Resident corporations are taxed on their worldwide income. Non-resident corporations are taxed in Greece on any Greek-source income they derive therein.
For the tax year 2021 onwards, the corporate income tax (CIT) rate of legal entities, with the exemption of credit institutions, has been reduced to 22%.
Furthermore, credit institutions are taxed at a rate of 29% only if and for those tax years that they are subject to the specific provisions of Art. 27A of the Income Tax Code (ITC) regarding deferred taxation.
The Greek tonnage tax regime model intends to tax shipping activity and applies to Greek or foreign ship-owning companies with vessels flying a Greek flag and foreign ship-owning companies with vessels flying a foreign flag that maintain a ship management company in Greece that is exclusively engaged in ship management activities. The Greek tonnage tax regime applies to vessels of ‘A’ and ‘B’ category that are either flying a Greek or foreign flag. In the case of vessels flying a foreign flag, the foreign ship-owning company should maintain a ship management office in Greece. Category ‘A' vessels include cargo vessels, tankers, steel hull vessels for dry or liquid cargo that fly to/between foreign ports, passenger vessels, drilling platforms, etc. Category ‘B' vessels include small boats and any other motor vessels not listed under category ‘A’.
Based on Law 4336/2015, the tonnage tax levied on certain categories of vessels flying a Greek flag (i.e. professional vessels, leisure yachts, ferries, etc.) has been expanded to vessels flying flags of the European Union (EU) or EU area member states, with exhaustion of the income tax liability of the ship owners on income earned from the related activity.
Said provision aligns the regime applying to said category of vessels following the European Commission’s accusation of discriminatory treatment of foreign-flag vessels compared to Greek-flag ones.
The gross tonnage is calculated by multiplying coefficient rates by each scale of gross registered tonnage. This taxable tonnage is then multiplied by an age-corrected rate.
Various exemptions/reductions of the tonnage tax apply, such as:
- Vessels built in shipyards in Greece, under a Greek flag, are exempt from tax for the first six years.
- 50% reduction for vessels operating regular routes between Greek/foreign ports or solely between foreign ports.
The tonnage tax exhausts the tax liability of the owner, and, if the owner is a company, this extends to its shareholders. Tonnage tax also exhausts the tax liability in relation to operating profits and capital gains arising out of the sale of the vessel flying the Greek flag. Tonnage tax also exhausts the tax liability of the foreign ship-owning company flying a vessel under a foreign flag managed by a ship management company in Greece, as well as of the shareholders thereof. No CIT or dividend withholding tax (WHT) is levied on shipping profits.
This tax burdens the ship owners or ship-owning companies, while the ship management companies are jointly and severally liable for the payment thereof.
An obligation of the liable parties for submitting before the Ministry of Mercantile Marine an annual statement indicating the name, flag, total tonnage, and age of the vessel under the foreign flag is established.
For calculating the tonnage tax (tax rates and tax brackets, criteria) and the special tax return and payment of tax, the provisions on the tonnage tax payable for Greek-flagged vessels apply in analogy. A credit for the tonnage tax paid abroad is provided.
As of 1 January 2020, the application of the tonnage tax regime is extended beyond ship owning companies and their shareholders and partners, also to bareboat charterers and lessees in case of ship leasing arrangements, and their shareholders and partners up to the level of Ultimate Beneficial Owners.
Annual contribution imposed on ship management companies
An annual contribution is imposed on offices or branches of foreign enterprises that have been established in Greece by virtue of Article 25 of Law 27/1975 and that are engaged in the chartering, insurance, average (damage) settlements, purchase, chartering or shipbuilding brokerage, or chartering of insurance of ships under Greek or foreign flag of total tonnage over 500 shipping tons, as well as the representation of ship owner companies or undertakings, whose object is identical to the above-mentioned activities. Said contribution is also imposed (referring only to years 2019 onwards) on Greek legal entities operating in Greece in accordance with article 25 of Law 27/1975, which are engaged to activities similar to those stated above.
Greek and foreign companies of Law 27/1975 that are engaged in the management of vessels flying a Greek or foreign flag (that are subject to tonnage tax), as well as in other activities approved by the license of operation, are exempt. Passenger coastal ships or merchant vessels that perform internal routes are exempt.
This contribution is imposed on the total amount of imported foreign exchange and, for the years 2018 onwards, the tax scale is as follows:
|Bracket of annual total foreign exchange (USD)||Rate(%)||Tax per bracket (USD)||Total foreign exchange (USD)||Total tax (USD)|
For the years 2016 through 2018, the contribution was calculated on a minimum 50,000 United States dollars (USD), while for the years 2019 and 2020 a minimum contribution of USD 5,000 was imposed on an annual basis. It is increased to USD 6,000 from 2021 onwards.
A special tax return for calculating the contribution on the basis of the imported foreign exchange of the previous year should be filed within March of each year. The contribution is paid in two instalments (April and September).
The distribution of profits by a foreign ship management company maintaining an office or branch in Greece by virtue of Article 25 of Law 27/1975 that is exclusively engaged in the chartering, insurance, brokerage, etc. of vessels to Greek individual tax residents was subject to tax at a rate of 10% up to 2022 and of 5% from 2023. From 2019 onwards, the said provision applies equally to Greek companies.
This tax applies to dividends paid or credited and shall be rendered to the Greek state by the beneficiary of the dividend.
Nevertheless, the 10% tax rate remained the same with regards to cases of distributions of profits by the above-mentioned companies in the form of extraordinary fees and percentages (bonus) to Board of Directors (BoD) members, directors, and officials, in addition to the regular remuneration, exhausting the tax liability of the beneficiaries for said income. From 2019 onwards, the application of the said provision is expanded to all BoD members, directors, and any other employee of both chartering and ship management companies, regardless of whether they are Greek or foreign entities.
The compatibility of the Greek tonnage tax regime with the EU State Aid rules has been investigated by the European Commission and found, in principle, compatible with the EU Maritime Guidelines.
Local income taxes
No municipal or local taxes on income are paid at a local level.