Greek Income tax

Resident individuals are taxable on their worldwide income whereas non-resident individuals are taxed on their Greek-source income only. Residence is not defined by law but determined on the basis of factual circumstances such as length of stay in Greece, the possession of a residence permit etc. Employment income be it in money or in money’s worth is taxable income. Benefits in kind are taxed at their fair market value.

The following deductions from taxable income are applicable: social security contributions are fully deductible; life insurance premiums are deductible up to EUR 1’200 for both spouses, split between them according to their income; interest payments on mortgages signed up to 31 December 1999 are fully deductible but only for one principle home in the taxpayer’s lifetime; interest payments on mortgages signed between 1 January 2000 and 31 December 2002 are fully deductible if the home is not bigger than 120m2; if it is bigger the deductible interest is reduced proportionally. Under certain circumstances, a tax credit is applicable for interest payments on mortgage loans taken after December 2002. Certain cash donations to institutions and charities are also deductible.

Apart from the above-mentioned tax credit for mortgage payments the following credits are available: a credit equal to 20% of the annual medical expenses of the taxpayer and his dependents up to a maximum of EUR 6’000; a credit equal to 20% of the annual home rent up to a maximum of EUR 240; a credit equal to 20% of the annual rent paid in respect of dependent children who are studying at a Greek school or university up to a maximum of EUR 240; a credit equal to 20% of the annual educational expenses for a taxpayer and his dependents up to a maximum of EUR 240; a credit of EUR 60 per child for taxpayers living at least 9 months a year in certain border areas or islands; and a credit equal to 20% of the expenses for converting an oil heating system to natural gas or solar power or for the purchase of power generating systems using renewable energy sources up to a maximum of EUR 700.

For 2008 the tax rates for employment income including pensions are as follows: up to EUR 12’000 – 0%; for the next EUR 18’000 – 27%, for the next EUR 45’000 – 37% and over EUR 75’000 - 40%. The first non-taxable bracket is increased by EUR 1’000 for one dependent child; EUR 2’000 for two dependent children and EUR 10’000 for three dependent children and EUR 1’000 for each additional child. Employees and pensioners have to file tax returns between 4 May and 1 June the year following the year the taxable income was earned.