Withholding Tax in Greece: A Detailed Guide

Withholding Tax in Greece: A Detailed Guide

Greece applies a withholding tax on a range of income of residents and non-residents including dividends, interest, and royalties. The tax is collected at the source which means the payer deducts the tax on the gross amount before paying the net income to the recipient. The standard rates of withholding tax are 5 percent on the payment of dividends, 15 percent on the payment of interest, and 20 percent on the payment of royalties. These rates can be reduced or fully exempt under a tax treaty with another country or under the provisions of the EU Parent-Subsidiary and Interest and Royalties Directives. This blog explains the withholding tax system of Greece, the rates, exemptions, rules of compliance, and penalties.

Withholding Tax Rates in Greece

The standard withholding tax rates on income from Greek sources are:

• Dividends: 5 percent of the gross amount paid

• Interest: 15 percent of the total payment

• Royalties and Other Payments: 20 percent of the total payment

• Fees for Technical Projects, Management Fees, and Consultancy Services: 20 percent of the total payment

Exceptions apply in certain cases:

• Fees received by contractors of technical projects and lessors of public or municipal properties will be taxed at 3 percent on the value of the project under construction or the lease payment

• Legal entities that are tax residents of Greece will be generally exempt from withholding tax on royalties, consultancy services, and management fees unless the services are provided to government bodies

• Foreign legal entities without a permanent establishment in Greece will not be subject to withholding tax on these services

• Intra-group dividends received by Greek tax-resident entities or permanent establishments of foreign entities will be exempt if specific conditions are met

Tax Treaties and EU Directives in Greece

Greece has agreements with other countries that provide for reduced withholding tax on dividends, interest, and royalties paid to residents of those countries. The agreements prevent double taxation of income on cross-border transactions and encourage investment from foreign entities in the Greek market. To benefit from reduced rates, a recipient of income must submit a certificate of tax residency or other documents required by the Greek tax authorities. The authorities will review the documents and approve the application of treaty benefits on the withholding tax of the income paid.

EU directives including the EU Parent-Subsidiary Directive and the EU Interest and Royalties Directive provide exemptions or reductions of withholding tax for qualifying entities within the European Union. The rules will apply to Greek entities and foreign EU entities receiving income in Greece if all conditions of the directives are satisfied. Anti-abuse measures ensure proper application of the directives and prevent avoidance of taxation on income.

Compliance Requirements for Withholding Tax in Greece

Payers of income subject to withholding tax in Greece must follow the rules of deduction, reporting, and remittance of the correct tax amount. Compliance ensures timely payment to the Greek authorities and prevents penalties or interest on unpaid amounts.

Key compliance requirements include:

• Deduct the appropriate WHT: Apply the correct withholding tax on the income according to the applicable rate of Greece.

• Remit the tax to the authorities: Pay the withheld amount on time to the Greek tax authorities within the deadlines of the law.

• File tax returns: Submit tax returns showing all amounts withheld on each type of income subject to withholding tax in Greece.

• Maintain records: Keep records of all transactions subject to withholding tax for the period required by law to support reporting, verification, and audits.

Penalties for Non-Compliance

Failure to follow withholding tax rules on income in Greece will result in financial or legal penalties. These will apply to late filing of returns, incorrect income reporting, non-payment of tax, and repeated breaches of the law. Compliance helps avoid fines, interest, and criminal liability on unpaid amounts.

Key penalties include:

• Late Filing: Fines from €100 to €500 for submitting returns after deadlines of the Greek tax authorities.

• Incorrect Returns: Additional penalties for inaccurate or incomplete information on returns of Greece.

• Non-Payment: Interest charges applied monthly on taxes not paid by the required date.

• Repeat Offenses: Higher fines and additional measures on repeated violations within a defined period of Greek law.

• Severe Non-Payment: Criminal penalties may apply if taxes due exceed €100,000 and remain unpaid for more than four months on income subject to withholding tax.

Exemptions and Reductions

Certain exemptions and reductions of withholding tax are available under conditions:

• Intra-Group Dividends: Exempt on the portion received by a Greek tax-resident company or by a foreign entity permanent establishment that meets anti-abuse rules.

• Interest Payments: Exempt if payer and recipient meet every condition of the EU Interest and Royalties Directive.

• Royalty Payments: Exempt if both payer and beneficiary satisfy the full requirements of the EU Interest and Royalties Directive.

• Documentation Requirement: An entity must present valid certificates or required documents to the Greek tax authority for the exemption or reduction to apply.

Recent Developments on Withholding Tax in Greece

As of 2025, Greece applies a withholding tax on the income of residents and non-residents with standard rates of 5 percent on dividends, 15 percent on interest, and 20 percent on royalties. Companies operating on the territory of Greece will need to track updates of tax treaties, EU directives, and amendments of the domestic law on withholding tax for all residents and non-residents. Awareness of the rules and obligations will allow accurate calculation of the tax on the income and limit the risk of financial or legal liabilities.

Engaging a qualified tax advisor provides access to notices and circulars issued by the Greek tax authorities. Advisors guide companies on preparation of documents, submission of forms, and compliance with procedures of the authorities. This support lowers the risk of penalties, interest charges, or legal disputes and ensures proper application of reductions or exemptions under law.

Conclusion

Greece applies a withholding tax on the income of residents and non-residents. The standard rates are 5 percent on the payment of dividends, 15 percent on the payment of interest, and 20 percent on the payment of royalties. A taxpayer may claim reductions or exemptions under the provisions of tax treaties or EU directives on interest and royalties. Entities must submit all required documents and follow the procedures of the Greek tax authorities to receive any reduction or exemption. Failure to comply will result in financial penalties, interest charges, or criminal sanctions on unpaid amounts. Maintaining accurate records of all transactions and filing all tax returns on time will ensure compliance with the laws on taxable income.

FAQs

1. What is the withholding tax rate on dividends in Greece?
   The standard withholding tax rate on dividends in Greece is 5%.

2. Are there any exemptions from withholding tax on interest payments?
   Yes, interest payments may be exempt from withholding tax if they meet the conditions of the EU Interest and Royalties Directive.

3. How can I benefit from reduced withholding tax rates under a tax treaty?
   To benefit from reduced rates, you must provide the necessary documentation to the Greek tax authorities, such as a certificate of tax residence.

4. What are the penalties for late filing of tax returns in Greece?
   Penalties for late filing range from €100 to €500, depending on the circumstances.

5. Is there a withholding tax on royalties in Greece?
   Yes, the standard withholding tax rate on royalties is 20%, but exemptions may apply under certain conditions.