million up to EUR 45 million;
- 20% of eligible aid for investment budgets exceeding EUR 45 million up to EUR 50 million;
- 10% of eligible aid for investment budgets exceeding EUR 50 million up to EUR 100 million; and
- No aid for investment budgets exceeding EUR 100 million.
The accelerated deprecation is provided for fixed assets included as part of the investment plan, with an increase of the standard depreciation rates by 100%, although if the standard rate exceeds 20%, the accelerated rate may not exceed 40%.
Further, for manufacturing companies, the amount deducted from gross revenue for the depreciation of machinery and equipment at the time of their realization is increased by 30%.
Certain other incentives are also granted to speed up the project implementation for strategic investments, such as rapid licensing procedures, as well as aid for the employment of disadvantaged and disabled persons up to EUR 5 million. The aid for research and development is granted:
- Up to EUR 20 million for industrial research projects;
- Up to EUR 15 million for experimental development projects; and
- Up to EUR 7.5 million for feasibility studies and preparation for research activities.
Greece offers several incentives in respect of research and development (R&D) costs. Taxpayers are allowed to deduct 130% of eligible R&D expenses incurred in scientific and technological research activities. If losses arise after the deduction of the R&D expenses they can be carried forward up to five years in line with the general tax provisions.
Effective 3 December 2018, an exemption is granted in respect of 1% capital duty on capital contributions used exclusively for R&D activities. The exemption is available to trading companies, associations, cooperatives, and branches of foreign companies.
In response to the COVID-19 pandemic, Greece approved a law providing an increased deduction for R&D expenditure. Effective 1 September 2020, taxpayers are allowed to deduct 200% (increased from 130%) of the eligible R&D expenditure incurred for scientific and technological research, including depreciation of equipment and instruments used for the purpose of conducting scientific and technological research. The claim of the increased deduction is subject to the submission of supporting documentation along with the tax return.
Where the deduction results in a loss, the loss can be carried forward as per standard loss carry-forward rules.
The patent incentive was introduced as part of Law 4512/2018, which was published on 17 January 2018. The incentive provides for a three-year tax exemption on income derived from the sale of goods manufactured by a company under a recognized patent that was developed by the company itself. The profits from such income must be recorded in a special reserve account, which will be subject to tax in accordance with the tax code if distributed or capitalized. Effective 1 January 2022, the tax code provides for a specific formula to determine the exemption amount based on nexus ratio in line with the OECD.
The tax-free reserve incentive provides for a reduced final tax on the capitalization of tax-free reserves formed under the various development laws. The final tax rate depends on whether or not the company is listed on the Athens Stock Exchange:
- For listed companies, the final tax rate is 5% for 2018, 10% for 2019 and 5% for 2020; and
- For non-listed companies, the final tax rate is 10% for 2018 and 2019 and 5% for 2020.
For claiming the reduced tax rate benefit, the capital must be maintained for a period of 5 years. For non-listed companies, an additional requirement applies that the capitalization of tax-free reserves must result in an increase in share capital for an equal amount.
The tax is to be paid in four instalments every six months and serves to fulfill the income tax obligation for both the company and its shareholders or partners. The incentive applied until 31 December 2020.
A tonnage tax regime applies, under conditions, to companies operating Greek or foreign-flagged ships. Effective 1 January 2020, the tonnage tax regime is also applicable to companies chartering bare vessels (bareboat charters) and leasing vessels under a foreign flag, provided they are managed by Greek or non- Greek ship management companies having an office in Greece.
The tonnage tax is in lieu of all other profit taxes. In particular, the payment, by the owners of Greek-flagged ships, of the tonnage tax constitutes fulfillment of all liability of the ship-owner and shareholders/partners of any Greek or foreign company in respect of income tax on profits from the operation of ships, including dividends received from the shipping company (except, in the latter case, for resident individuals). This exemption also covers all capital gains realized at the level of the ship-owner/shipping company and their shareholders. Moreover, tonnage tax paid abroad may be offset against the tonnage tax due in Greece. The ship-owner bears the primary responsibility for the payment of the tax, but the (often related) ship manager has a joint liability therein.
