Strategic Tax Planning: Establishing a Company in Greece

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Table of Contents

• Introduction to Greek Business Environment
• Key Benefits of Setting Up in Greece
• Choosing the Right Business Structure
• Greek Tax Framework and Considerations
• Company Formation Process: Step-by-Step
• Banking and Financial Considerations
• Real Estate Investment and Tax Implications
• Navigating Regulatory Compliance
• Common Challenges and How to Overcome Them
• Your Mediterranean Business Roadmap
• Frequently Asked Questions

Introduction to Greek Business Environment

Considering Greece for your next business venture? You’re looking at a country that has transformed its economic landscape dramatically over the past decade. While once mired in financial crisis, Greece has emerged with streamlined business processes, competitive tax incentives, and strategic positioning as a gateway between Europe, Asia, and Africa.

The Greek business ecosystem now offers entrepreneurs a compelling blend of traditional European stability with emerging market growth potential. As Maria Kontoudaki, a Athens-based business consultant puts it: “Greece isn’t just about sunny islands anymore—it’s about sunny business prospects with corporate tax rates that make CFOs smile.”

Let’s explore how Greece has positioned itself as an increasingly attractive destination for international businesses seeking tax efficiency while maintaining EU-compliant operations.

Key Benefits of Setting Up in Greece

The Hellenic Republic offers several distinct advantages that make it worth considering for your corporate structure:

Strategic Geographic Advantages

Greece’s position at the crossroads of three continents provides unparalleled access to multiple markets. This isn’t just about map coordinates—it translates to practical business benefits for companies involved in shipping, logistics, energy, and international trade.

Consider Hellas Maritime Solutions, which established its headquarters in Piraeus in 2019. By centralizing operations in Greece, they reduced shipping routes between Asian manufacturers and European markets by an average of 4-7 days compared to northern European ports, resulting in 12% cost savings on logistics.

Tax Incentives and Special Regimes

Greece has introduced several tax incentives specifically designed to attract foreign investment:

• Corporate tax rate of 22% (reduced from 29% in recent years)
• Non-dom tax regime for high-net-worth individuals relocating to Greece
• Special tax regime for digital nomads offering significant exemptions
• Investment incentives with up to 50% tax allowances for specific projects
• Dividend withholding tax of 5% (with further reductions under DTTs)

The transformation is significant. As recently as 2016, the World Bank ranked Greece 60th for ease of doing business. By 2020, it had climbed to 44th position—a testament to the country’s commitment to business-friendly reforms.

Choosing the Right Business Structure

Your choice of legal entity significantly impacts your tax position and operational flexibility in Greece. Let’s examine the most viable options:

IKE: The Most Flexible Option

The IKE (Private Company) has rapidly become the vehicle of choice for foreign investors entering the Greek market. With minimal capital requirements and simplified governance, it offers the perfect balance between operational flexibility and credibility in the market.

Case Study: TechSolutions UK established an IKE in Athens in 2021 to serve as their EU headquarters post-Brexit. With just €1 in initial capital (later increased through capital injections), they created a fully operational entity within 7 business days, maintaining their EU market access while benefiting from Greece’s lower operational costs—approximately 30% lower than their previous Netherlands structure.

Greek Tax Framework and Considerations

Understanding Greece’s tax ecosystem is essential for strategic corporate planning. The country operates a territorial tax system with worldwide taxation for resident companies.

Corporate Taxation Structure

The standard corporate income tax rate of 22% applies to all business profits. However, the effective rate can be significantly reduced through various incentives:

While Greece’s headline rate appears average by EU standards, the combination of incentives and special regimes makes it particularly competitive for specific business models:

• R&D tax credits: Up to 200% deduction for qualifying research expenses
• Patent box regime: 80% exemption on income from patents and IP
• Strategic investments: Up to 12 years of fixed tax rates for large projects
• Employment incentives: Reduced social security contributions for new hires

Double Tax Treaties Network

Greece maintains an extensive network of over 57 double taxation treaties, providing ample opportunities for international tax planning. Particularly favorable treaties exist with Cyprus, Switzerland, and the UAE, creating strategic opportunities for holding structures.

Let me introduce you to a real-world application: Northern Lights Trading, a Norwegian export company, established a Greek subsidiary in 2022 to coordinate their Mediterranean operations. By leveraging the Greece-Egypt double tax treaty, they reduced withholding taxes on Egyptian-source income from 20% to just 5%, while simultaneously benefiting from Greece’s participation exemption regime on dividend income.

