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The tax regime for income from dividends and interest

06/03/2018

The new Income Tax Code (Law 4172/2013), which is in force from 1/1/2014, provides that dividend and interest income of natural persons is taxed at a rate of 15%. The tax is withheld by the legal person who makes the payment, provided that he has his tax residence in Greece.

These incomes are declared by the taxpayer in the annual income tax statement and are not subject to any extra income tax. However, in line with other taxpayers' income, they are subject to a special solidarity levy, which may reach 10%.

Dividends

Dividends include income of domestic or foreign origin resulting from any distribution of profits from quored or non-listed shares, from founding titles, from limited company shares, or from participation in partnerships, joint ventures and other legal entities, pre-dividends distributed by anonymous companies, temporary profits of partners, interest on preferred shares, over-performance of mathematical stocks of insurance companies, distribution of profits of trusts and offshore companies, as well as the fees paid in any form to Board members, managers and employees from the profits of the legal entity.

However, the profits distributed to the partners by legal persons holding record books are not subject to withholding tax.

The concept of dividend is, in principle, also the distribution of profits from units of UCITS (Undertakings for Collective Investment in Transferable Securities) established in the country or in another EU Member State. or in an EEA / EFTA State or mutual funds established in third countries. However, dividends from domestic UCITS, as well as UCITS from the EU or EEA / EFTA countries are exempt from income tax (but not from the solidarity levy).

Interests

The term "interest" includes income of domestic or foreign origin arising from all kinds of claims and particularly income from deposits, government bonds, securities and bonds, and all kinds of loan relationships, including premiums, repos / reverse repos  and rewards arising from securities, bonds or debt securities. This includes interest on late payment due to a contractual obligation, as well as interest awarded by court order.

However, interest on bond and Treasury bills of the Greek State, as well as interest earned on bonds issued by the European Financial Stability Facility (EFSF), are exempt from income tax, pursuant to a program of participation in the redeployment of Greek debt.

Income from abroad

Especially if the taxpayer obtains income from dividends and interest from abroad, regardless of whether it is imported into Greece or remains abroad, one must normally include it in one's annual income tax statement in order to be taxed and subject to a solidarity levy.

In the event that this income has been subject to withholding tax abroad, this tax will be declared in the annual tax return and will be offset against the corresponding domestic tax. If the tax paid abroad is higher than the tax applicable to that in Greece, no extra tax is refunded to the taxpayer.

Also, if a higher tax rate than that set out in the relevant Double Taxation Income Tax Convention (DTITC) is imposed abroad, only the tax deducted at the rate set in the bilateral DTITC will be credited.

The payment of the amount of tax abroad is evidenced by appropriate supporting documents, as the case may be (certificate of the competent tax authority, certified statement of the chartered auditor, etc.).

G. Samothrakis, J. Panou
Posted on Sunday newspaper "KATHIMERINI" on 04/03/2018

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