An overview of distributions and capital gains taxation in Greece
The taxation of investment income is of high interest for Greek taxpayers and foreign investors. Different tax treatments are raised from distributions and transactions on listed stocks, bonds, shares of unlisted companies and UCITS. Our tax analysis is based on the Greek Income Tax Code (Act 4172/2013), which is in force from January 1st, 2014, and on the interpretative circular 1032/2015, issued by the Independent Authority for Public Revenue.
Dividends and other Distributions
In principle, the flat tax rates on dividends an interest are 5% (from January 1st 2020) and 15% accordingly. Several exemptions are provided for some specific sources of such income. In more detail, coupons from treasury bills and government bonds issued by the Greek State are tax free. Furthermore, dividends or other income arising from EU UCITS funds are excluded from chargeable income.
The statutory tax rates may differ if a Double Tax Treaty applies and provides for an advantageous tax treatment.
In general, capital gains from the sale of stocks exempt from income tax. A Greek tax resident shall file such capital gains in his income tax return and pay solidarity tax, if any. However, if the holding rate is higher than 0.5% of the share capital, a capital gain tax is applied at a rate of 15%. Regarding the shares of unlisted Greek or foreign companies, the capital gain is subject to tax at a rate of 15%, regardless the holding rate.
Capital gains from the sale of UCITS shares, registered in EU jurisdictions, also exempt from income tax. Non-UCITS or mutual funds traded in third countries are subject to income tax at a flat rate of 15% on capital gains.
Bonds are mainly classified as government and corporate depending on the issuer. On the one hand, capital gains from the sale of government bonds and treasury bills are taxed under the general provisions of the Income Tax Code (flat rate 15%). On the other hand, if the issuer is an EU company, the capital gain from transactions on corporate bonds is tax free. Moreover, if an investor holds a corporate or government bond until the redemption date, any surplus between the nominal value and the acquisition cost exempts from income tax.
Note that direct transactions costs and fees charged on the acquisition or sale of an asset are taken into account for the determination of capital gain.
Special issues for foreign investors
According to the Greek Income Tax Code, a foreign tax resident is subject to Greek tax for any income generated from Greek sources. This means that dividends and interests received by foreigners are subject to withholding tax at the standard rates, without prejudice of the provisions of a relevant Double Tax Treaty.
Capital gains are not chargeable in Greece and a foreign investor is –in general- not liable to file an income tax return for this reason. However, if a foreign investor receives any other income except for capital gains (for example rental income or interest) and has obtained a TIN (AFM) in Greece, he shall file an income tax return and declare any capital gain from Greek sources.
The filing of the annual tax return requires an attentive breakdown of income received by portfolios due to the different tax treatment of various financial instruments. The relevant tax form (E1) includes all necessary fields and boxes for the declaration of each type of income. In case of a tax audit, all supporting documents shall be delivered to the Tax Office officially translated into the Greek language and carry an Apostille, if necessary.