Company Formation Process: Step-by-Step

Ready to take the plunge? Here’s your roadmap to establishing a Greek company with maximum tax efficiency:

1. Pre-formation planning (1-2 weeks)
   • Determine optimal legal structure based on business model
   • Draft Articles of Association with tax-optimization provisions
   • Secure corporate name approval from the Athens Chamber of Commerce
2. Formation execution (1-2 weeks)
   • Notarize company documents (required for AE and EPE structures)
   • Register with the General Commercial Registry (GEMI)
   • Obtain Tax Identification Number (AFM) from local tax office
   • Register with the Unified Social Security Institution (EFKA)
3. Post-formation implementation (1-3 weeks)
   • Open corporate bank account (increasingly challenging due to enhanced KYC)
   • Register for VAT (if applicable)
   • Implement accounting systems that comply with Greek tax requirements
   • Apply for specific tax incentives relevant to your business model

Pro Tip: While Greece has made significant progress in digitizing business processes, personal relationships still matter enormously. Engaging a local advisor with established connections to relevant authorities can reduce formation time by up to 60% and minimize potential compliance pitfalls.

Banking and Financial Considerations

The Greek banking sector has undergone substantial consolidation and strengthening since the financial crisis. However, opening corporate accounts remains a detailed process requiring careful preparation.

Corporate Banking Requirements

Greek banks have implemented rigorous Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. When establishing banking relationships, prepare for:

• Comprehensive documentation of beneficial ownership (up to UBO level)
• Clear explanation of business model and source of funds
• Projected transaction volumes and patterns
• Physical presence requirements for account signatories
• Enhanced due diligence for businesses in specific sectors (e.g., cryptocurrency, online gaming)

Alternative banking solutions through fintech platforms like Revolut Business or Wise Business have gained popularity for day-to-day operations, though a relationship with a Greek bank remains essential for local credibility and accessing credit facilities.

Real Estate Investment and Tax Implications

Property acquisition often accompanies company formation in Greece, whether for operational premises or as part of a broader investment strategy. The real estate sector offers compelling tax advantages worth exploring:

Golden Visa Program Benefits

Greece’s Golden Visa program has attracted significant investment, offering residence permits for non-EU nationals investing at least €250,000 in Greek real estate. For business owners, this creates an opportunity to combine corporate structuring with personal residence planning.

Many entrepreneurs buy house in greece not just for the residence benefits but also as a strategic business asset. Property can be owned directly by the Greek company (creating potential for expense deductions) or separately as a personal investment.

Real Estate Taxation Strategy

Property ownership in Greece incurs several taxes that require careful planning:

• Transfer tax: 3.09% on property acquisition value
• Annual property tax (ENFIA): Based on objective value, usually 0.1%-0.35%
• Capital gains tax: 15% on property disposal gains (with numerous exemptions)
• Rental income tax: Progressive rates from 15% to 45% for individuals; flat 22% for companies

Strategic Insight: For maximum tax efficiency, consider establishing a Greek Real Estate Investment Company (AEEAP) structure, which offers a preferential tax rate of 10% on income and capital gains when specific conditions are met.

Navigating Regulatory Compliance

Tax optimization must be balanced with proper compliance to avoid costly penalties and reputational damage. Greece has significantly enhanced its regulatory oversight in recent years.

Compliance Essentials

Your Greek company must adhere to several ongoing compliance obligations:

• Monthly VAT returns (if registered for VAT)
• Quarterly withholding tax returns
• Annual corporate income tax returns (due by June of the following year)
• Transfer pricing documentation for related-party transactions
• Ultimate Beneficial Owner registry updates
• Annual financial statements submission to GEMI

Missing deadlines can result in penalties ranging from €100 to €2,500 per violation, with interest accruing at approximately 8.5% annually on unpaid tax amounts.

Substance Requirements

In the era of BEPS (Base Erosion and Profit Shifting) initiatives, substance requirements have taken center stage in international tax planning. Your Greek entity must demonstrate genuine economic presence through:

• Appropriate physical premises (leased or owned)
• Adequate staffing relative to claimed functions
• Local decision-making capacity
• Technology and equipment commensurate with activities
• Reasonable financial risk assumption

Case Study: Digital Solutions Ltd established a Greek subsidiary claiming to coordinate all Mediterranean operations. With only a virtual office and no employees, they allocated €1.2M in profits to the entity. During a tax audit, authorities reclassified the arrangement as a permanent establishment of the parent company, resulting in additional tax assessments of €380,000 plus penalties.