The Greek Public Revenue Authority has issued Circular 1159 of 3 August 2018 on the determination of ancillary activities related to maritime transport, which are eligible for the tonnage tax regime. The Circular clarifies that the regime may apply to eligible ancillary activities performed by ship-owners, which include:
- With regard to passenger transport, the provision of accommodation, food, beverages, entertainment, retail, and other passenger care services provided onboard and exclusively by the ship-owner, as well as the operation of facilities for the issuance of tickets and terminals (proceeds from gambling/casino operations, shore excursions, and most luxury goods are excluded);
- The transport of goods and freight and the loading and unloading of cargo on an eligible ship, including the movement of containers by the ship-owner within the port area immediately before or after a voyage;
- The rental of space onboard for business operations of third parties for the sale of goods and services, and certain other operations; and
- The applicable tonnage regime depends on whether the ship is classified under Category A or Category B.
Category A includes the following types of vessels:
- Engine-propelled cargo ships, tankers, and refrigerator ships with gross tonnage equal to or exceeding 3,000 tons;
- Iron-hulled cargo ships for dry and liquid loads and refrigerator ships with a gross tonnage exceeding 500 tons, but no more than 3,000 tons, and its itinerary includes calls at foreign ports or which ply between foreign ports;
- Passenger ships, the itineraries of which include calls at foreign ports or plying between foreign ports;
- Passenger ships with gross tonnage above 500 tons, which for a period of at least six months during the preceding year have exclusively carried out regular tourism voyages between Greek ports or between Greek and foreign ports, or only between foreign ports, for the recreation of their passengers, after public advertisement of the said ships (tourism or cruise ships); and
- Floating drilling platforms with a displacement exceeding 5,000 tons, floating platforms for refining or storing oil with a gross tonnage exceeding 15,000 tons, designed or converted for exploration, sea-bed drilling, sea pumping, refining, or storing oil or natural gas.
The tonnage tax rate for Category A vessels is determined by reference to the age of the vessel and then multiplied by a specific factor depending on gross tonnage. The tax rates are as follows:
|Age of Vessel in Years||Rates (2016 in USD per gross tonnage)|
|30 years and over||1.795|
For the tax years 2022 and 2023 (abolished for the tax year 2021), the above tonnage tax rates are increased by 4% for category A vessels flying the Greek flag. The 4% increase also applies to vessels of Greek interests flying a foreign flag to the extent insured with the Naval Retirement Fund. The rate is increased from 4% up to 6% for the tax years 2024 and 2025. It is clarified that even if the increase of 4% is suspended for the tax year 2021, it must be considered for calculating the tax and determining the contribution for subsequent tax years 2022 up to 2025.
The tax amount is then multiplied by an adjustment rate depending on gross tonnage. The adjustment rates are as follows:
|Gross Tonnage||Adjustment Rate|
|100 – 10.000||1.2|
|10.001 – 20.000||1.1|
|20.001 – 40.000||1|
|40.001 – 80.000||0.9|
|80.001 and above||0.8|
Category B covers all other engine-driven ships, sailing ships, and all other types of boats, in particular, fishing vessels, sailing boats, and small craft in general.
The tonnage tax for Category B vessels is determined in accordance with the following Table:
|Gross Tonnage||Tax Rate (in EUR per gross tonnage)||Tax (in EUR)||Cumulative Gross Tonnage||Total Annual Tax (in EUR)|
|First 20||0.90 (previously 0.60 until 31 December 2019)||18||20||18|
|Next 30||1.05 (previously 0.70 until 31 December 2019)||31.50||50||49.5|
|Next 50||1.14 (previously 1.14 until 31 December 2019)||57||100||106.50|
A uniform rate of EUR 1.20 (previously 1 until 31 December 2019) per ton applies for gross tonnage in excess of 100.
Hence, the tonnage tax for a Category B vessel of 100 tons amounts to EUR 106.50 per year being: 0x0.90] + 0x1.05] + 0x1.14]. For a vessel of gross tonnage 150, the annual tax would be EUR 166.5, being 106.50 + 0X1.20].
However, a minimum tax amount is set at EUR 200, if greater than the amount determined according to the above rate scale.
