Payroll Taxes and Hiring Staff: Considerations if You Relocate Your Business to Greece

Reading time: 15 minutes

Table of Contents

• Introduction
• Understanding Greek Payroll Taxes
• Hiring Staff in Greece
• Legal Considerations for Business Relocation
• Economic Impact of Business Relocation
• Conclusion
• FAQs

Introduction

As global economic landscapes shift and evolve, many businesses are considering relocation strategies to optimize their operations and tap into new markets. Greece, with its strategic location in the Mediterranean and recent economic reforms, has become an increasingly attractive destination for businesses looking to expand or relocate. However, navigating the intricacies of payroll taxes and hiring staff in a new country can be a complex endeavor. This comprehensive guide will delve into the critical considerations for businesses contemplating a move to Greece, with a particular focus on payroll taxes and the nuances of hiring local talent.

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Understanding Greek Payroll Taxes

Greece’s payroll tax system is a multifaceted structure designed to fund social security, healthcare, and other public services. For businesses relocating to Greece, comprehending this system is crucial for compliance and effective financial planning.

Greek Social Security Contributions

Social security contributions in Greece are divided between employers and employees. As of 2023, the breakdown is as follows:

• Employer contributions: Approximately 24.81% of the employee’s gross salary
• Employee contributions: Around 15.75% of their gross salary

These percentages can vary slightly based on the nature of the work and specific industry regulations. It’s important to note that there are caps on the maximum amount of contributions, which are adjusted annually based on economic factors.

Income Tax Withholding

Employers in Greece are responsible for withholding income tax from their employees’ salaries. The Greek income tax system operates on a progressive scale, with rates ranging from 9% to 44% depending on the individual’s annual income. As an employer, you’ll need to calculate and withhold the appropriate amount each pay period.

Additional Payroll Levies

Beyond social security and income tax, there are several other levies that may apply to payroll in Greece:

• Solidarity Contribution: A temporary tax ranging from 2.2% to 10% on high earners, though this has been suspended until 2025.
• Professional Fee: A small percentage (usually around 1%) applied to certain professions.
• Stamp Duty: A minor tax applied to some types of compensation.

Understanding these various components of the Greek payroll tax system is essential for accurate budgeting and compliance. It’s advisable to work with local tax experts or payroll service providers to ensure all obligations are met correctly.

Hiring Staff in Greece

Recruiting and managing staff in Greece involves navigating local labor laws, cultural norms, and employment practices. Here are key aspects to consider:

Employment Contracts

Greek law requires written employment contracts for all employees. These contracts must specify:

• Job description and responsibilities
• Working hours and location
• Salary and benefits
• Leave entitlements
• Notice periods for termination

Contracts can be for fixed-term or indefinite periods, each with its own set of legal implications and protections for employees.

Working Hours and Overtime

The standard workweek in Greece is 40 hours, typically spread over five days. Overtime is strictly regulated:

• Up to 5 hours per week: Paid at 120% of regular hourly rate
• Beyond 5 hours: Paid at 140% of regular hourly rate
• Work on rest days or holidays: Paid at 175% of regular hourly rate

Employers must maintain detailed records of overtime work and compensation.

Leave Entitlements

Greek labor law provides generous leave entitlements:

• Annual Leave: 20-26 days per year, depending on years of service
• Public Holidays: 14 days annually
• Sick Leave: Up to 2 weeks per year, with longer periods covered by social security
• Maternity Leave: 17 weeks fully paid, with additional unpaid leave options
• Paternity Leave: 14 days fully paid

Understanding and implementing these leave policies is crucial for maintaining employee satisfaction and legal compliance.

Termination and Severance

Greek labor law provides significant protection for employees against unfair dismissal. Key points include:

• Notice periods ranging from 1 to 6 months, depending on length of service
• Severance pay calculations based on salary and years of service
• Strict regulations on valid reasons for termination

Employers must be cautious and well-informed when considering terminations to avoid costly legal disputes.

Legal Considerations for Business Relocation

Relocating a business to Greece involves navigating a complex web of legal and regulatory requirements. Here are some critical areas to address:

Business Registration and Licensing

To operate legally in Greece, businesses must:

• Register with the General Commercial Registry (G.E.MI.)
• Obtain a tax identification number (AFM)
• Secure necessary operating licenses based on the nature of the business
• Register with the relevant social security organization

The process can be time-consuming, so it’s advisable to start well in advance of your planned relocation date.

Corporate Taxation

Understanding the Greek corporate tax landscape is crucial for financial planning:

• Corporate Income Tax: Currently set at 22% for 2023
• Value Added Tax (VAT): Standard rate of 24%, with reduced rates for certain goods and services
• Dividend Withholding Tax: 5% on distributions to both resident and non-resident shareholders

Greece offers various tax incentives for new businesses and specific industries, which may influence your relocation decision.

