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Pay your team in Greece
Setting up payroll in Greece
Income tax and social security in Greece
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The Greek payroll system is not among the most complex in Europe. However, the lack of information which is available for foreign employers in English can slow down set up processes and increase compliance risks.
What’s more, with the pandemic and the country’s continuously difficult economic situation, legal changes regarding employment and taxation have become more frequent in the past few years. For example, 2021 and 2022 have brought a number of legal adjustments employers should have in mind when processing payroll in Greece.
Setting up payroll in Greece involves several registration processes. This includes registering with the local tax office (Eforia) in order to receive an employer tax number (AFM) as well as registering with the Unified Social Security Fund (e-EFKA). The latter will issue an employer social security ID which is needed for payroll processing. The registration processes usually take around 5 business days.
New hires must be reported to the authorities before they start work. Hiring declarations are sent via the Ergani Information System which is the official platform provided by the Greek Ministry of Labor.
Foreign employers can set up and process payroll in Greece without establishing a local legal entity. However, in order to fulfill all the mandatory employer obligations, they have to appoint a local representative. A local bank account is necessary to issue payroll-related payments to local authorities - companies need their AFM to open an account with a local bank.
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The Greek tax system is progressive, with tax rates rising for every EUR 10,000 the employee earns. Social security contributions are shared between employees and employers and mainly cover pension and health insurance.
Employment income in Greece is subject to progressive tax rates. The lowest rate is 9% and applies to income not exceeding EUR 10,000 per year. The top rate is 44% and is applicable to annual income above the EUR 40,000 threshold.
In addition, income exceeding EUR 12,000 per year is subject to a special solidarity contribution. Rates start at 2.2% and go up to 10%, the latter applying to annual income of more than EUR 220,000. However, the solidarity contribution for employees working in the private sector has been temporarily suspended for the 2021 and 2022 tax years.
Taxable income from employment includes the employee’s base salary as well as any other bonuses, benefits and payments provided by the employer in cash or kind. Social security contributions are deductible.
A personal tax allowance of EUR 777 is available for employees earning less than EUR 12,000. The tax allowance increases if there are dependent children living in the employee’s household. For higher income (i.e. above EUR 12,000), the tax allowance decreases progressively.
Resident taxpayers are taxed on their worldwide income while non-residents only pay tax on income sourced in Greece. Individuals are considered Greek tax residents if their main residence or their center of vital interests is in Greece. Furthermore, spending more than 183 days in Greece in any given 12-month period makes an individual liable for income tax.
Employees who have only just recently become Greek tax residents and fulfill certain requirements can apply for a special tax regime under which they are taxed on only 50% of their income earned in Greece for a period of up to 7 years.
2022 Tax Bands
Corresponding Tax Rates *
* Please note: The tax rates indicated do not include the solidarity surcharge which is levied separately according to the following progressive scheme - not applicable on employment income in tax years 2021 and 2022.
EUR 12,000 to EUR 20,000: 2.2%
EUR 20,000 to EUR 30,000: 5%
EUR 30,000 to EUR 40,000: 6.5%
EUR 40,000 to EUR 65,000: 7.5%
EUR 65,000 to EUR 220,000: 9%
Above EUR 220,000: 10%
Employers are responsible for calculating and deducting solidarity tax and income tax from employee salaries and wages at source. The withheld amounts have to be reported and paid to the tax agency once every month. Both reports and payments are due on the last working day of the second month following the payroll run they relate to.
Furthermore, employers are obligated to provide each employee with an annual income certificate stating the total amount of income earned in the previous tax year. The certificate must be issued no later than by the end of February of the following year. A similar tax report must be prepared for the Greek tax authority, as well as an annual leave report which is due by the end of January.
Employees must file an annual tax return no later than 30 June of the following year. The tax year is the calendar year.
Social security contributions are shared between employee and employer, the latter paying the bigger share. Following several reductions in 2020 and 2021, the contribution rates to Greek social security are currently (as of 2022) set at 22.54% for employers and 14.21% for employees. The maximum contribution base is EUR 6,630 (as of January 2022). Contributions cover pension (main share), health insurance, unemployment insurance and several other social insurances.
It is the employer’s responsibility to withhold the employee’s social security contributions during the payroll process and submit them to the authorities together with their own contributions on a monthly basis. Payments are made towards the Unified Social Security Fund (e-EFKA). The due date is the last working day of the following month. An electronic social security declaration (APD) needs to be filed on the same day.
Employees in Greece are entitled to various benefits. These include:
Annual leave and public holidays: 20 days of annual leave which gradually increases to 25 days (annual leave entitlement of employees with a 5-day working week); 14 public holidays
Maternity leave: 17 weeks, 6-month extension possible (so-called special maternity leave)
Paternity leave: 14 days
Parental leave: 4 months for each parent; parental leave allowance paid during the first 2 months
Sick leave: sickness benefits are available for either 15 days and 30 days, depending on the employee’s length of service; the first 3 days of sick leave are paid by the employer
For more information on employee benefits and other employment requirements in Greece (including severance pay and termination procedures), check out our Global Hiring Guide.
In January 2022, the national minimum wage rose from EUR 650 to EUR 663 per month, counting 14 payments within one year. When calculated with 12 payments per year, the Greek minimum wage currently stands at EUR 773.50 per month. This equals an annual minimum wage of EUR 9,282.
Greek labor law mandates the payment of a 13th and 14th salary. These bonuses have to be paid at Christmas (full month’s salary), Easter (half a month’s salary) and in time for the employee’s annual holiday (half a month’s pay).
Overtime pay regulations changed under the new employment law passed in June 2021. Additional hours which are within the legal limits (i.e. 3 hours per day and 150 hours per year) now have to be paid at a rate of 140%. In case the employer receives special permission for additional overtime work, those hours should be paid at a rate of 160%.
Payroll in Greece is processed once a month. Payments to employees are usually made at the end of the month. The prevalent payment method is bank transfer. Every employee should receive a payslip at the end of each payroll run. Both paper and electronic payslips are legally valid.
Learn about tax reporting, compensation laws, registration requirements and more in our free Payroll Guide for Greece.
This country guide is for informational purposes only and should not be construed as legal advice. The content of this guide contains general information, and although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
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