The resulting tax amount is then multiplied by certain coefficients depending on vessel type to determine the tax payable. The coefficients are as below:
|Tugboats operating in maritime transport/ shipping services for a time period that does not exceed 50% of their total time of operation||0|
|Training boats and boats for scientific research||1|
|Passenger and cargo ‘category B ships||1|
|Dredgers, barges, crane ships||1|
|Supply ships, fridges, lightships, barges||1|
|Layer and maintenance vessels for cables, pipelines, marine research vessels, drilling and pumping vessels||1|
|Professional leisure boats and touristic sailing boats||5|
|Private leisure boats||5|
|Tugboats, lifeboats, navigators, firefighting boats, and boats for the cleaning and decontamination of the sea||10|
Additional reductions of or exemptions from the tonnage tax are available in certain circumstances, such as the repair of qualifying ships in Greece.
The following new tax deductions are introduced effective from 1 January 2020:
- A 50% reduction for vessels routed in scheduled destinations between Greek and foreign ports or between foreign ports; and
- A 60% reduction for passengers’ vessels.
Effective 1 January 2020, a new special tax duty is introduced for fishing vessels flying the Greek flag and for tugboats that are active in shipping for more than 50% of their total operating time.
For fishing vessels, the duty amount, based on the length of the vessel in meters, is as follows:
|Length of the Vessel (in meters)||Tax Duty (in EUR)|
|up to 6 meters||100|
|6.01m up to 8 meters||250|
|8.01m up to 10 meters||475|
|10.01m up to 12 meters||813|
|12.01m up to 15 meters||1,319|
|15.01m up to 18 meters||2,078|
|18.01m up to 24 meters||3,217|
|24.01m up to 30 meters||4,926|
|30.01m up to 36 meters||7,489|
|36.01m up to 45 meters||11,333|
|45.01 meters and longer||17,100|
For tugboats subject to the duty, the duty amount, based on the horsepower of the vessel, is as follows:
|Horsepower of the Vessel (BHP)||Tax Duty (in EUR)|
|up to 500||6,000|
|501 to 1,000||12,500|
|1,001 up to 1,500||19,500|
|1,501 up to 2,000||27,500|
|2,001 up to 2,500||36,500|
|2,501 up to 3,000||46,500|
|3,001 up to 3,500||57,500|
|3,501 up to 4,000||69,500|
|4,001 up to 4,500||82,500|
|4,501 up to 5,000||96,500|
|5,001 and above||111,500|
The new special tax duty is required to be paid annually with returns due by the end of March and payments in two instalments due by the end of June and the end of October.
Note that the European Commission is critical of the Greek shipping regime, in particular in areas potentially constitutive of illegal State aid. The Commission submitted a proposal in 2016 to revise the regime, and the Greek government pledged to revise the regime in agreements reached with international financial institutions. Most notably, the Commission proposes to restrict the scope of application of the regime by the introduction of a flag-linked condition and the exclusion of various operators, such as insurance intermediaries, maritime brokers, fishing vessels, port tugboats, and certain pleasure crafts, from its scope.
New state aid for branches of foreign companies established in Greece is introduced by a law published on 1 April 2019. Qualifying branches are eligible for the following incentives/ state aid, including cash grants:
- Wage subsidies for up to 12 months for employees equal to 50% of eligible expenses, capped at EUR 200,000 in a three-year period (capped at EUR 5 million per year for recruitment of disadvantaged and disabled persons);
- Aid for training for employees equal to up to 50% of eligible expenses, capped at EUR 2 million per project;
- Aid for research and development projects equal to:
- 50% of eligible expenses for industrial research, capped at EUR 20 million per project;
- 25% of eligible expenses for experimental development, capped at EUR 15 million per project; and
- 50% of eligible expenses for feasibility studies, capped at EUR 7.5 million per study; and
- Aid for the purchase of IT equipment and software equal to 50% of eligible expenses, capped at EUR 200,000 in a three-year period.
The aid may be granted annually for a period of five years from the date of the decision to grant the aid is provided. Existing branches of foreign companies and Greek companies are also eligible for the aid, provided that they develop a new activity that has not been undertaken in Greece in the two years preceding the application for aid and that the new activity creates a minimum number of new jobs.
