Thursday, April 10, 2014

Taxes in Greece as self employed

It has been almost four months that i came back to the beloved Greece. Recently i started working for an UK based company, OnApp. The prospects were good: a good salary combined with the sunshine of south Greece. However, after some time i realized that the taxes where insane high. To get an idea lets assume two people with gross salary 2000 and 3000 euro per month. In both cases you don't need to pay VAT (23% now in Greece) as you provide a service to a company and the company will produce the product to the final customer.

So lets see an example of tax:



Gross Income per year
24000
36000
Technical Chamber of Greece1
-100
-100
Insurance + Retirement
- 2706
- 2706
Tax (26%) without ins + ret
- 21194*0.26 = -5510.44
- 33194*0.26 = -8630.44
Prepay Tax (55%) for next year2
- 5510.66*0.55 = -3030.74
- 8630.44*0.55 = -4746.74
Total After Main Tax
12652.82
19816.82
Solitary tax (1-4 %)3
-6,52
-78,168
After all taxes
12646
19739,39
Tax + overhead
47,03%
45,16%


1. Depending on the employment category. Some categories can ignore it.
2. Only the first year! 
3. 12001 - 20.000,99: 1%, 20001 - 50.000,99: 2%, 50001 - 100.000,99: 3%, 100001 and up: 4%.

So, what is different compared with many other countries: 
  • You prepay the 55% of the tax for the next year. The tax service assumes that you are going to have the same income next year. So, the tax is 1.55X
  • Insurance and retirement is fixed no matter your income. This changes by the year you are self employed.
Another issue that you have is that you have to pay more as you are getting older for the insurance and retirement. You change in category after three years. Here is a table with different categories:

Category
Retirement
Insurance
Unemployment Benefit
Sum per month
1
152.41
58.30
15
225.71
2
186.14
71.20
15
272.34
3
222.20
84.99
15
322.19
4
242.58
92.79
15
350.37
5
279.81
107.03
15
401.84
6
315.59
120.71
15
451.3
7
337.46
129.08
15
481.54
8
364.90
139.57
15
519.47
9
389.55
149.00
15
553.55
10
414.22
158.44
15
587.66
11
438.87
167.87
15
621.74
12
463.52
177.30
15
655.82
13
488.19
186.73
15
689.92
14
512.85
196.16
15
724.01

For example, if you are working for 18 years,  you have to pay 451 per month, in total 5412 per year. This overhead can be really big especially, if your income is not so high. The last, but not least issue, that someone has to encounter is that the laws and tax rules change every year. Thus, it is very hard to have a financial plan for the next two-three years.  On the good side is that you can include expenses and not taxed for them. For example, you can buy a new laptop, a new monitor, or a new phone. If you rent an office you can also put the rent in the expediences and not pay tax for them. Things can be much worse if you open a business: the registration and anual fee of technical chamber increases a lot and you have to prepay 80% of the next year's tax. Furthermore, you have to pay also VAT when you sell products of provide service.

So, if you thinking working in Greece and you got a good offer, please make your calculations before coming. At least they can't tax the sun :).


Update 1: Inserted solitary tax (not sure if this is the proper translation) and some information about the technical Chamber