Any natural person or legal entity, earning income in Greece, is generally, obliged to submit annual tax income statements and be taxed for such income.

Greek taxation law has ranked the tax-payers/natural persons into two tax scales: 1) wage earners - pensioners; and 2) other professionals, according to the category of income that each tax-payer receives. Basically, the distinction that is taken into consideration for ranking a natural person into the category of wage earners - pensioners is whether his income from wage earning services/pensions exceeds the percentage of 50% of his total income.

Each taxation scale provides a tax free amount of income for which there is no tax imposition (for the year 2008, the tax free amount rises to €12,000 for the wage earners - pensioners and to €10,500 for other professionals). The amount of income that exceeds this amount is taxed with a progressive tax scale.

For determining the net income of every scale, a number of expenses are deducted, which are usually expenses incurred for the acquisition of the income by a certain category. Moreover, the tax authority adds the income that is received from presumed or actual expenses (expenses incurred for the purchase of a car, building a house in Greece, etc), based on the relevant provisions of the Greek law ("tekmiria").

For foreign residents, there is a tax in Greece imposition in the percentage of 5%, instead of the tax free amount that each tax scale provides.

If the total income includes income received from real estate property in Greece, in addition to the main tax that is imposed, there is an additional tax in the percentage of 1,5% on the gross income received from real estate properties. In case that the size of each residence exceeds the 300 sq.m., the additional tax arises to the percentage of 3% on the gross income received by such residence. However, the amount of the additional tax can not exceed the main tax, imposed on the total income.

In furtherance to the above, reductions from tax are provided, depending on the number of children that burden each taxpayer; reductions for medical expenses and expenses for hospitalization; tax reductions for housing needs of the tax-payers' children; expenses for rents and out-school lessons etc. Foreign residents are entitled to these tax reductions, only in case that they reside in the European Union and acquire income in Greece that exceeds the percentage of 90% of their global income. In order to be entitled to this benefit, the resident of a European Union member State, has to file to the competent Greek Tax Authority, a certificate for his global income issued by the local tax authority of their place of residence.

Despite the actual income that is declared from the taxpayer, his total income is also defined, based on his and his family's expenses, as per the relevant provisions of the Greek Income Taxation law 2238/1994. The definition of the income based on the expenses, is based on the rationale that the taxpayer must justify expenses incurred by declaring respective income that he has “presumably” received ("tekmiria").

The expenses may include: a) presumed expenses that each taxpayer is considered to have acquired from ownership rights or use of certain assets, such as the possession of a secondary residence in Greece, of size larger than 150sq.m.; possession of a private car; possession of yachts, aircrafts, etc... or b) actual expenses, made for the acquisition of assets, allowance of loans, gifts, repayment of loans.

For foreign residents, the expenses will be taken into consideration only in case that the expenses were performed in Greece, or in case that the acquired property is located in Greece and generally only in case that there is a connection between the expenses or the object for which expenses have been performed, within Greece.

The difference between the total expenses (presumed or actual) and the total net income of the taxpayer and his wife which is declared in Greece and taxed, consists the difference in expenses. The taxpayer is invited to cover or to reduce this difference by declaring certain income (mainly but not limited to through bank accounts, capital accumulated from past years, import of currency in Greece, loans etc), in order to be taxed on his actual income and not on the presumed.

All the above procedures for the fulfillment of the tax obligations regarding your income in Greece, can be accomplished through a limited Power of Lawyer to specialized Greek law firm, like ours.

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