However, for aid applications made up to 28 June 2019, an existing branch may have already developed the new activity prior to submitting the application, but not before 1 January 2019.
In response to the COVID-19 pandemic, Greece has announced the following tax measures to support businesses:
- An incentive for advertisement expenses: An increased deduction of 100% (i.e., a total deduction of 200%), 60% (i.e., a total deduction of 160%) and 30% (i.e., a total deduction of 130%) for advertising expenses incurred in the years 2020,2021 and 2022, respectively. The increased deduction is subject to certain conditions, including that the company has either suspended its activities or is financially affected due to the pandemic; and
- An incentive for cancelled/ postponed events: Expenses incurred (such as expenses for airline tickets, conference and exhibition space rentals, etc.) towards a business event that is cancelled or postponed due to the pandemic can be deducted in the same year in case of cancelation of the event, or can be deducted in the year in which the service is provided in case of postponement of the event. The claim is subject to the submission of proof by the taxpayer that the cancelation or postponement of the event was due to the pandemic.
The incentive for stimulating employment was introduced as part of Law 4549/2018, which was published on 14 June 2018. Employers are eligible for up to 150% deduction of social security contributions in respect of the recruitment of full-time employees, subject to fulfillment of certain conditions.
Effective 1 January 2020, employers are eligible for a 130% deduction of the cost of purchasing monthly or annual public transportation cards for employees.
The incentive for stimulating the production of audio-visual works was introduced as part of Law 4549/2018, which was published on 14 June 2018. A company investing in qualifying audio-visual works (financiers) is eligible for a deduction of up to 30% of eligible expenses incurred in Greece for each audio-visual production, except investments derived from financial sponsorships of the production of audio-visual works. The maximum deduction is calculated on the basis of the total annual eligible costs of the investment plan and is capped at the amount of financing if this amount is less than 30% of total costs. In case multiple financiers are eligible for the incentive deduction, the deduction is determined on the basis of the total investment amount and the amount invested by each financier. Further, the company may deduct the amount of the incentive deduction from the taxable income reported in the tax return for the relevant tax year relating to the relevant expenditure. In case the incentive results in a tax loss, the same is carried forward under the general tax rules (see Sec. 7.1.).
Effective 26 May 2022, Greece introduced an incentive for business development through corporate transformations (reorganizations) and cooperation by way of an exemption from tax on 30% of the pre-tax profits of a new company resulting from reorganization, cooperation, or by the contribution of a sole proprietorship. The exemption is subject to fulfillment of the following conditions:
- Last three years’ average turnover of all companies involved under reorganization is at least 150% of the average turnover of the company with the highest average turnover in the last three years;
- Companies transformed after undergoing reorganization are micro, small, or medium-sized enterprises (SMEs);
- Turnover of the new company is at least EUR 375,000, which is ascertained based on the total turnover of the latest and approved financials or income tax returns of companies involved in a reorganization, excluding transactions between them; and
- New company employs more than 9 full-time employees.
The exemption of 30% of the pre-tax profits can also be availed by the cooperation of persons taking place under the establishment of a new legal entity or other legal entity subject to the following conditions:
- Each cooperating person contributes at least 10% of the corporate capital of the legal entity as share capital; and
- Share capital of the new legal entity should be more than EUR 125,000.
The exemption of 30% of the pre-tax profits is also granted to the new company formed by way of contribution of sole proprietorship subject to the following conditions:
- The sole proprietorship has started operations at least 3 years before the contribution;
- Accounting records of the new company are maintained under a bibliographic system; and
- Turnover of the new company should be equal to or greater than 150% of the turnover of the sole proprietorship having the highest average turnover in the last 3 years amongst the several sole proprietorships who have contributed to the formation of the new company
The 30% tax exemption can be claimed for up to 9 years beginning from the year following the completion of the reorganization, the commencement of the cooperation, or the contribution of a sole proprietorship. In the case of reorganizations and contributions of a sole proprietorship, the tax benefit is restricted to EUR 500,000 and in the case of cooperation, the tax benefit is restricted to EUR 125,000 for each cooperating person.