Tax law holds a significant place in all EU Member States, as it plays a crucial role in financing public budgets. Harmonizing cross‑border tax law is therefore essential for the sustainable functioning of the EU. Tax sovereignty, however, remains vested in the individual Member States.
In principle, income taxation for natural persons is applied at the source of the income. Greek tax law mainly comprises Income Tax Law No. 4172/2013, VAT Law 2859/2000, Tax Procedure Code No. 4174/2013, and Gift and Inheritance Tax Law No. 2961/2001.
Greece applies progressive taxation with different rates for various types of income. Income from employment and pensions is taxed progressively up to a maximum rate of 42%. Rental income and capital income, such as dividends, are subject to separate tax rates. Freelancers, merchants, and entities maintaining first-category accounting books (typically smaller businesses) are taxed at a flat rate of 26% on their profits. Public limited companies (AE), limited liability companies (EPE), and private capital companies (IKE), as well as entities keeping second-category books, have been subject to a corporate income tax rate of 29% since January 1, 2015, plus a 10% tax on distributed dividends.
Rental income is taxed at 11% on the first €12,000, and 33% on amounts above this threshold. The purchase of real estate in Greece is subject to either the real estate transfer tax or VAT. The real estate transfer tax is 3%, calculated on the purchase price if it exceeds the objective (assessed) value. However, in the commercial sale of new buildings (with building permits issued from January 1, 2006), the transaction is subject to 23% VAT instead of the transfer tax.
For transactions such as gifts, parental grants and inheritances, a tax‑free allowance of €150,000 per person applies within the immediate family (parents/grandparents and children/grandchildren/spouses). Gifts or inheritances to non‑relatives are subject to significantly higher tax rates.
“European tax law” typically refers to international tax law that harmonize cross‑border provisions among EU States. Double taxation is addressed through bilateral double taxation agreements.
Where differing tax systems impede the functioning of the internal market, the EU may harmonize indirect taxes to remove trade barriers, with VAT being a primary focus. VAT harmonization is governed by the 2007 VAT System Directive. The EU does not have direct legislative power over direct taxation; instead, it relies on the general harmonization principles set out in Article 113 of the Treaty on the Functioning of the European Union (TFEU). Nevertheless, the EU has addressed certain areas of direct taxation to avoid double taxation and facilitate cross-border activities, such as through the Merger Directive (covering cross-border reorganizations and equity participation), the Parent-Subsidiary Directive, and the Interest and Royalties Directive.