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Tax Treaties: United States And Greece



Tax Treaties: United States And Greece

Quick Summary. Greece (Ελλάδα, Hellada or Hellas)sits on the Mediterranean Sea in Southeastern Europe.   Officially the Hellenic Republic (Ελληνική Δημοκρατία, Elliniki Dimokratia), Greece’s government is a parliamentary republic.  Its structure is set forth in the Constitution of Greece, its fundamental charter, which was adopted by the Fifth Revisional Assembly in 1975 and last amended by the Greek Parliament in 2008.

In 2019, Greece implemented several amendments to its Income Tax Code, including a corporate income tax rate reduction, reduced dividend withholding tax rates, and a participation exemption for certain capital gains.  The amendments also reduced bracketed rates for individuals and certain exemptions for non-residents from income, inheritance, and gift taxes.
Greece is a member of the North Atlantic Treaty Organization (NATO), European Union (EU), and the European Economic and Monetary Union in 2001.

Treaty.  Convention Between the United States of America and Greece for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed at Athens on February 20, 1950

Currency.

  • Euro (EUR)

Common Legal Entities.  

  • Corporation (SA)
  • Limited Liability Company (EPE)
  • Private Company (PC)
  • General Partnership (OE)
  • Limited Liability Partnership (EE)

Tax Authorities. 

  • Ministry of Finance
  • Public Revenue Independent Authority

Tax Treaties.

Corporate Income Tax Rate.

  • 24% rate for earned income applied to generally all legal entities in Greece.
  • 29% rate applied o Greek credit institutions and Greek branches of nonresident credit institution if they are subject to “deferred tax asset” recognition provision for all relevant fiscal years.

Individual Tax Rate. 

  • Up to EUR 10,000 – 9% rate
  • EUR 10,001 – 20,000 – 22% rate
  • EUR 20,001 – 30,000 – 28% rate
  • EUR 30,001 – 40,000 – 36% rate
  • Over 40,001 – 44% rate

Corporate Capital Gains Tax Rate.

  • 24% rate (taxed as ordinary business profits)

Individual Capital Gains Tax Rate. 

  • 15% rate applied to gains arising from the sale of securities and derivatives.

Residence.  

  • Corporation – A company is considered a resident under Greek law if the company is incorporated under Greek law or the company has its registered seat in Greece or its place of effective management in Greece at any time during the tax year.
  • Individual – An individual is considered a resident under Greek law if the individual is present in Greece for more that 183 days within any 12-month period. Individuals are also considered a resident if their center of vital interests in in Greece.

Withholding Tax.

            Dividends.

  • 5% dividend withholding tax for both residents and nonresidents unless the rate is reduced by an applicable tax treaty or exemption.

            Interest.

            Royalties.

  • 0% withholding tax rate on royalties paid for resident companies.
  • 15% withholding tax rate on royalties paid for resident individuals, and nonresident individuals and companies.

Transfer Pricing.

  • Transactions between related parties must be carried out on arms-length terms.
  • Greece allows the following transfer pricing methods.
    • Comparable uncontrolled price
    • Cost plus
    • Transactional net margin method
    • Resale price
    • Profit split

CFC Rules.

  • Greece has implemented the CFC rules based on the EU anti-tax avoidance directive (ATAD).
  • The undistributed passive income from affiliates of a foreign subsidiary satisfying certain conditions will be attributed to and taxed in the hands of the Greek resident controlling shareholder.
  • The application of the CFC rules results in the taxation of “deemed” income as business profits.

Hybrid Treatment.

  • Inbound dividends at the level of a Greek parent entity may be tax exempt under the EU parent-subsidiary directive but only to the extent that the relevant income is not treated as a tax-deductible expense (e.g., interest) at the level of the payer/subsidiary.

Inheritance/estate tax. 

  • Close Relatives – 1-10% range levied on the “tax value” of real estate after the deduction of a tax-free amount, which varies on the taxpayer’s relationship with the deceased.
  • Other heirs – 0-40% range of applicable rates.

Have a question? Contact Jason Freeman, Freeman Law.

Jason Freeman

Mr. Freeman is the founding and managing member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney. Mr. Freeman has been recognized multiple times by D Magazine, a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service.
He was honored by the American Bar Association, receiving its “On the Rise – Top 40 Young Lawyers” in America award, and recognized as a Top 100 Up-And-Coming Attorney in Texas. He was also named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas” by AI.

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