Common Challenges and How to Overcome Them

Setting up in Greece offers tremendous advantages, but it’s not without hurdles. Here are the most common challenges and practical solutions:

Navigating Bureaucracy

Despite significant improvements, Greek bureaucracy can still present obstacles. Overcome this by:

• Engage specialized business formation experts with established relationships
• Prepare comprehensive documentation packages before initiating processes
• Utilize the fast-track investment program for larger projects (investments over €2M)
• Consider digital nomad visa options for simpler entry before full corporate setup

Managing Currency Risk

Operating within the Eurozone provides stability, but companies with significant non-EUR operations should implement:

• Currency hedging strategies
• Multi-currency accounts to minimize conversion costs
• Natural hedging through matching revenue and expense currencies

Practical Example: TechExports SA, selling software from Greece to UK markets, established a natural hedge by paying their British developers directly in GBP while maintaining EUR-denominated accounts for European clients, reducing their currency exposure by approximately 65%.

Your Mediterranean Business Roadmap

You’ve navigated the complexities—now let’s chart your path forward with concrete action steps:

1. Strategic Assessment (Month 1)
   • Conduct comprehensive tax modeling comparing Greece with alternative jurisdictions
   • Map your international corporate structure with Greek entity positioning
   • Identify specific tax incentives aligned with your business activities
2. Implementation Planning (Month 2)
   • Select optimal legal structure and draft governing documents
   • Engage formation specialists and tax advisors
   • Prepare substance implementation plan (staffing, premises, operations)
3. Execution Phase (Months 3-4)
   • Complete formation procedures and tax registrations
   • Establish banking relationships and treasury processes
   • Implement accounting and compliance systems
4. Optimization Review (Month 6)
   • Assess initial operations against tax projections
   • Refine transfer pricing and intercompany agreements
   • Apply for specific incentives based on actual operations

The Mediterranean offers more than just breathtaking coastlines—it now represents a strategic nexus for tax-optimized business operations. Greece’s transformation from economic crisis to entrepreneurial haven demonstrates that sometimes, the most beautiful opportunities emerge from challenging circumstances.

Will your business become part of Greece’s economic renaissance story? The framework is in place—now it’s about execution with precision and vision.

Frequently Asked Questions

What are the minimum substance requirements for a Greek company to be considered tax resident?

For a Greek company to maintain valid tax residency status, it must demonstrate genuine economic substance through: (1) a registered office with actual business premises (not just a virtual address), (2) at least one local director with decision-making authority who is physically present for board meetings, (3) local staff appropriate to the claimed business activities, (4) local bank accounts with regular transactions, and (5) authentic business operations evidenced by contracts and communications. Tax authorities increasingly scrutinize entities lacking these elements, potentially reclassifying them as permanent establishments of foreign parents.

How does Greece’s taxation of foreign-source income work for corporate entities?

Greek tax-resident companies are subject to taxation on their worldwide income at the standard corporate tax rate of 22%. However, foreign-source income may benefit from several relief mechanisms: (1) Foreign tax credits for taxes paid abroad, limited to the Greek tax payable on the same income, (2) Participation exemption on foreign dividends (100% exemption if specific conditions are met regarding ownership percentage and holding period), and (3) Relief under applicable Double Tax Treaties. Companies must maintain detailed documentation on foreign income sources and applicable taxes paid to optimize these relief mechanisms.

What are the implications of the EU’s Anti-Tax Avoidance Directives (ATAD) on Greek corporate structures?

Greece has fully implemented the EU’s Anti-Tax Avoidance Directives (ATAD 1 & 2), introducing several mechanisms that impact corporate structures: (1) Interest limitation rules capping deductibility at 30% of EBITDA, (2) Controlled Foreign Company (CFC) rules targeting artificially diverted profits, (3) General Anti-Abuse Rules (GAAR) allowing authorities to disregard arrangements with primary tax avoidance purpose, (4) Exit taxation when assets are transferred abroad, and (5) Anti-hybrid measures preventing double non-taxation through entity classification mismatches. Corporate structures must be designed with these provisions in mind, focusing on commercial substance rather than solely tax benefits.

Article reviewed by Aino Koskinen, Business Growth Consultant | Scaling Companies with Data-Driven Strategies, on May 5, 2025