Stock Options and Free Shares in Greece

January 3, 2025

Free stocks and stock option plans continue to be powerful tools for attracting and retaining top talent. By aligning employee incentives with company performance, they promote long-term commitment, increase job satisfaction, and help companies build loyalty among key personnel.

In Greece, the legislative framework remains favorable, offering capital gains taxation at a flat 15% under certain conditions, which is significantly lower than progressive employment tax rates (up to 44%). These incentives are increasingly utilized by startups, tech firms, and high-growth companies across various sectors.

Free Stock Plans

Under the Greek Income Tax Code (ITC), in force since January 1, 2020, free stock awards granted to employees are not taxed at the time of the grant. These awards are typically tied to performance milestones or vesting schedules.

Taxation occurs only upon transfer or sale of the shares and is handled as capital gains income under Article 42A of the ITC. The method of capital gains calculation depends on whether the shares are listed or unlisted. Below, we focus on listed shares.

Taxation of Listed Shares

For listed company stocks, the reference value for calculating capital gains is the market price on the grant date. Here’s how the gain is taxed upon sale:

• If the sale price is equal to or exceeds the grant-date market price:

  • The gain up to the grant-date price is taxed at 15% (capital gains).

  • Any additional gain is exempt from tax under Article 42, unless the employee owns 0.5% or more of the company, in which case it is taxed at 15%.

    
    

• If the sale price is below the grant-date market price:

  • The difference is still treated as a capital gain based on the grant-date value and taxed at 15%.

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Example:

Employee “A” received 100 listed shares for free in 2021, with each valued at €50 on the grant date. In 2025, the shares are sold at €70 each.

• Taxable gain under Art. 42A = €5,000 (100 shares × €50), taxed at 15%.

• Additional gain = €2,000 (100 × €20) taxed under Art. 42 (either 0% or 15%, depending on ownership percentage).

  
  

Stock Option Plans

Stock options allow employees to buy shares at a pre-agreed price (exercise price), often lower than market value. The tax event is triggered only upon transfer of the acquired shares, not at grant or exercise.

Under Article 42A of the ITC, if the shares are sold at least 24 months after the grant date, the taxation is:

• 15% capital gains based on the difference between the exercise price and sale price.

• Additional gain may be exempt under Art. 42 if ownership is below 0.5%.

  
  

If sold within 24 months, part of the income is treated as employment income (fringe benefit), taxed at progressive rates (up to 44%), based on the value difference between exercise and market price at exercise. The rest is taxed as capital gains.

Example:

Company “TechCorp S.A.” grants options to buy shares at €20 each in January 2023. Employee “B” exercises the options in January 2024 when the shares are worth €50.

• Acquires 100 shares for €2,000 (instead of €5,000).

• If shares are sold in July 2025, more than 24 months after grant:

  • €3,000 gain taxed at 15% under Art. 42A.

  • Additional gain (e.g., if sale price is €100) = €5,000, taxed under Art. 42 (usually exempt if below 0.5% ownership).

• If sold before January 2025, the €3,000 difference (exercise vs. market) is taxed as employment income.

  
  

Compliance and Trends in 2025

As of 2025, the trend among Greek companies—especially in the tech, fintech, and biotech sectors—is to expand stock option programs beyond top executives to include mid-level employees and key technical staff.

Key points to ensure compliance:

• Maintain documentation for grant, vesting, exercise, and sale events.

• For listed shares, retain broker transaction statements.

• Evaluate ownership thresholds to determine whether additional gains are exempt.

  
  

Greece continues to offer a tax-efficient environment for stock-based compensation, making it a strategic advantage for companies looking to retain talent and boost performance. With favorable capital gains treatment, particularly after the 24-month holding period, both employees and employers can benefit significantly.

Employers should structure these plans carefully and seek proper legal and tax guidance to ensure maximum benefit under current regulations.