Data Protection and Privacy

As a member of the European Union, Greece adheres to the General Data Protection Regulation (GDPR). Businesses must ensure compliance with these stringent data protection laws, including:

• Appointing a Data Protection Officer if required
• Implementing robust data security measures
• Obtaining necessary consents for data processing
• Providing transparency in data collection and usage practices

Non-compliance can result in significant fines and reputational damage.

Economic Impact of Business Relocation

Relocating your business to Greece can have significant economic implications, both for your company and the local economy. Let’s explore some key aspects:

Cost Considerations

While Greece has experienced economic challenges in recent years, it offers several cost advantages for businesses:

• Lower commercial real estate costs compared to many Western European countries
• Competitive labor costs, especially for skilled professionals
• Potential tax incentives for new businesses and specific sectors

However, it’s crucial to factor in relocation costs, potential productivity adjustments, and ongoing compliance expenses when calculating the overall economic impact.

Market Access and Growth Potential

Greece’s strategic location offers unique market access opportunities:

• Gateway to Southeast Europe and the Eastern Mediterranean
• Access to the European Union single market
• Growing tourism sector offering niche market opportunities
• Emerging tech and startup ecosystem, particularly in Athens

Businesses that can leverage these geographical and sectoral advantages may find significant growth potential in the Greek market.

Economic Indicators and Trends

As we assess the economic landscape for business relocation, it’s crucial to consider current indicators and trends:

• GDP Growth: Greece has shown resilience, with projected growth rates outpacing many EU counterparts
• Foreign Direct Investment: Increasing FDI inflows indicate growing investor confidence
• Labor Market: Gradual improvements in employment rates and skill availability
• Privatization and Reforms: Ongoing structural reforms aimed at improving the business environment

These trends suggest a cautiously optimistic outlook for businesses considering relocation to Greece. However, as with any major business decision, thorough due diligence and expert consultation are essential.

Conclusion

Relocating your business to Greece presents both opportunities and challenges. The country’s strategic location, improving economic indicators, and potential cost advantages make it an attractive destination for many businesses. However, navigating the complexities of Greek payroll taxes, labor laws, and regulatory requirements demands careful planning and expert guidance.

Key takeaways for businesses considering relocation to Greece include:

• Thorough understanding of Greek payroll taxes and social security contributions is crucial for compliance and financial planning.
• Greek labor laws provide significant protections for employees, requiring careful management of hiring, contracts, and terminations.
• The legal and regulatory landscape for business operations in Greece is complex, necessitating expert assistance for smooth relocation and compliance.
• Economic indicators suggest potential growth opportunities, but businesses must conduct comprehensive market research and due diligence.

Ultimately, successful business relocation to Greece requires a balanced approach that leverages the country’s advantages while carefully managing the associated challenges. By thoroughly preparing and seeking expert advice, businesses can position themselves to thrive in this dynamic Mediterranean market.

FAQs

1. What are the main payroll taxes I need to consider when relocating my business to Greece?

The main payroll taxes in Greece include social security contributions (split between employer and employee), income tax withholding, and potential additional levies such as the solidarity contribution and professional fees. Employers are responsible for calculating and withholding these taxes from employee salaries.

2. How do Greek employment contracts differ from those in other countries?

Greek employment contracts must be in writing and include specific details such as job description, working hours, salary, benefits, and termination notice periods. They offer strong protections for employees and can be either fixed-term or indefinite. The terms are often more regulated and employee-friendly compared to some other countries.

3. What are the key steps for registering a business in Greece?

Key steps include registering with the General Commercial Registry (G.E.MI.), obtaining a tax identification number (AFM), securing necessary operating licenses, and registering with the relevant social security organization. The process can be complex and time-consuming, often requiring assistance from local legal experts.

4. Are there any tax incentives for businesses relocating to Greece?

Yes, Greece offers various tax incentives, particularly for new businesses and specific industries. These may include reduced corporate tax rates, investment incentives, and R&D tax credits. However, these incentives are subject to change and may have specific eligibility criteria, so it’s important to consult with tax professionals for the most current information.

5. How does the Greek labor market compare to other European countries in terms of skill availability and costs?

Greece offers a competitive labor market with a well-educated workforce, particularly in fields such as engineering, technology, and services. Labor costs are generally lower than in Western European countries, making it attractive for businesses. However, certain specialized skills may be in high demand, potentially affecting recruitment in some sectors. It’s advisable to conduct thorough market research for your specific industry needs.

Article reviewed by Ariana Smit, Investment Portfolio Manager | Real Estate & Private Equity Expert | Driving High-Yield Investments, on March 28, 2025