Tax Law

Tax law takes a central role in all the countries of the European Union because they finance themselves through this. Harmonisation of the cross-border tax law is, for this reason, of strategic importance for the sustainable operation of the EU. The taxing authority remains with the member states.

The income tax for natural will generally be at the source of the income. The main laws for Greek tax law are the income tax law No. 4172/2013, the sales tax law 2859/2000, the tax proceedings law No. 4174/2013, as well as the gift and inheritance tax law No. 2961/2001.

In Greece there is a tax progression with different tax rates for income from labour and pensions (can reach a maximum of 42%), rental income, capital income (e.g. from dividends, etc.). Freelancers, entrepreneurs (merchants), and companies with books of the first category (relatively small companies) are subject to a tax of 26% of their profits. Joint-stock companies, private limited companies and IKE, as well as companies with books of the second category are subject to a tax of 20% plus 10% on distributable dividends beginning 1.1.2015.

Rental income is subject to a tax of 11% on the first part of the rental income up to 12,000 €, and 33% from this amount.

Tax on the purchase of real estate is either by means of the property acquisition tax which is 3%, and is added to the purchase price, provided it is above the assessed value. In the event of the commercial sale of new construction (date of issue of the building permit starting from 1.1.2006) the purchase price is subject to a value added tax of 23%, but is exempt from the property acquisition tax.

For legal transactions such as gifts, parental gifts and inheritances a tax free amount of 150,000 € per person exists, insofar as it relates to parents, or grandparents and children, or grandchildren, or spouses. Gifts or inheritances to third parties are subject to significantly higher tax rates.

European tax law means international tax law which contains transnational regulations between the EU member states. Questions of double taxation are regulated in agreements between the individual countries in the form of double taxation agreements.

If the different tax systems affect, for example, the European single markets the EU is authorised to harmonise indirect taxes in order to abolish barriers to trade. This is important practically in connection with the value added tax. The harmonisation of the value added tax was summarised in the so-called Value Added tax system directive 2007. However, a possibility to engage in direct taxation does not exist for the EU so that, in this regard, it can only fall back on the general harmonisation principles of Art. 113 of the Treaty on the functioning of the European Union. So far, individual areas were regulated like, for example, the taxation of cross-border changes in ownership and capital investments in the form of the Merger Directive, or through the Parent-Subsidiary Directive as well as the Interest and Royalties Directive for the avoidance of double taxation in different countries.

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Iliana – Kalliopi Kokotini was born in 1989 in Athens, Greece. She is graduate of the Law School of Democritus University of Thrace, (University of Komotini), Greece. She also hands a Master’s degree (L.M.M.) from the Democritus University of Thrace, Komotini with specialization in Criminal Procedure.

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